'Tax Me More Fund' raises little revenue - - The Washington Times, America's Newspaper

The Washington Times on the fate of Virginia's "Tax me more" fund:

RICHMOND — State lawmakers can rule out Virginian's offering up more of their hard-earned money to fix the $1.4 billion budget shortfall Gov. Tim Kaine announced this week.

At least that is what a peek at the so-called "Tax Me More Fund" suggests.

Since its inception in 2002, the fund has collected a total of $10,217.04.

This is what economists call "revealed preference". What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we'd give the money to charity.

Comments

I think that's a real oversimplification of human nature. Polls show that a majority of people in the US now don't want to extend the recent tax cuts. Is your theory that they're lying because they don't voluntarily send more money at tax time? Why would they lie about a desire for a forced tax increase?

Posted by NutellaonToast | February 15, 2008 4:18 PM

MM:"What most of us are really in favor of is higher taxes on other people."

NoT" :Polls show that a majority of people in the US now don't want to extend the recent tax cuts. "

Obviously, it is a case that people are willing to pay some price to get what they want.

Posted by Njorl | February 15, 2008 4:28 PM

It is pretty convincing evidence of the unpopularity of taxes. One year, the Virginia fund collected a whole 19 dollars.

Posted by Yancey Ward | February 15, 2008 4:36 PM

What are we doing, compiling a list of obvious things that people mistakenly think are insightful? Okay, I'll add a few:

-Not all intellectual works exist solely to make a profit. Oh, like this one.
-Evolution is a theory.
-Some activities have negative externalities that their partakers don't incorporate into the decision to do it, or pay for such externalities.
-In some cases, raising taxes won't raise revenues gained from that tax.
-That might not apply to any cases in America.

Come on guys, let's make a long list!

Posted by Person | February 15, 2008 4:48 PM

Almost nobody wants higher taxes. Many people are willing to tolerate them for what they provide (services, paying existing debt, old-age pensions etc). Whether or not that constitutes advocating higher taxes per se is open to debate.

But that's not what this article discusses. Pragmatically, there are several good reasons for not contributing to this fund, even if you fall into the latter camp described above. First whatever contribution you make is a drop in the bucket compared to the cost of running the various VA agencies. So why bother? Second, there's the free rider problem. Why should I alone contribute and reduce everyone else's tax load, albeit trivially? Third, why not buy a state bond instead? For the same outlay, I reduce the debt load of the state, marginally reduce its interest rate, and get money in the future.

I'd wouldn't mind paying more to the IRS if I thought the money was being spent somewhat sanely AND if I knew everyone else was sharing the burden. In the meantime, I'll get a treasure note.

Posted by Matt B | February 15, 2008 4:54 PM

Polls show that a majority of people in the US now don't want to extend the recent tax cuts.

- NutellaonToast

How were these poll questions phrased, specifically?

My guess is that a majority of people are in favor of rescinding tax cuts for "the rich", but also in favor of instituting "targeted" cuts for "working families" or "the middle class" (i.e. themselves) once Bush's tax rates expire.

That's just my guess, you could prove me wrong by linking to some of the polls you refer to.

Posted by Rob Leder | February 15, 2008 4:59 PM

This is just silly. I am happy to pay more taxes for good purposes PROVIDED EVERYBODY ELSE IS CONTRIBUTING, TOO. That's what distinguishes "taxes" from "charitable donations."

Try opening the vault at the local bank and telling people, "You can help yourself to the money with no repercussions." Quite a few people will take some money, I am sure. Does that prove that "people really don't believe there should be laws against theft"?

Posted by Karl Weber | February 15, 2008 5:06 PM

Many people believe that they are in the "middle class" and that the Bush Tax Cuts help the "wealthy." So they don't think that the tax cuts benefit them.

Keep in mind that many people are irrational. Also keep in mind that Democrats and the press have been accusing Bush of passing tax cuts for the wealthy.

Also, there is some evidence that people are willing to suffer some to "get" other people who they think deserve it. In other words, they might be willing to pay a tax they don't like to make sure some "rich guy" pays his "fair share."

Posted by Earnest Iconoclast | February 15, 2008 5:30 PM

Matt B: there's the free rider problem

Isn't this blindingly obvious to everyone? It isn't "If we wanted higher taxes on ourselves, we'd give the money to charity", it's that we don't want to pay more while someone else either just like us or with more money than us pays less. The system relies on a perception of fairness.

Give everyone a personal debt account (the flipside of the personal SSA account) and tell people if they pay it off, their personal, annual tax burden will be reduced thereafter, and it might happen. As it stands, I "donate" a dollar today, I still have to pay a dollar tomorrow, and I'm allowing everyone else to avoid paying their part of that dollar.

Posted by zaleriana | February 15, 2008 6:14 PM

Rob,

I can't remember where I read about this but I think you're actually right about it. I think the polls stated that people were in favor of redacting the tax cuts primarily on the upper class. I vaguely remember them also stating they wouldn't mind higher taxes (to a lesser degree) on the middle classes but I could be making that up.

Posted by NutellaonToast | February 15, 2008 6:24 PM

The only honest way to conduct a poll about taxation is to show the proposed tax schedules and ask if the respondent likes them better than what's out there right now. The catch is that such a poll will be very much biased in favor of IQs above that of a box of rocks.

Posted by ...Max... | February 15, 2008 7:57 PM

That comment makes no sense.

But I thought I might introduce yet another confounding notion: Not only do those making a voluntary contribution making a very small dent, they don't even get a say in what their contributions are spent on.

I would like to see some studies as to how people would like to see their tax dollars allocated and check them against what the percentages of allocations for various programs, services, etc. really are.[1]

My guess is at the median income level, what you want is most definitely what you do not get.

[1]Discretionary spending, of course; you can't 'decide' to lower or stop payments on the servicing the federal debt, for example.

