Give me taxes or give me death! (Just tell me where they go.)

"Taxes are the price we pay for democracy," FDR said. They're the cost of civilized society, Oliver Wendell Holmes said. Just so. I'd rather check out than live in a lawless society - well, that's a contradiction in terms - without the collective support of fellow citizens who help finance our near-perfect country.

And there will be taxes, oh my yes. Whether you live in Botswana or Denver or Alberta or Singapore, whether you lived 500 years ago in China or were born two weeks ago in Kiev, there always have been, and always will be, taxes.

These taxes will be collected by a government that is representative of the people, whose elected officials can be removed at the next election. (Or beforehand, if you live in a jurisdiction with recall provisions, like California.)

Or they will be collected by the ruling monarchy, military junta, theocracy, or kleptocracy. And you'll have no say in how much is taken from you or what is done with it.

As there has always been and always will be government - society by definition is a set of rules, or living arrangements, that we either select or suffer to be imposed on us - there always will be fees for government services rendered. Lavish government subsidies for military contractors and oil explorers come out of my pocket. From that same pocket are drawn payments for police, neighborhood rehabilitation, public gardens, swimming pools and other public amenities, street repair, "midnight basketball" programs for inner-city youth, and doctor, engineer and teacher training.

I want to live in a caring society. And I will cheerfully pay for it. There is no free lunch. It has cost me money to prevent genocide in Benghazi. And my money's also at work at the June Callwood Centre for Women and Families on Parliament Street, the refugee integration centre nearby on Keele Street, in asserting our Arctic sovereignty with costly Coast Guard ships and patrol aircraft, and in running a humane and scrupulously fair criminal-justice system.

Trouble is, I don't know exactly where my tax money's going - how much is spent on each of the government services made available to me. If I knew that, I'd be well pleased by what a bargain it is to pay such a tiny fraction of the total budget of RCMP, and our delegation at the UN, and the repair work last summer on my street - the tree trimming, the pothole filling, and the new sidewalks.

And I'd also, as a better-informed citizen, ask hard questions about why so much of my tax payout went to servicing the national debt. Why so little to subsidize medical research, compared with what I spent on assistance to our would-be Olympic competitors? Year over year, why has my spending on education risen in double digits? Why so little for the arts, and foreign aid? (I've nothing but pride in our Olympians, I'm just saying...)

Really, when you think about it, what other goods and services do you pay for absent a receipt?

Well that could change, and soon if the public will existed to force this obviously needed improvement in our collective governance.

At pixel time, veteran political progressive Michael Tomasky's Democracy: A Journal of Ideas, is pushing the idea hard. The Obama White House now has a "tax receipt calculator" and a "tax cut calculator" highlighting new tax deductions for which taxpayers might not know they're eligible. And Third Way has its own tax receipt calculator that shows where your money goes. And bills are making their way through both the U.S. House and Senate to provide detailed receipts to every taxpayer, by mail and online, bills co-sponsored in both cases by Republicans and Democrats.

Here's what Third Way's prototype tax receipt looks like: 
All that's missing is a groundswell of public support for this overdue innovation. One of its advocates, David Kendall, was interviewed on NPR's "All Things Considered" today, in advance of the IRS filing deadline:

The problem is Americans think every dollar they send to Washington is wasted," Kendall said. "Turns out, for instance, that $15 of my taxes goes to the FBI. I think that's a bargain. If people know where their money's going - maybe only if that happens - can we have an informed debate about the nation's spending priorities.

True.

The following may surprise you. If you're an American paying $6,883 in federal tax on household income of $50,000, here's where your tax money goes:

Defense: $1,375.40 (19.9% of your total federal tax bill)

Social Security: $1,334.78 (19.4%)

Medicare: $845.70 (12.3%)

Interest payments on the national debt: $433.11 (6.3%)

How about NASA, couldn't we save a lot by scrapping those costly missions? And foreign aid, which most Americans believe consumes about a third of U.S. government spending? And the arts, isn't that a luxury in these tough economic times?

Well, here's what the taxpayer above spent on those items:

Space and science: $49.84 (0.7%)

Foreign aid: $42.81 (0.6%)

Arts and culture: $4.92 (0.07%)

The U.S. is currently in the early stages of a gut-wrenching and likely prolonged debate about how to restore fiscal sanity to the Republic.

The U.S. commentariat knows that foreign aid spending accounts for less than 1% of the U.S. government budget. But the public doesn't, as polls consistently show. 

For Rush Limbaugh, Bill O'Reilly, Sarah Palin and Michele Bachmann, whipping up outrage on foreign aid and arts spending is a crowd pleaser. And they reach far more Americans than, say, progressive pundit E.J. Dionne or his conservative counterpart David Brooks. Each of them trouble to inform themselves on what government actually does. And each is equally embarrassed at public ignorance - for that's what it is - on the actual use of taxpayer funds.

Now if taxpayers in Tallahassee and Spokane had several years' worth of tax receipts, they could see not only where their tax dollars have gone this year, but the rate of increase or decrease in spending on selected areas. They could determine their government's priorities and how they've changed.

For instance, they would have seen, at the privacy of their kitchen tables as they pursued their receipts, how Pentagon spending soared in the Reagan years, compared with a negligible increase in education, healthcare and social services. And today they would see how healthcare costs have spiralled consistently through the past decade, way out of line with inflation.

Most important, taxpayers would see that today's top spending priorities - defence, Social Security and Medicare alone accounted for 52% of total government spending. Obviously those are the areas to focus on with urgent reforms. It's those three that threaten the nation's long-term solvency, not NPR.

