How would America change if taxpayers were allowed to specify how their tax money were spent? That fascinating question (no, really, it’s fascinating!) is explored in a piece by Cait Lamberton in the latest issue of Democracy: A Journal of Ideas.
Side note: if you don’t read Democracy, you really should bookmark it. The latest issue alone contains five or six absolutely stellar pieces, including Jon Chait on the rise of conservative taxophobia, Matt Yglesias on the importance of the Fed to progressive policy, and David Madland on the centrality of a healthy middle class to economic growth. Among others! It’s like a wonk buffet.
Anyway, returning to Lamberton’s piece. She notes that part of what makes paying taxes so unpleasant is the total loss of agency. You just sign the check; the government decides how to spend the money. There’s no sense of engagement or ownership.
What if U.S. taxpayers were allowed, for some small portion of their taxes — say, 10 percent — to specify on their tax returns where they’d like to direct the money? Lamberton ran some experiments to find out.
One result is that those allowed to specify some tax expenditures felt much less irritation and angst, and much more of a sense of satisfaction and benefit, toward paying taxes. That in itself would be a sea change in U.S. consciousness.
But what interested me even more is finding out what people would spend on if allowed to choose. You think it’s foreign wars and fossil-fuel subsidies? No. Lamberton sums it up as “more butter, fewer guns.” Specifically:
Respondents across the board shifted spending toward education, training, and social services — all areas that are major job-creation engines and paths to sustainable improvements in standards of living. Democratic respondents allocated 25 percent of their allocable tax dollars to education, training, and social services, while Republicans allocated about 21 percent.
Other categories also saw substantial gains. Most notably, energy, the environment, and science increased from approximately 4 percent to 16 percent of spending. Even Republican respondents showed substantial upward movement in this category, allocating about 14 percent to energy and scientific issues. Bipartisan consensus also prevailed on housing and community development funding, which more than doubled for both parties, from 5 percent to about 11 percent. Interestingly, dollars for anti-poverty measures did not change substantially, holding at approximately 13 percent of the budget overall, but higher among Democrats, who allocated 16 percent to such efforts, compared to 10 percent among Republicans. [My emphasis.]
For one thing, if taxpayers were allowed to do this, they would demonstrate — with their own money, which carries more weight than any poll — what they value. I’m not naive enough to think that would transform the priorities of policymakers, but over time, the disjoint between what Americans want to spend money on and what politicians are spending on would grow difficult to ignore. Priorities would get dragged in the right direction.
That’s long term, but even in the near term there would be a huge effect:
Let’s look a bit more closely at how tax choice could do this by using the Environmental Protection Agency (EPA) as an example. The agency’s 2010 budget was approximately $10.5 billion. Now suppose, as our research suggests, American taxpayers choose to allocate 16 percent of their allocable tax dollars to “the environment, energy, and science,” directing 30 percent of that amount to augmenting the budget of the EPA. Assuming total tax collections of $2 trillion (which is a little less than the amount collected in 2007), total allocable taxes are $200 billion, of which taxpayers direct $32 billion to the environment, energy, and science, and $9.6 billion specifically to the EPA. In the span of one tax season, the budget of the EPA nearly doubles. [My emphasis.]
I’m really taken with this idea. It’s tough to think of a substantive argument against it. Of course, the political establishment would never let it happen. Conservatives — all the Republican Party and close to half the Dem Party — want people to hate paying taxes. And they know full well that the public’s priorities are different from theirs. The last thing they want is for the public to have a tangible way of expressing that.