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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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  • May 13 2012: Just to set things straight. Taxation is theft plain and simple. Libertarians care about poor/disadvantaged, etc. people more than anyone else, because the free market (whether businesses, charities, churches, nonprofits, etc.) is the most effective method of solving these issues. This is abundantly clear if you study the works of the Austrian School that Sutherland refers to.

    Decentralization allows money to be spent more effectively, especially regarding local problems, as they don't face the economic calculation problem Your view that a libertarian world would not punish polluting corporations, the Madoffs of the world, etc. is misguided. In such a society, these wrongdoers would be punished according to tort and trespass law and fraud. The reason these bad things happen is due to corporatism and regulatory capture--i.e. corruption. Government is flawed from the beginning.

    You also take a naive view that simply because technologies like the Internet and benefits like education, roads, etc. are funded by taxpayers, that they couldn't be provided by a free market. This is a gross logical leap. If government spending and taxes didn't crowd out private organizations, then of course they would provide them--especially if these goods and services are in high demand. Similarly we could all engage in "pro-social" behavior without staring down the barrel of a gun.

    I encourage everyone to visit Mises.org. It has tons of great information and will teach you real economics.
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      May 14 2012: Well, you could take the Austrian school and "the free market" as the be all end all of economic discussion.

      Here are some alternative views:
      http://www.nytimes.com/2011/09/18/business/darwin-the-market-whiz.html?pagewanted=all
      http://www.nytimes.com/2012/05/13/opinion/sunday/fables-of-wealth.html

      The slogans (it would be a charity to call them real ideas) that taxation is theft and "the free market" can solve all problems are bizarre and hollow. The discipline of economics is undergoing a sea change at the moment, but it's more in the direction of Robert Frank, Daniel Kahneman, and William Deriesiewicz than the anti-government propaganda from Mises.org.

      To be fair, I believe markets are a powerful policy tool that can create good outcomes in a wide variety of cases. But there is a large role for government as well, when markets fail, as they often do.
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        May 14 2012: do i decipher it right that you believe that austrian economics is not more than the two slogans "taxation is theft" and "free market solves all"? and you find that shallow?

        austrian economics is a life-long work, tens of thousands of written pages, of many individuals. starting with karl menger, through böhm-bawerk, von mises, rothbard and hayek, a thorough and sophisticated economic theory was built and explained in many books. since then, literally hundreds of books are available, ranging from the introductory materials to detailed analysis of specific subjects like the history of governments or banking, anti-trust laws, education or the business cycle.

        i spent 9 month of my time studying this theory, and i've learned to respect those, who have or had 100 times the knowledge i have. from all of this vast library of knowledge, you managed to extract two tiny chips of conclusions, and you complain about shallowness? that is bold.
      • May 16 2012: It is absurd to call it "anti-government propaganda". As absurd as democrats and republicans (US terms) calling each other anti-government people. Please learn the difference between Anarchy and Libertarianism.

        As for "bizarre and hollow", anything will sound bizarre and hollow if you have not made the effort to learn about it. The bill of rights sounds bizarre and hollow to tribals with strict social hierarchies.

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