Tuesday, October 5, 2010

Why don't Americans receive an itemized tax receipt?

Is that all you get for your money?

Oct 1st 2010, 20:13 by M.S.

EVERYONE'S talking about Third Way's idea for a taxpayer receipt. (Ezra Klein, Annie Lowrey, Joshua Marshall, Andrew Sullivan, for starters.) So I'll talk about it too. Like everybody else, I like it. What's not to like?

Taxpayer receipt

Two complicating factors are raised. Megan McArdle writes that this is a great idea, but most of the liberal folks who are championing it may be unpleasantly surprised to find out which of the big-ticket items end up raising voters' ire: "[I]sn't it possible that the widespread support for programs like Social Security and Medicare rests on the fact that most people don't realize just how big a portion of your paycheck those programs consume?" Maybe. But the three items that voters already do see broken out separately on their taxes are Social Security, Medicare and Medicaid, since they're paid separately as FICA. Setting up the list this way might change things a bit, but then again it might not.

Kevin Drum meanwhile wonders whether either of the parties would support this shift.

Would liberals be afraid that people might look at the welfare-related spending and be outraged? Would conservatives be afraid that people might look at the startlingly low numbers for everything after the Big Five (Social Security, Medicare, Medicaid, Defense, interest on the debt) and lose some of their outrage over federal spending? Technical details aside, this is the kind of idea that everyone should support. Taxpayers should know where their tax dollars are going, after all. And yet, I'll bet that neither party would actually be in favor of this. Why do you suppose that is?

I'm sure Mr Drum meant this as a rhetorical question, but I'm too dumb to immediately get the rhetorical answer, so I had to think about why this might be the case. If it is the case, I can think of two explanations. One is that there's uncertainty about which side the change would benefit: Democrats think it would benefit Republicans, while Republicans think it would benefit Democrats. One of the two propositions is in fact correct, but either one party is simply guessing the odds wrong, or both parties are too risk-averse to find a zone there where they're comfortable placing a bet.

The second possibility is that the parties aren't risk-averse here; they actually place a positive value on denying the voters independent accurate information about how the government spends its money. Why might that be? It might be because political parties compete for power by shaping voters' political opinions to their own electoral benefit, and they have more power to shape opinions when the voters aren't getting this sort of information from neutral sources. They might oppose this kind of tax receipt because it diminishes their ability to act as informational gatekeepers between voters and government. It's a theory, anyway. But given that politicians routinely submit their bills to the nonpartisan and fairly rigorous CBO for analysis, I'm not really sure how accurate this theory is; I'm probably overblowing it.

source: theEconomist

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