Taxes That Don't Benefit You Directly Can Still Benefit You Indirectly

Great Debates
1

What do you think of the following sentiment:

“I HATE the fact that even one penny of my very hard earned money goes to social programs such as Medicaid. It makes me sick to my stomach to support other people.”

This would be my response:

Of course, you must be talking about the taxes taken from your “hard earned money”. I assume you do not wish them to be applied to Medicaid, because such tax uses do not benefit you directly. Well, let’s assume that you live in a big city like New York, and regularly take the subway to work. I guarantee you that there are, in my hypothetical example, many others who drive to work in the city who resent the fact they have to subsidize the NYC subway, to your benefit. If this scenario were to indeed be true, you would probably also, in addition to your Medicaid rant, be saddened to see taxes from your “hard earned money” go to subsidize roads in New York City.

Obviously, what you are missing is that not all taxes that are assessed upon you benefit you directly. But by the same token, the taxes on my hypothetical “driver to work” don’t necessarily benefit him directly either. The important thing to realize here is that the taxes we pay that do not benefit us directly can still benefit us indirectly. For example, in any society, there will inevitably be people who find themselves out of work. This is not to say that such people are lazy and shiftless, happy to accept a government handout. Layoffs happen. Declines in jobs in a community happen. That is why unemployment exists. And, yes, your tax dollars are used for it. But the fact that unemployment exists means a guy without a job with a family of four doesn’t feel the need to rob your local deli to provide for his family. He doesn’t have to hold up a couple who are on their way home from dinner and a movie to be able to provide food for his family. In other words (that is, if I haven’t beaten this dead horse into the ground), unemployment can make your neighborhood safer for example, and you have thus benefited indirectly from the taxes that were used for it.

The thing we as citizens must alway be on the lookout for, is that the way our tax dollars are allocated by the government are responsible, and if such is not the case, the those in government who are responsible for bad allocation should be thrown out on there ears!

2

Certainly, not all government programs are bad. I think unemployment benefits, to use one of your examples, are fine, when they are used as a limited, short-term solution, and handled by a responsible organization. Other spending, such as that for law enforcement, roadway upkeep, education, and the like should be handled by the government out of reasons varying from general public welfare to efficiency. Few people outside of rabid libertarians would argue here.

The problem is where to draw the line. The government, 9 times out of 10, will not handle an enterprise as efficiently as the private sector can. Witness: Amtrak (bankrupt), socialized medicine in places like Canada (an ineffective shambles that regularly drives Canadians to the US for their health care), education (the cost per student for public schools is roughly twice that of private), and so on. This inefficiency means that these services will end up costing more, overall. Add to that the fact that many people will wind up paying for these services that either don’t want them, or will never need them.

As an example, look at Amtrak. I don’t use Amtrak. I likely never will. I have no need for it. It’s a crappy system, anyway. It doesn’t provide any life-saving purpose. I am in no way benefited by your ability to get from Sacramento to Tuscon cheaply. Even if Amtrak wasn’t a complete mess, I would have a hard time justifying why I should have to pay for your transportation.

What about medicine? There’s a touchier issue. Medical care is, of course, a life-or-death situation for many. But what we can see by observation is that the more the government interferes (and I’m sure this is going to draw criticism from the pro-socialization crowd), the worse health care gets overall, to the point where people, overall, are worse off. Providing some means of helping those who need absolute emergency care (car crash victims, people who are shot, people who suffer random heart attacks and keel over, etc) is a good idea, but forcing the public to pay for the health care of the masses through taxation just doesn’t work.

What about education? If I choose never to have kids, why should I have to pay for your kids? Education is a stickier issue. We could completely privatize education, but that would lead to a sever polarization among the economic classes. The poor would be left uneducated, which would likely keep them from ever leaving the lower class, and would seriously undermine one of the best aspects of our nation - the ability for anyone to become successful, regardless of where they start out. This being the case, it’s a good idea to have the citizens pool their money (through taxes) and fund public education. However, I’m all for the idea of vouchers as a way for citizens to divert their portion of the education fund to a school of their choosing - a partial privatization, if you will. Competition is your friend.