They'd also see that paying interest on the debt already swallows up 6.3% of their taxes, a figure poised to rise. That's money they'll never see again, in the form of parks, subways, federally funded irrigation systems, and a new class of more energy efficient warships.  

The general population would also see, for the first time in a detailed, personally tailored tax receipt, that the total elimination of spending on protecting the environment, on agriculture (including food-safety inspectors), social serivices, workplace safety, foreign aid, and arts and culture would reduce the above taxpayer's tab by all of 3.6%. Which means the next time someone yipsabout killing off PBS and the Environmental Protection Agency, one would know they're not serious about the nation's debt crisis.   

What about those costly bailouts to fat-cat Wall Street financiers and two of the Detroit Three automakers? Well, actually, those bailouts were loans. And repayments on them this year, along with a self-funding financial regulation system and a Federal Reserve that makes a profit issuing currency, reduced your tax bill this year, by $155.74.

This summation clarifies the mind greatly. It says there must be a half to the sharp escalation in healthcare costs. And that Social Security needs once again to be fixed - as Reagan and Tip O'Neill did with relative ease in the 1980s, the last time Social Security was heading for crisis. Those top three items are where the money is - or rather, where the potential for big savings is. It's not in our assistance to Native Americans ($15.50, or 0.2% of my tax bill).

Defense spending looms large, topping the list of our above taxpayer's contributions to the Treasury. Have a look at this chart of the world's biggest defense spenders. And ask yourself why the U.S. still accounts for almost half the entire world's defense spending, 20 years after the collapse of the Soviet Union.

 

This is a crucial cause for progessives. True, the demonization of government for the past 30 years has been a highly coordinated and persistent campaign of misinformation. But there's been precious little to counter it. If hundreds of millions of taxpayers saw with their own eyes where their money's actually going, they'd know who's leading them by the nose, and who's talking common sense.  

The Democracy series on tax receipts is inspired by this sentiment expressed by the editors;

For too long now, progressives have been on the defensive on the issue of taxes. We hope this mini-symposium prompts progressives to think creatively to turn the argument in our favor, and inspires new ideas on how to deepen and clarify the connection between taxpayers and the government.

Here are David Kendall and Ethan Porter, in the vanguard of tax-receipt initiative:

While the anti-taxers have diagnosed the correct problem, they've prescribed the wrong solution. Rather than simply demanding tax cuts - or hikes, for that matter - we can work to open the tax system up, to show taxpayers how it works and where their money goes. In the process, we might be able to change the discussion around taxing and spending, making it less ideological and more relevant to the challenges of our day. Presumably, Americans will never like paying their taxes. But with the right policy proposals - and with their implementation - they might not despise doing so.

Jonathan Chait of The New Republic writes:

The conservative movement's embrace of taxophobia is probably the most important development in American political life over the last three decades. It is the one quality that most distinguishes American conservatives from conservative elites in other countries. [American conservatives are] more likely to question climate science, are more sanguine about people dying for lack of health insurance, and are less xenophobic (which is rather nice). But above all - far above all - they hate taxes.

Taxophobia has spawned an epistemology of its own and has completely reshaped the landscape of American politics. It more than anything else has driven the widely decried rise in partisan conflict. More profoundly, conservative taxophobia has redefined the terms of the political debate.

Cait Lamberton, assistant professor of marketing at the University of Pittsburgh, argues for going beyond taxpayer receipts (which she heartily endorses) to introducing "tax choice." Perhaps by enabling taxpayers to direct their tax payments to selected areas, taxation can be "detoxified":

Progressives have a problem: Voters detest taxes, and Republicans want to give them more tax cuts. Because Democrats believe in using government to promote the public interest, they will never 'out-tax-cut' the right. So how can progressives win over the public when they're always on the wrong side of the question of who'll cut taxes more?

Here's one idea: Promote the concept of tax choice. What exactly is tax choice? Simply put, it is a policy that would permit taxpayers to allocate a percentage of their income taxes to any portion of the discretionary federal budget. In a tax choice program, a taxpayer who wishes to support public education, for example, could send some of her income tax dollars specifically to that part of the budget, while a taxpayer who feels strongly about the military could allocate a portion of his income tax payment accordingly.

I can see a tangle of snakes in that propospition. Even putting aside my belief it's the job of the people's elected representatives to make those decisions and not the vox populi - which makes me an elitist, I know, but I like experts making these decisions - the logistics seem nightmarish.

Yet it's an important idea, since it goes to the heart of the taxophobia phenomenon. Lamberton notes that:

Taxes are compulsory, and Americans hate being told what to do. The discomfort we feel when our freedom is constrained is called pyschological reactance, and it plays a big part in our hatred of taxes. Since tax payments involve zero agency or freedom, people are likely to dislike them even if they pay for goods acknowledged to be valuable. Even worse, reactance can generate negative emotions toward its source. In the context of taxes, reactance creates antipathy toward government, even among individuals who otherwise benefit from it.

"Tax choice" might indeed help. Tax receipts unquestionably would. I wish we had them here. We also should know what we're paying for, and be drawn into a higher level of citizenship by being so much better informed.  

 

 

Comments

[Wascally Wabbit]

David. Excellent piece. Most timely. Now - I wish the pundits like Jack Mintz of Stephen Gordon who keep popping up with their prognostications on individual policies - would do something like this for the complete Canadian Economic pie - and how differently it will look if each of the major parties had carte blanche to implement their policies. I'm sure the election campaign would get away from how Mr. Harper treated Helena Guergis and other distractions