Posted by ScentOfViolets | February 15, 2008 8:50 PM

I fail to see how "I choose not to donate my money to the state of Virginia" is an example of revealed preference.

Posted by Gene | February 15, 2008 9:46 PM

Gene,

Oh, maybe it reveals the preference for not sending money to the state of Virginia.

I could be mistaken, however.

Posted by Yancey Ward | February 15, 2008 10:48 PM

There's been a "Gifts to the United States" fund since the 1840s. Gets three or four million a year (I did investigate it for an article once, can't remember the exact figure).
The UK has an equivalent. Last time I checked it had 6 donors that year, five of whom were dead (ie legacies).
Revealed preference indeed.

Posted by Tim Worstall | February 16, 2008 7:38 AM

There's been a "Gifts to the United States" fund since the 1840s. Gets three or four million a year (I did investigate it for an article once, can't remember the exact figure).
The UK has an equivalent. Last time I checked it had 6 donors that year, five of whom were dead (ie legacies).
Revealed preference indeed.

Posted by Tim Worstall | February 16, 2008 7:39 AM

I think the failure of people to contribute to these "tax me more" funds refutes one particular argument we hear about the need for higher taxes. It's the claim by some (wealthy) people that they "aren't taxed enough." Those people very definitely should put their money where their mouth is, and their failure to do so reveals a basic lack of sincerity.

However, the same can't be said of those who favor higher taxes, not because they don't pay their "fair share," but because they deem overall tax revenues insufficient in relation to spending priorities. For these people, making voluntary contributions doesn't accomplish anything. By contrast, for those wealthy folks who claim they're not taxed enough, making the voluntary contributions should completely assuage their guilt.

Posted by BD | February 16, 2008 8:57 AM

This is just silly. I am happy to pay more taxes for good purposes PROVIDED EVERYBODY ELSE IS CONTRIBUTING, TOO.

Karl, may I presume that you would be happy to give money to a beggar – only if everyone else already had? That you would rescue someone from death, if someone else was prepared to save him, but would otherwise leave him to it? That you would volunteer to fight for your country, if the draft notices had already been sent out?

That you will make a sacrifice, only to stay with the herd?

Try opening the vault at the local bank and telling people, "You can help yourself to the money with no repercussions." Quite a few people will take some money, I am sure. Does that prove that "people really don't believe there should be laws against theft"?

If everyone stole, it would be pretty good evidence that no one saw anything wrong with stealing themselves. That they objected to theft only when there was some danger they would be victims of it themselves.

Why would they lie about a desire for a forced tax increase?

NutellaonToast, because that way they could demonstrate their own virtue to themselves without having to pay a penny. After all, no single person answering that question will noticeably affect the chances of a tax increase being passed.

Then they come up with reasons why they themselves should not give more money now.

Posted by ad | February 16, 2008 10:38 AM

This argument has always been transparent bunk, and it's depressing (but not surprising) to see glibertarians, along with the Moon Times and apparently some smart alecks in the Virginia legislature pretending otherwise.

Look, what is the expected outcome of contributing $1 to a voluntary fund such as this, versus 1,000 people contributing $1 via a tax rule? Is it irrational for anyone to prefer the latter? What if the choice is contributing $10 voluntarily versus a $1 tax? or $1,000 vs. $1 tax? It is perfectly reasonable to prefer the tax, and says nothing whatsoever about "revealed preferences" against taxes, as Megan snidely implies. It's called having a rational, adult understanding of how things work.

Flip it around: If proponents of a $1/per person tax cut could instead choose to get a $10 individual rebate (only to them), which would they choose? Or a $1,000 rebate? Do you have to even guess the answer? Is that a "revealed preference" against across-the-board tax cuts?

How about all those war supporters who didn't volunteer to be sent to Iraq? Heck, anyone who wasn't willing to buy their own helicopter and have themselves dropped into the middle of Baghdad in their pajamas must have shown a "revealed preference" against invasion, right? Sheesh.

Posted by W.D. | February 16, 2008 12:30 PM

Megan says: "What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we'd give the money to charity."

That accounts for only one possible explanation. The other explanation for why people prefer taxes to charity is that even those who would like to be very generous with their own money are unwilling to be taken advantage of by free riders. In other words, I'd gladly contribute another 10% of my income to better national security, medical care, education, and so on -- but only if my fellow-citizens chip in too. Otherwise, they just get to free ride on the fact that I'm subsidizing something they want (a strong nation, well educated populace, social justice, etc.)

Posted by dcuser | February 16, 2008 12:59 PM

The argument made in this post is patently invalid and would not pass muster as the content of an undergrad econ. paper. Of course it does not follow from the fact that people don't want to give to this fund that they don't favor paying taxes. In the same way, it doesn't follow from the fact that a person hates apples that she hates oranges. Paying taxes and giving to this fund are--what's the phrase--different things.

Some of these differences, which have already been noted by commenters here, make it obvious why we cannot conclude anything about taxes from a "revealed preference" about the fund in question. Crucial to a democratic conception of government is that is is a cooperative enterprise. That means, among other things, that whatever the extent to which resources are needed to keep the government functioning, the burden upon citizens should be distributed equitably. Funds like this one ignore this idea; they thus entirely overlook a core principle of the democratic conception of how to pay for government. The fact that people don't give to these funds tells us nothing about their view of taxes; indeed, it tells us nothing about their willingness to give to charities, properly so construed. (The government is not a legitimate object of charity.)

I'm not sure if it's more charitable to regard Megan as actually believing the argument that she gives here is a good one, or to regard her as happy to offer any propaganda, however frivolous, in favor of her worldview.