Basically, there are a number of worthy candidates for taxpayer subsidies, and a number of lousy ones. Personally, I feel that right now, on a federal level, the lousy ones outnumber the good ones by a wide margin.
Jeff

3

All things being equal, I would prefer to keep my own money then have it confiscated from me for ‘indirect’ benefits.

Letting me keep my own money benefits me very directly.

4

Being able to hire well educated individuals is a very valuable indirect benefit from taxes I no longer directly benefit from.

I’m sure John Madden would say he’s perfectly content paying for the FAA and not having his family or friends die in airplane crashes.

Not having any money in the stock market doesn’t prevent me from appreciating the SEC.

There will always be taxes we don’t use, but there are taxes you use that other’s don’t.

5

Let’s extend your argument a little bit, shall we? Letting you keep your own money, in effect, means the government doesn’t take out any taxes. This, of course, means that the government will no longer take anyone’s money away through taxes.

I don’t believe for a minute that this would pose any problems today in the U.S. Sure, the trash would no longer be picked up, fires would go unchecked, banks would be robbed, and rapists would commit their crimes with impunity. Who wouldn’t want to live in such a world?

6

I agree with that sentiment wholeheartedly. My tax money should only go towards a bare-minimum of goverment programs. Enough to guard our borders, enforce laws, and allow for commerce. Everything else is socialist fluff, to one degree or another. Down at the local level, one may add emergency (as in firefighting, EMS, etc), to the list.

My tax dollars should not be part of some wealth-redistribution scheme.

I refuse to bribe people to not commit crimes.

7

I think Dave Barry said it best when describing why higher taxes are “good”:

“They will create jobs. You see, if you got to keep your money, you wouldn’t create jobs with it. You’d just throw it in the bushes or something.”

8

It’s quite a simple concept really: your taxes go towards supporting the infrastructure that allows you to earn your money in the first place. If that infrastructure didn’t exist, you wouldn’t even have your job to have your money taken from you.

Infrastructure has to be paid for. That includes physical assets such as bridges, railways and schools but it also includes “fluffier” things such as an educated and healthy workforce, legislation and the running of regulatory bodies.

pan

9

Geez, notcynical, take it to the extremes why don’t you?!

I didn’t say no taxes. I said that I prefer to keep my money if possible. I am willing to pay to have my trash hauled away. I am willing to pay for roads, police, military, firemen and all that.

What I do not wish if for my money to be confiscated from me and given to someone else to spend even though it provides an “indirect” benefit to me. I would prefer to spend that the money taken from me and given to someone else to be spent by me. You know, the guy who actually earned it?

The only item I would waver on the above is schools. However, every year my property tax goes up (which is every year btw), I start to back off on it. It has been only in the last 2 years that I’ve started to vote against school referendums. The property tax is getting ridiculously high.

10

Paying taxes doesn’t benefit anyone. The government spending (which taxes pay for) does benefit people. A more precise statement of the OP might be: Government Spending That Doesn’t Benefit You Directly Can Still Benefit You Indirectly.

The point of this distinction is to make the statement: Taxes that aren’t taken from you directly can still hurt you. Examples that come to mind are[ul][] taxes on businesses that are passed through into the price of the products we buy[]taxes that discourage business, thus reducing overall prosperitytaxes on business that produce high unemployment (as exists now in most of Western Europe)[/ul]

11

Kabbes, the vast majority of taxes goes towards social programs not physical infrastructure.

The lowest 50% of income earners don’t pay any income taxes at all. They are the ones most likely to be using government services, and its not being paid for by them. The government is taking money out of my paycheck and giving it, in the form of services, to people who make less money than me.

12

—The lowest 50% of income earners don’t pay any income taxes at all. —

Uh, what? First of all, I’m not sure that’s even close to true. But second of all, the income tax is not the ONLY tax that people pay. People that don’t pay income taxes are not necessarily tax free. That’s crazy.

