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Bill Harrison

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How can we re-frame tax policy to make people happier about paying taxes and/or spending pro-socially?

We already require people to pay taxes, both for their own good and for the good of society as a whole. Michael Norton's talk, everyday experience, and our tribal evolutionary history suggest that pro-social spending makes us happier. Yet, many people hate paying taxes, possibly (as per Rory Sutherland's talk) because of the way tax policy is perceived or structured, or because they hate the lack of control as to where their money goes.

If you think social policies should be structured in such a way as to give the greatest happiness to the greatest number of people, then is there a way to structure tax policy in such a way to make people happier about paying taxes and/or spending pro-socially?

For example, maybe allowing (or requiring) people to pay some percentage of their taxes (beyond what they pay to the general fund) on some pre-approved set of necessary social programs, but allowing people to choose which ones, could be a policy that would promote pro-social behavior, and thereby produce happier and tighter-knit communities, nations, etc.

Such a policy would, in fact, be less restrictive than either taxation or education, both of which we already require. We don't allow selfish behavior (not paying taxes, remaining ignorant) in either of those cases, because we understand that pro-social laws and policies are necessary for society to function at all.

Policies like this are particularly necessary right now in the US, for example, where the country is extremely divided politically. This could also get the Mitt Romneys of the world to gain an appreciation of the interdependence that allows them to become and remain wealthy.

So, given that pro-social spending makes people happy (a la Michael Norton's talk) and given that re-framing where money goes can make people happier about paying money (as per Rory Sutherland's talk), how would you structure taxes so that people would be happier about paying them?

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  • Apr 26 2012: The social good? Are we talking about strengthening or weakening the human spirit?

    How is it good for society to expand on a sector that is dependent upon government subsidies and private charity?

    How does denying an individual or company the opportunity to fail and learn a valuable lesson become good for society?

    All you are talking about is Industrializing Compassion. What happens when something is industrialized? Isn't someone getting exploited?

    Anyway, the path you are on will only lead to fewer producers and more dependents. Before you expend more energy in this direction try studying human nature. Human nature will dictate the consequences of the "pro-social" avenue you are on.

    Good luck on your journey.
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      Apr 26 2012: So let me get this straight. Suppose the first 10 dollars of your income taxes were refunded to you every year, on the condition that you had to spend it pro-socially, on someone other than you. Hell, it might even just be a "suggestion" that you can opt out of and not a "requirement" (if you've read Nudge by Richard Thaler and Cass Sunstein, then you could call it libertarian paternalism, since the default option is the healthy one.)

      As per this talk, it wouldn't matter how people spent pro-socially, just that they did so, and they would be better off for it. And this would tend to make people happier, on average, and possibly give them a sense of how interdependent people are. And because they could choose where the money would go, it's hard to see how one particular "sector" would expand. Industrialization, in my mind, implies standardization, and this would be anything but that.

      So, I'm not entirely sure what you're talking about with "expand on a sector that is dependent upon government subsidies and private charity," but (back to the question) do you really think a policy like this would increase the number of "dependents" relative to "producers"? If you're talking about a "sector" of "dependent people" I think this is an insane and broad brush to paint with - we're all interdependent. You probably don't grow all your own food or make all your own clothing or produce all your own electricity - we all live off of the (legal, technological, educational, scientific, etc.) infrastructure created by people who came before us, as well as the labor of others. We're all interdependent.

      For the record, I reject the Ayn Rand framework entirely - here is an article by Nobel economist Joseph Stiglitz on rising income inequality in the face of growing productivity of the average American:
      http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

      What you produce is not at all the same as what you take - they are very distinct activities.
      • Apr 26 2012: I will agree with you that it is good when people DIRECTLY help each other. However, when a system is designed for people to help their fellow man INDIRECTLY the seeds of corruption are layed.

        We are all interdependent. Yet, to facillitate the means by which people are able to be involved in the marketplace only gives way to more corruption and "exploitation". When an individual does not earn their own money they then do not treat that money the same way. Easy come, easy go. Giving people money only makes them more easily used to enrichen the wealthy.

        The reason for the convolution of the modern day is because the rich and powerful through legislation are getting competitive advantages and gaining access to new customers; example, the world markets.

        I have never read Ayn Rand, though I have wanted to. Nevertheless, I have seen the damage social programs have done to individuals and areas where they are reliant upon those social programs. They are void of ambition and imagination to create their own world. They wait for the next check to continue their monthly existence and are unhappy with the world around them. All the while they are looking for someone to blame for their meager existence.

        What you produce is not at all the same as what you take - they are very distinct activities.

        I do understand where you are coming from. People have to have the best of everything and consume more than they produce. They drive diesel pickups when they do not need them. They eat till they are so fat they can't move. And the list goes. Where we differ is why this is this way.

        Prosperity is a double edged sword. When individuals do not have the developed character to withstand the temptations of a prosperous economy they will be eaten up by it. Just because we want something does not mean we should be given what we want.
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          Apr 26 2012: i would not recommend rand. her theses are loaded with not so smart ideas hidden among the good ones.

          murray rothbard would be a more clean source, but i most recommend henry hazlitt, and his famous "economics in one lesson"
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          Apr 26 2012: Rand is brilliant, just imperfect, but her work is so powerful and she goes 99% of the way to the right answer that I can overlook the 1% of inconsistencies. Murray Rothbard eliminated the inconsistencies but as he did not write dramatic fiction and did not go into personal philosophy as much, I'd only recommend him to someone who wanted to get the finer details right.

          Ayn Rand essentially demonstrated that you don't need a government, that it is the purest manifestation of evil. However, instead of going all the way with this idea, she instead stopped at monarchism - the idea of a very, very small government, which is a big mistake I beleive. Also, she overlooked the emotional side of things - she was correct in matters of the ego and not letting your emotions blindly dictate your actions, but she did not express the kind of complete portrayal of a happy human being that a philosopher should.

          Another great philosopher is Stephan Molyneux: he combines rational philosophy, Austrian economics and modern psychology into an intellectually consistent framework. Here is his best video:

          http://www.youtube.com/watch?v=P772Eb63qIY
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          Apr 26 2012: i would say, for the open minded, who are curious, rand mght be good as an eye opener. but for those who intend to nitpick, or dismiss an idea if they spot any problems, rand can have the opposite effect.

          for example. rand idolizes entrepreneurs. while in reality, we have to "worship" entrepreneur function, but not any specific entrepreneur. we all know that businessmen are far far from being the nice guys. they are the ones who happily stand in queues at senators' offices with large bags of money, and they never complain about it. they are the ones who put poisons in our food if they can, and they are the bernie madoffs and other bigtime bandits who happily steal what they can lay a hand on. corporate figures are not the good guys. they are not the heroes. most of them are just opportunists, as everyone else.

          capitalism is not good because it makes such figures the leaders. capitalism is good exactly because it keeps such figures in check way better than the state can.

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