Posted by Jason | February 16, 2008 2:07 PM

NoT" :Polls show that a majority of people in the US now don't want to extend the recent tax cuts. "
Obviously, it is a case that people are willing to pay some price to get what they want.
I would say the polls reflect how the question was phrased. Take a look at the following tables:

Taxes in 1999:
• Single making $30,000; tax, $8,400
• Single making $50,000; tax, $14,000
• Single making $75,000; tax, $23,250
• Married making $60,000; tax, $16,800
• Married making $75,000; tax, $21,000
• Married making $125,000; tax $38,750

Taxes in 2008
• Single making $30,000; tax $4,500
• Single making $50,000; tax, $12,500
• Single making $75,000; tax, $18,750
• Married making $60,000; tax, $9,000
• Married making $75,000; tax, $18,750
• Married making $125,000; tax, $31,250

You can check for yourself at www.taxfoundation.org/publications/show/151.html.

If the IRS were to send each tax payer a question that more or less stated you paid $18,750 (Or the amount paid by each tax payer.) in taxes last year on $75,000 income (Or their exact income); do you favor paying $21,000 (or whatever the new larger tax bill would be) in taxes next year? Do you believe the majority of tax payers would say, “Sure Uncle Sam I really want to pay more taxes!?”

Better yet how about the five million that no longer paying income taxes; I bet they are just dying to start paying taxes again.

If you believe that poll would mirror the results of the poll you are taking as gospel then I have a great deal for you. I am willing to sell you my interest in some great land in the Atchafalaya Basin for only…..

Posted by macquechoux | February 16, 2008 2:51 PM

Can anyone--let alone a self described "econoblogger"--have this poor of an understanding of the collective action problem?

Posted by djw | February 16, 2008 2:52 PM

This is fun.

The fact that few people are willing to personally kill death row inmates is a revealed preference.

The fact that few people are willing to make their own butter is a revealed preference.

The fact that few people are willing to fight in Iraq is a revealed preference.

The fact that few people are willing to save for retirement is a revealed preference.

I could go on all day.

Posted by F | February 16, 2008 3:53 PM

ad - If everyone stole, it would be pretty good evidence that no one saw anything wrong with stealing themselves. That they objected to theft only when there was some danger they would be victims of it themselves.

I nominate you for best comment this year.

Posted by Glaivester | February 16, 2008 6:13 PM

F, the thing being, they are revealed preferences. They may not be revealing in exactly the manner you think they are, but they are nonetheless revealing.

For instance, that most people don't save for retirement doesn't reveal that they don't value saving for retirement. It's that they discount the future relative to the present and thus value the new bigscreen now more than the nice vacation 30 years from now.

A basic rule of thumb, if you want to know how much someone actually values something, find out how much they'll willingly pay for it.

Posted by Jody | February 16, 2008 7:05 PM

And that's the only possible reason? It couldn't be that being able to save only, say, $10/month for retirement means that saving for retirement nets you only six extra months of income, but you can spend that $10 on cigarettes right now? Or that they expect someone else to take care of their retirement? And so on and so forth.

As for your 'rule of thumb' (which sounds like it comes out of some bad libertarian sf, doubtless as the Received Wisdom of one of the protagonists), someone could easily value an item, a service, an act very highly, and yet have that value be utterly beyond what they are able to pay.

I'll match it with _my_ rule of thumb which says that if you want to conclude A on the basis of B not being picked, you better make sure, very sure, that A is the only possible alternative to B.

The libertarians here are committing the analogous mathematical fallacy of saying that since all primes greater than two are odd, if a number is greater than two and odd, it must be prime.

Sounds rather silly when you put it this way, doesn't it?

Posted by ScentOfViolets | February 16, 2008 9:14 PM

SoV,

I don't recall him saying how much they are able to pay. I recall him saying how much they are willing to pay.

Hence we have plenty of people who go into bankruptcy to pay for all sorts of things from medical expenses to cars, tvs, and houses.

Their ability to pay was not there. But their willingness to pay clearly was.

Actually, you could make an argument they had the ability, based on the unprecedented amount of credit available to most people in the US. They just weren't able to pay their debts afterwards...

Posted by sam | February 16, 2008 11:36 PM

There are a lot of mental gymnastics going on here to try to show that people really want to give more of their money to the government.

Look, the Virginia example shows very clearly that people won't voluntarily give more money to the state of Virginia. This is a revealed preference.

The argument about the lack of collective action in the special funds really doesn't hold any water either. People claim highly specialized tax deductions and credits all the time even though they are not universal, nor is it obligatory to claim them. This is also a revealed preference for not giving one's money to the government.

As for many of the "silly" examples that some have provided, most of them really do reveal preferences, though not always the ones that are being claimed. To give one example, someone above tried to say that not signing up and going to Iraq shows one has a revealed preference against the invasion. No, it reveals a preference for not personally fighting in the War in Iraq. Someone can both support the invasion and not want to do the fighting themselves.

Posted by Yancey Ward | February 16, 2008 11:38 PM

I don't recall him saying how much they are able to pay. I recall him saying how much they are willing to pay.

And how do you determine this? By simply asking?
You could, I suppose, ask a man dying of cancer how much he would be willing to pay to be cured of it, and if he said a million billion dollars . . . and not one penny more, I guess that's what we'd have to accept it. According to you at least. Iow, throwing out any old number is not the same as actually making a measurment.

Hence we have plenty of people who go into bankruptcy to pay for all sorts of things from medical expenses to cars, tvs, and houses.

Their ability to pay was not there. But their willingness to pay clearly was.

That's odd, because then you say:

Actually, you could make an argument they had the ability, based on the unprecedented amount of credit available to most people in the US. They just weren't able to pay their debts afterwards...

I would hazard a guess and say that frequently people don't really know how valuable something is to them, but act as if it has some specific value anyway. In my personal experience, at least; people may behave differently where you're from.

Posted by ScentOfViolets | February 17, 2008 12:21 AM

Look, the Virginia example shows very clearly that people won't voluntarily give more money to the state of Virginia. This is a revealed preference.

