Monday, April 23, 2012

Taxes and the collective action problem

I'm not sure I've made this point here. I know I've made it somewhere before, probably during my days on message boards. But I figured this post by Will Wilkinson was a good reason to make the point, or let him make it sufficiently:

My friend Matt Zwolinski, a professor of philosophy at University of San Diego, wonders why folks who think taxes ought to be higher, like Warren Buffett, don't just go ahead and pay more in taxes.
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Anyway, this could be any question about the rationality of complying with a rule that (1) you support, but (2) will only have its desired effect if general compliance with the rule is high, and (3) you suspect general compliance will not be high. Suppose I'm a utilitarian convinced that human consumption of meat causes a huge amount of animal suffering. And suppose I love meat, and giving it up would leave me worse off. I would happily comply with a no-meat-eating rule if I thought others would likewise comply. But in the absence of a mechanism (whether internal/moral or external/political) to enforce compliance, I rationally believe that my compliance with the no-meating-eating rule will have zero effect on market demand for meat. And suppose I rationally believe my heeding the rule will only make me worse off while making no animals better off. In that case it is perfectly rational to continue to eat meat even if I believe that it would be immoral to eat meat under conditions of general compliance with utility-maximizing rules. I think Matt's voluntary taxpayer case is exactly analogous.

Put simply, even Warren Buffett doesn't have enough money to where he could just write a check to the gov't and clear our deficit. Even if he did it would leave him without much money left. And even if I were a deficit hawk I wouldn't expect him or any other insanely wealthy person to give it all up to solve the problem.

So what Buffett wants is for all insanely rich people to contribute because combined, they do have enough money to significantly reduce the deficit and they can afford to give a lot more money and still have a ton of money left over. There are probably enough people in the middle of the income brackets that we could raise taxes on everyone and make a similar dent in the deficit. But those people have less money and unlike the small % of insanely rich people, their loss would probably affect the economy since they would have to cut back on spending to make up for the loss. That's why you don't hear Obama and other liberals calling for tax increases on anyone but the rich. That and it's a bad idea politically.

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