Granted. It is just not a revealed preference against paying taxes, raising taxes, or anything to do with taxes. This whole discussion rests on a big category mistake.

Posted by W.D. | February 17, 2008 7:06 AM

There are two things about taxes that bug me.

One: when you raise taxes you collect less money over the long term and your expenses increase faster.

Two: when you raise taxes the total number of people with jobs decreases, the same thing happens every time you raise the minimum wage.

So every time you hear the call for a tax increase ask "Why do you want to destroy jobs?"

Higher Taxes Destroys Jobs -- proposed bumper sticker.

Both points are counter-intuitive but have been proven over the long term.

Posted by Jeff | February 17, 2008 8:25 AM

If Socialist believe taxing people to death is a worthly civic duty to help save the poor why then do their fellow billionaires continue to hide all their wealth behind trust funds which are designed to protect Socialists from taxation?

I mean without the Tides Foundation how could Teresa Kerry appear like she cares about the poor.

I admire wealth I just don't appreciate the Socialist who uses their money, power and influence to make me poor.

Posted by syn | February 17, 2008 8:30 AM

If I contribute $1000 along with everyone else toward a new bridge, then from my point of view I just got a new bridge for $1000. If I chip in $1000 just by myself I don't get any value from it since it's not enough to pay for a bridge.

Taxes are a force multiplier.

People would also likely give more to charity if they knew that every other taxpayer would be matching it.

Posted by Scott | February 17, 2008 9:25 AM

NO, NO, NO!!! DON'T TAKE AWAY MY PREFERRED METHOD FOR DEMONSTRATING MY OWN COMPASSION AND MORAL SUPERIORITY!!! IF I CAN'T ADVOCATE HIGHER TAXES, HOW WILL EVERYONE ELSE IN THE FACULTY LOUNGE KNOW WHAT A WONDERFUL PERSON I AM? SHUT UP, FASCISTS!!!!

Posted by UCSDProfessor | February 17, 2008 9:49 AM

"This argument has always been transparent bunk, and it's depressing (but not surprising) to see glibertarians, along with the Moon Times and apparently some smart alecks in the Virginia legislature pretending otherwise."

Did anyone keep reading after that sentence? Sheesh.

Posted by Spartee | February 17, 2008 10:02 AM

Two: when you raise taxes the total number of people with jobs decreases, the same thing happens every time you raise the minimum wage.

You mean like when Clinton increased taxes(The Largest Tax Increase In History! yelps Cato[1]) and we went over the cliff into a deep and prolonged recession?

This is the problem with ideologues and ideology - any sort of facts just don't matter.

[1]This was the time period when I completely lost respect for that organization. Several - many - 'respected intellectuals' publicly said they would stake their reputations on the certainty of a recession should the tax increase pass. Well, the tax increase made it into law, there was no recession . . . and all those worthies blatting about their sacred reputations turned right around and went into spin mode, claiming that the present economic prosperity was all due to Reagan. Not a shred of integrity among the whole lot.

Posted by ScentOfViolets | February 17, 2008 10:03 AM

when you raise taxes you collect less money over the long term

This is just utterly false. You will not be able to find me one economist, not even one lone Chicago Boy who will assent to this insanity.

Posted by DivGuy | February 17, 2008 10:20 AM

"You mean like when Clinton increased taxes(The Largest Tax Increase In History! yelps Cato[1]) and we went over the cliff into a deep and prolonged recession?"

You can't view the economy of the 1990's without considering the internet boom that went bust in 2000.

Millions of jobs were created building stuff and offering services for the predicted 8 Gazillion online retailers and other internet fantasies.

It is ridiculous to think that raising taxes could possibly increase jobs, unless one counts the contrived jobs that the gov't gets out of it. Exactly how does raising taxes make demand grow?

Stu Blu

Posted by Stu Blu | February 17, 2008 10:29 AM

Well, we should just raise them to 100%. Then we will get the maximum amount of funding.

Posted by TomT | February 17, 2008 10:30 AM

Well, we should just raise them to 100%. Then we will get the maximum amount of funding.

Posted by TomT | February 17, 2008 10:30 AM

Think about this as you discuss taxation:

The Democrats most responsible for shepherding a future President Obama's "change" legislation (which will undoubtedly call for hefty tax increases to pay for all the "free" goodies) make the old Soviet Politburo look positively youthful: they'll generally range in age from their 60's (e.g., Nancy Pelosi, age 69) to, in Robert Byrd's case, 90. Teddy Kennedy, for another, will be nearly 77.

Many, if not most, of the aforementioned have spent their entire lives as professional state and/or federal legislators. They've literally never held down a private-sector job. Byrd has been in Washington since 1956, Steny Hoyer was first elected to the Maryland state senate in 1966, Ted Kennedy has been around since 1962, and Nancy Pelosi is the new kid on the block--she's only been in the House since 1987.

Are there long-serving Republicans? Yep, Ted Stevens immediately comes to mind. However, my point is that all the platitudes coming from Obama about such things as "change" and "tax fairness" ring hollow when he'll need the blessing and support from a powerful and privileged gerontocracy to bring it all about. Golden Boy could receive a rude awakening when he discovers that the old men (and women) of the Gerontocratic Party aren't going to flutter their eyelashes and swoon every time he whispers sweet nothings into their ears. The Barackster may be further shocked to find that his nominal congressional "allies" have a very different idea of "change" than what he's put forth.

Posted by MarkJ | February 17, 2008 10:30 AM

"You mean like when Clinton increased taxes(The Largest Tax Increase In History! yelps Cato[1]) and we went over the cliff into a deep and prolonged recession?"

You can't view the economy of the 1990's without considering the internet boom that went bust in 2000.

Millions of jobs were created building stuff (e.g., routers) and offering services for the predicted 8 Gazillion online retailers and other internet fantasies, most of which turned out to be sold at 'fire sales' for a couple years or collected unemployment.

It is ridiculous to think that raising taxes could possibly increase jobs, unless one counts the contrived jobs that the gov't gets out of it. Exactly how does raising taxes make demand grow?

Stu Blu

Posted by Stu Blu | February 17, 2008 10:31 AM

Scott, nothing will ever be 100% fair. I give to charity because I believe it will help my fellow man. I do not believe taxes do that. I think entitlements have produced a bunch of dependent and selfish citizens who will not do anything of significance unless it is completely 100% fair.

I learned back in the 90s that the Dems are not for the poor or working man. Look at the tobacco settlement. One of the largest transfer of wealth from the poorest to the richest ever seen in this country. Basially rich white trial lawyers made billions on the backs of the poor and lower middle class. Now there is an injustice and yet I hear nothing from my protectors. Please leave me alone.

As far as the Iraq analogy, some of us do not have the ability to enter the military(physical, educational, and age), but most people have the ability to pay more taxes.

Posted by TomT | February 17, 2008 10:45 AM

W.D.,

Yes, it reveals the preference for keeping one's own money. No one is arguing that it reveals a preference for lower taxes in general, only that if there is a preference for higher taxes, then that preference is for others to pay more. Or don't you ever wonder why politicians of both parties promise tax cuts for their base voters and nothing for the base voters of the other party (and in the case of Democrats, promises of raising the taxes of people more likely to vote Republican)? Politicians play to this revealed preference.

Posted by Yancey Ward | February 17, 2008 10:48 AM

A really interesting experiment would be to offer people a 75% - 99% tax credit for contributions to charity (or perhaps only to specific Government agencies). Then you could see how much extra people were willing to pay for some control over how their money is spent.

Posted by Al | February 17, 2008 11:07 AM

You can't view the economy of the 1990's without considering the internet boom that went bust in 2000.

What was claimed in '93 was that there would be a recession if the Budget Omnibus Reconciliation Act passed. Period. There were no qualifiers. Hmmm, this might be time for a few facts:

http://www.pkarchive.org/column/22300.html

I suppose I could stop right there. You know and I know that if the economy were slumping instead of booming, the same people would triumphantly contrast the Clinton record with Mr. Reagan's and declare the contrast -- surprise! -- a vindication of Reaganomics.

But we don't have to leave this as a mere conjecture. Instead we can be scholarly, and look at the literature -- that is, earlier writings by some of the Reaganite faithful, from the years before it became clear that their problem would be how to explain away the economy's continuing success.

For example, it so happens that in October 1996, little more than three years ago, Mr. Moore and William Niskanen, Cato's chairman, put out a report titled "Supply-side tax cuts and the truth about the Reagan economic record." This report was vehement in insisting that in assessing Mr. Reagan's achievement one must not include any data after 1989, which marks the end of the Reagan era; the years from 1981 to 1989 "provide a convenient and unique laboratory-like testing ground for assessing the success or failure of Reaganomics." And the report went on to argue that the slower growth from 1989 to 1995 demonstrated the superiority of Reaganite policies.

It doesn't get much better than this. If the post-Reagan economy stumbles, the great man's responsibility ends on the day he left office. But if the good times keep rolling, so does Mr. Reagan's legacy. As they say in the scholarly journals: Gotcha!

Or how about "Mr. Republican" (is that moniker associated with him?):

http://query.nytimes.com/gst/fullpage.html?res=9F03E3DE1139F932A05753C1A960958260

Mr. Dole said today's economic figures, which showed that growth of the Gross Domestic Product slowed to 2.2 percent in the third quarter, proved his assertion that President Clinton's claim of an economic recovery was false and that the economy was in fact faltering because of Mr. Clinton's policies, particularly the tax increase of 1993.

''So all this false and empty talk about the so-called Clinton recovery comes to an end,'' Mr. Dole told his audience of mostly students, who filled about half the gym floor at Austin Peay State University in Clarksville. ''It ended today. With today's announcement, take off the mask -- it's not Halloween -- take off the mask! The economy is not good.''

I'm sorry, but at the time, the talk was universally "Tax cuts good, tax increases bad", with all the usual 'scientific' reasons.

Millions of jobs were created building stuff (e.g., routers) and offering services for the predicted 8 Gazillion online retailers and other internet fantasies, most of which turned out to be sold at 'fire sales' for a couple years or collected unemployment.

It is ridiculous to think that raising taxes could possibly increase jobs, unless one counts the contrived jobs that the gov't gets out of it. Exactly how does raising taxes make demand grow?

Yes, I was one of those downsized people. Looking back, I was happy to get out. At the time, development was very much a young man's field, and dominated by young men and the culture of young men. Needless to say, I didn't fit in too well :-)

To address your point, I happen to have a few scenarios that I could call plausible, but that's really not important. In fact, this is one of the aspects of libertarian personality that I find puzzling. It doesn't matter, you see, whether or not there is a known plausible mechanism for 'making demand grow'.

The fact of the matter is that after taxes were increased, growth took off, 'demand grew', etc. That is - let me repeat - an observed fact. And it simply isn't kosher to say this goes against every known theory; the facts must be wrong. No, facts are facts; theories are merely compressed statements of them.

Now, it just so happens that there are good explanations: It depends on what the taxes are being spent on. If you spend money on refurbishing or extending existing infrastructure, say roads and bridges, thousands, perhaps millions of jobs are created. But the effects don't end there, spending money on roads and bridges is good for business - less wear and tear on transport, better gas mileage, etc. This is especially nice if the roads and bridges in question are badly in need of repair; I have in mind certain stretches of I-70 extending across Missouri from St. Louis to Kansas City, or the recently collapsed I-35W bridge in Minneapolis.

But again, we don't have to have any idea about those possible mechanisms, any more than Michaelson and Morley had any idea how to account for the lack of ether drift and the measured constancy of the speed of light. No one back then was making the claim that the measurements were wrong, and those were some very smart people working in a much more demanding field.

Posted by ScentOfViolets | February 17, 2008 11:32 AM

A really interesting experiment would be to offer people a 75% - 99% tax credit for contributions to charity (or perhaps only to specific Government agencies). Then you could see how much extra people were willing to pay for some control over how their money is spent.

Or you could ask people how they wanted their taxes to be spent and see how it matches up with what is actually spent. My guess is that for the median income voter, the match-up is a very poor one.

People after all aren't saying that more money should be going to fund programs they disapprove of, after all. Perhaps in Virginia the voluntarily donated money is going to refurbish a memorial to all those that fell as a result of Yankee perfidy. I would guess that the people most apt to contribute in general would be the least apt to contribute in this specific case.

Posted by ScentOfViolets | February 17, 2008 11:42 AM

This illustrates something that has been proven over and over and over.

Conservatives are more generous with their own money. Witness every study ever done comparing the relative charitable giving of conservatives and liberals -- as I recall, conservatives gave about twice as much on a per person basis.

And if you compare the amount of money that went for people things -- like, say, an orphanage in Kenya -- versus the latest liberal rage -- say, the fund for affirmative action for homosexual penguins, then the contrast is much more stark. Conservatives care much more about people than liberals do.

Liberals, on the other hand, are much more generous with other people's money. They want to confiscate money from others to fund their pet causes. They don't want to give themselves to the starving children because it wouldn't be "fair" if they couldn't make others give -- and not only that, but give much more than they do themselves.

It must give Liberals psychic organisms to think that they are making the conservative Bible Thumpers fund the latest moonbat homosexual penguin passion.

Posted by Narniaman | February 17, 2008 11:51 AM

Narniaman,

I hope you mean "orgasms".

Posted by Yancey Ward | February 17, 2008 12:08 PM

If the issue is that of the free rider, how does that apply to Warren Buffet. I doubt he is worried about free riding, since he seems to be willing to donate billions to the Gates foundation.

But at the same time, he decries taxes as too low. Why shouldn't he have donated that money to the Treasury?

If had done that, I think it would be an excellent example, but instead he sends a signal that "smart money" should avoid being taxed and be used by private corporations.

Posted by Aaron | February 17, 2008 12:33 PM

People would also likely give more to charity if they knew that every other taxpayer would be matching it.

Why? The fewer dollars other people give to the charity, the more it needs yours. If you give money only because other people are giving it, that only demonstrates that you will pay more to fit in than to help others.

If you want to give the government more money to e.g. help the sick, there is no reason to wait until everyone else is forced to give the government more money.

So if you vote to raise taxes to spend more money on the sick, but refuse to give the extra money voluntarily yourself, you are not voting that way out of an altruistic desire to help the sick.

Few people are willing to admit this to themselves, which is why Megans argument causes so much hassle.

No one likes to have his own preferences revealed to himself.

Posted by ad | February 17, 2008 12:34 PM

"The fact of the matter is that after taxes were increased, growth took off, 'demand grew', etc. That is - let me repeat - an observed fact."

Correlation is not causation. The famous example is cases of mental illness rising along with sales of radios, but I suspect tax increases along with the rise of the Internet are not really related.

And if the tax increases will be spent on infrastructure, why not show us a list of projects? In reality, they will mainly be spent on income redistribution programs in various forms. Nothing wrong with that, just be honest.

Posted by Aaron | February 17, 2008 12:42 PM

Sov:

Your arguments are worthy of a response, but I don't have time to do so as I have to go out for several hours.

However, I am curious about your thoughts on the fact that the Democrats were insisting in 1992 that Geo H W Bush's economy was the worst since the Depression and that their candidate had to 'do something' about it.

When Clinton tried to pass an emergency stimulus package, he failed. Yet, the economy went on to become what the NYT called the longest peacetime expansion since WWII (or something like that). I know this doesn't support the argument that his tax increase didn't help, but it appears that his administration had no real idea what was going on in the economy when they demogogued about its strength, or when the proposed the unnecessary stimulus package.

In my mind (and any thoughtful one), the expansion continued in spite of his tax increases, not because of them.

Stu Blu

PS, I will add more later if I see you respond.

Posted by Stu Blu | February 17, 2008 12:58 PM

Did this poll actually ask only people who pay some income taxes or was it geared to the more general population almost half of whom do not pay any income taxes?

If the latter, then I can see that it would be easy to get a majority to endorse rescission of the so-called Bush tax cuts.

How about if we do rescind the tax cuts that we also make sure that all segments of the population (including those in the lower half of the income spectrum) pay 'some' income tax?

Posted by Robert Thompson | February 17, 2008 1:34 PM

Quite honestly, I think the number of things that the government can do better than private business or charities is small. So if I think that there are people in my community who need affordable housing, I'll give time, labor, or money to, say Habitat for Humanity rather than HUD which doesn't want my time or labor anyway, but just the cash. There was a while I didn't find any church in my area I liked or agreed with, so every now and again I'd get a cashier's check made out to some charity or other (note: if you choose to do this, do your research first - there's several out there who talk a good game but don't actually do much). My SO at the time was rather impressed that I actually put my money where my mouth was (and now we're married, so I suppose that says something).
And to the non-shrinking Violet: I think the way our tax dollars are spent is something is of increasing interest to the average blog-reading citizen. Porkbusters, for example, probably only really got any kind of break-through because it combined people on both sides of the political spectrum ready and willing to call both Ds and Rs out on their wasteful ways. The call to force human-readable output on the voting machines in my last state of residence probably failed because the main group agitating for it wasn't in a 'We have to protect our voting from coding errors and possibly a malicious hacker' mode but instead shrilly proclaimed 'The Other Group Wants TO STEAL your votes' which wasn't too believable and automatically alienated the majority of state residents.

Posted by Nony Mouse | February 17, 2008 1:35 PM

Yes, i don't want to give my money to the state of Virginia, either. In fact, I don't want to give my money to the auto dealership, the grocery store, or the restaurant either. However, I am more than willing to exchange my money with these places in exchange for goods and/or services.

Similarly, I am willing to exchange my money with the government in exchange for goods and services too. For a bunch of capitalists, people here sure don't seem to understand how capitalism works.

Posted by F | February 17, 2008 2:46 PM

Megan, are you really that dense? Do you really not appreciate the distinction between wanting everyone, self included, to contribute at a higher rate vs. individually sending a meaningless contribution to a useless fund?

Posted by Alan in SF | February 17, 2008 3:11 PM

And yet, taxation to fund the provision of nonrival goods can be a Pareto improvement over pure private provision of nonrival goods.

Should've gotten an econ degree, McMegan. Then you'd know these things.

Posted by Mr. Noah | February 17, 2008 3:53 PM

We should design our tax return forms to solve this supposed coordination problem. Right after the box for the election fund, we can have a box which increases one's tax rate by a fixed percentage if and only if a majority of other filers agree to do the same. Coordination problem solved! I'm sure the objectors here will agree.

Posted by Thomas | February 17, 2008 4:01 PM

"The fact of the matter is that after taxes were increased, growth took off, 'demand grew', etc. That is - let me repeat - an observed fact."

Correlation is not causation. The famous example is cases of mental illness rising along with sales of radios, but I suspect tax increases along with the rise of the Internet are not really related.

And if the tax increases will be spent on infrastructure, why not show us a list of projects? In reality, they will mainly be spent on income redistribution programs in various forms. Nothing wrong with that, just be honest.

Sigh. Did you read what I was responding to? Surely you must have:

Two: when you raise taxes the total number of people with jobs decreases, the same thing happens every time you raise the minimum wage.

Nowhere have I claimed that raising taxes equates with increased employment or a faster rate of growth for the economy(I have said that there appear to be plausible mechanisms which would explain why this is so in certain cases. This in no way equates to the claim you appear to think I have made, since plausible mechanisms are not the same as actual mechanisms.) I have pointed to the _facts_ which show that the claim that poor economic performance is the result when taxes are raised is _false_. Again, the claim I was responding to, reposted above, is factually _false_.

I would also like to note that the mantra "correlation does not imply causality" seems to be a bit misunderstood; while it is true that correlation does not imply causality, it is most certainly true that lack of causality implies lack of causation. And since lowering taxes has often not had the correlative effect that proponents say they should have had . . .

This is, btw, quite elementary logic.

Posted by ScentOfViolets | February 17, 2008 4:07 PM

F: I would also be delighted to exchange my money with the government for valuable goods and services. Such a scenario would represent a huge improvement over the status quo:

* The transaction would be voluntary, where today it is coerced.

* I would get valuable goods and services from the government, where today I get nothing of the kind.

Posted by BC | February 17, 2008 4:10 PM

I'm sorry, that should read that it is true that if causality implies correlation, then lack of correlation most definitely implies lack of causality.

Posted by ScentOfViolets | February 17, 2008 4:10 PM

In my mind (and any thoughtful one), the expansion continued in spite of his tax increases, not because of them.

Uh-huh. Well, before this conversation can continue, you've got to admit that what various people were saying was just plain wrong. That includes Cato, AEI, Heritage, the illustrious heads of the Republican party who predicted in no uncertain terms that Clinton's tax increases would lead to a recession. It would also be nice if you would condemn those who did not admit they were wrong about this particular, which would include, Cato, AEI, Heritage, the illustrious heads of the Republican party, etc.

And y'know, I really don't like the idea you're trying to push that the only 'thoughtful' opinion is that the expansion happened _despite_ a tax increase.

No, the 'thoughtful' response is "let's see the numbers." Theorizing in the absence of data is most certainly _not_ being thoughtful.

Posted by ScentOfViolets | February 17, 2008 4:23 PM

This article states it incorrectly, if people were really in favor of higher taxes, they would voluntarily give more mone to GOVERNMENT, not charity.

I laugh when I read Warren Buffet say the people are undertaxed. He has billions accumulated during his lifetime and has to decide what to do with his money . . . he won't live forever. Look at what what does, not what he says. He is giving his money to BILL GATES to do good, not the US treasury!!!!! No matter what he says, he know the US government would waste his money. Look at what people do, no be a sucker an look at what they say.

Posted by George | February 17, 2008 4:31 PM

Besides if they cut taxes more money magically comes in, Rudy Giuliani told me so.

Posted by AJ | February 17, 2008 5:05 PM

The Bush Tax Increases should be allowed to proceed as scheduled, regardless of whatever cockamamie nonsense they cooked up in Virginia.

If Democrats must have a tax cut of their own, they should increase the standard deduction and nothing more.

Posted by Aatos | February 17, 2008 5:28 PM

Because Lord knows we're not taxed enough.

Posted by BC | February 17, 2008 5:39 PM

Exactly how does raising taxes make demand grow?

Government raises taxes. Government takes excess revenue and subsidizes electronics manufacture, builds roads, and makes other infrastructure improvements that benefit business. Business increases. Business hires.

That wasn't too hard now was it?

Posted by Daddy Love | February 17, 2008 5:55 PM

small point: They've literally never held down a private-sector job. . . Steny Hoyer was first elected to the Maryland state senate in 1966

Maryland State Senate, especially in those days, is part-time job. Hoyer practiced law until elected to House in 1981.

Posted by sj | February 17, 2008 5:56 PM

Exactly how does raising taxes make demand grow?

Government raises taxes. Government takes excess revenue and subsidizes electronics manufacture, builds roads, invades other countries, and makes other infrastructure improvements that benefit business. Business increases. Business hires.

That wasn't too hard now was it?

Posted by Daddy Love | February 17, 2008 5:56 PM

Give people credit with being more rational than that. They realize that if the costs are institutionalized, every shares in the burden. So they're happy to pay their share.

Posted by Steve Roth | February 17, 2008 7:54 PM

"Exactly how does raising taxes make demand grow?

Government raises taxes. Government takes excess revenue and subsidizes electronics manufacture, builds roads, invades other countries, and makes other infrastructure improvements that benefit business. Business increases. Business hires.

That wasn't too hard now was it?" -- Daddy Love

In the same sense the geocentric astronomy and phlogiston chemistry isn't hard. Wrong, but not hard.

The truth is that the economy is so complicated, and so interconnected, that nobody ever has more than a guess as to what it will do next or where it's going, including professional economists. Both the Democrats and the Republicans ere caught completely by surprise by the dot.com boom and its economic and taxation side effects.

Historically, though, government is not usually a primary driver of growth, except in certain special-case sectors like defense, where many companies effectively have the Federal Government as their primary or only customer.

Today, the largest share of all government spending goes to entitlements, and higher taxes, given the current distribution of voting power, will also mostly go out as entitlement payments.

Those do sustain some demand, and keep large segments (esp. the elderly) out of immiserating poverty, but they don't drive large-scale growth, they don't drive infrastructural improvement, and they don't do much to subsidize R&D.

Posted by HC | February 17, 2008 8:23 PM

This is what economists call "revealed preference". What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we'd give the money to charity.

Matthew Yglesias is right. Megan's claim here is like saying that if, when I'm alone, I don't buy myself Christmas presents, this proves via revealed preferences that most people don't really want to celebrate Christmas. It doesn't. What it proves is that you have to have a universal collective agreement that we're all going to pay taxes together. Otherwise it's very unlikely that people will pay more taxes.

Posted by brooksfoe | February 17, 2008 8:48 PM

sigh

sigh.

Posted by "Mindles H. Dreck" | February 17, 2008 10:08 PM

What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we'd give the money to charity.

I gave 10% of my income to charity in 2007, but I don't want higher taxes for myself. Since I own myself, I prefer to control the product of my labor.

Posted by "Mindles H. Dreck" | February 17, 2008 10:11 PM

If Megan's light shined a little brighter maybe there wouldn't be so many commenters here bumping around in the dark.

Posted by jimbo | February 17, 2008 10:29 PM

While I think the revealed preference assertion is not airtight, I love the comparison of Christmas presents and tax dollars from Yglesias via Brooksfoe.

I realize this is just a casually tossed-off analogy, but talk about opening oneself up to the hairies old tax&spend cliches!

Posted by "Mindles H. Dreck" | February 17, 2008 10:38 PM

I would get valuable goods and services from the government, where today I get nothing of the kind.

Yeah, I know what you mean. Roads, the protection of civil liberties and property rights, the relatively low incidence of lead poisoning, weather reports, and the rule of law are all crap. Viva la Revolucion!

Posted by DMonteith | February 17, 2008 10:47 PM

Matthew Yglesias is right. Megan's claim here is like saying that if, when I'm alone, I don't buy myself Christmas presents, this proves via revealed preferences that most people don't really want to celebrate Christmas.

There are any number of instances like this: if one advocates alternative energy and alternative vehicles, and believes that the government should be involved; it is _not_ a 'revealed preference' that most of these types do not, in fact, install rooftop solar, converters, etc. (just to be clear, I like gasoline; the closest you'll ever see me come to alternative is nuclear)

This could almost be the McArdle drinking game :-)

Posted by ScentOfViolets | February 17, 2008 11:14 PM

In the same sense the geocentric astronomy and phlogiston chemistry isn't hard. Wrong, but not hard.

Oh geeze. Another one of those argument by assertion guys. Don't we have enough of those already?

The truth is that the economy is so complicated, and so interconnected, that nobody ever has more than a guess as to what it will do next or where it's going, including professional economists. Both the Democrats and the Republicans ere caught completely by surprise by the dot.com boom and its economic and taxation side effects.

Seems to me there was this one fellow from Tennessee, Al Gore, his name was. You may have heard of him, the guy Vincent Cerf credits with making the internet what it is today:

Let's quite(sic) Vincent Cerf, a man often called The Father of the Internet,

"The Internet would not be where it is in the United States without the strong support given to it and related research areas by the Vice President in his current role and in his earlier role as Senator."

Marc Andreesen, Internet pioneer who actually received federal funding thanks to Al Gore, who while Senator wrote the High Performance Computing Act also credits Gore. Another Internet expert, Dave Ferber says that without Gore the Internet "would not be where it is today."

Multiple early web pioneers say that Gore was the first political leader to grasp and understand the Internet and its possibilities. They all say it was his vision and yes, initiative, that helped turn the Internet into what it is today.

An argument by assertion guy who furthermore thinks that quite common tropes can be made to vanish down the memory hole once their usefulness has reached an end.

Posted by ScentOfViolets | February 17, 2008 11:28 PM

Charity, shmarity. The proof that nobody wants to pay more taxes lies in the fact that the government offers us tax breaks for doing things they want us to do. Even they know that people are motivated when you reduce their taxes. When you increase their taxes, the only thing they're motivated to do is avoid paying them.

Posted by Jason | February 18, 2008 12:28 AM

Is this 'tax me more fund' a bad joke?
Is it supposed to make some kind of point?

I want public goods, but I don't want to pay more than my fair share for them while others free ride.

That's pretty obvious, and it doesn't take this bad joke of a fund to prove it.

Posted by Tim | February 18, 2008 12:54 AM

"Yeah, I know what you mean. Roads, the protection of civil liberties and property rights, the relatively low incidence of lead poisoning, weather reports, and the rule of law are all crap. Viva la Revolucion!"

I'll give you roads. The rest? You really think the government is delivering those goods and services with s