To the OP:

Yes, government spending has benefits. But it also has costs (which are NOT just the value of money transferred by the tax: a transfer is neither a benefit nor a cost). Are the benefits worth the costs? In general, we can’t blanket say. Sometimes it’s plausible that they might, sometimes not. It’s rarely ever conclusive.

For instance, to explain why education needs government support, you need to make some sort of case as to why people would naturally underinvest in it. Some very good cases have been made. But don’t fool yourself into thinking that you needn’t make and constantly defend and update that case.

Finally, none of that gets to the heart of whether government spending on various things is RIGHT. Just because there is some benefit to be had in something doesn’t mean that it’s right to force people to buy it. It might benefit me to have a new car: that doesn’t mean the government should tax my income away and buy it for me. People might well have other intentions for their money which they feel would benefit them even more than social spending. They might reasonably argue that it should be THEIR choice, not anyone elses, as to what they spend the money on: welfare or durable goods. At best, you can make a pragmatic case for income redistribution by reffering to market failures. Making an ethical case for appropriating someone’s income to solve these failures is an entirely different story.

It’s one thing to point out that redistributing income could have indirect benefits even to those that pay the bulk of the tax. It’s entirely different to argue that this reality justifies TAKING people’s money for this pupose. If people individually care about funding government programs, nothing stops them from contributing money to the government. The IRS is happy to accept your chosen overpayments. What you are arguing is that all people should be FORCED to make these purchases. And that’s a lot harder to justify (not to mention that successfully justifying it would lead to all sorts of other conclusions one might not be as happy to support).

13

Hmm, I can think of at least four reasons off the top of my head.

  1. When people take the train, there are fewer cars on the road. This benefits people who don’t take the train, both in the short run (shorter driving time, lower risk of accidents) and in the long run (less pollution).

  2. Many of the people taking the train are foreign tourists who might choose to visit – and spend their money in – another country if they didn’t have the option of getting around the US by rail.

  3. Just because you don’t take the train now doesn’t mean you never will. Plenty of older people can’t drive long distances because of poor eyesight or reflexes; you may be one of them someday.

  4. Because I (and other people who don’t personally use the interstate highway system) have to pay for your transportation. Taxes subsidize roads too, you know.

14

I am pretty sure that this is an alarmist and inflammatory statement, not really based on fact.

Let us posit a situation where all income tax was eliminated. I think that, after a somewhat ugly and Darwinian adjustment period, the market would take care of these indirect benefits in a more efficient way that the government is doing so.

For example, dispensing with the obvious such as private companies hauling garbage and putting out fires, education. Once all public schools were dropped, the private sector would step in. People would open schools, and based on that good old supply/demand thing, I would guess that we would have just about as many kids in school as we do now (and probably learning more).

The other boogieman here is police. I would be interested in someone explaining how they are a deterrent to anything. It looks like they mostly write speeding tickets and clean up messes after a crime has occurred. The detective work that they do could easily be taken care of by interested parties paying private investigators.

Basically, I really can’t think of anything that giving the government money is good for.

15

—Hmm, I can think of at least four reasons off the top of my head.—

This is a decidely wrong headed way to approach the problem. You can’t just list some benefits and conclude that some policy is a good idea. You have to seriously consider both the benefits AND the costs. Some of the things you note as benefits aren’t even uncontroversially so.

For example: “1) When people take the train, there are fewer cars on the road. This benefits people who don’t take the train, both in the short run (shorter driving time, lower risk of accidents) and in the long run (less pollution).”

This benefits the people on the road, yes, but that doesn’t prove that it’s a benefit for less people to be driving and instead more taking trains. People LIKE to drive. It’s not at all clear that all of the benefits of driving outweigh all of the costs.

16

—the market would take care of these indirect benefits in a more efficient way that the government is doing so.—

“More efficient” doesn’t mean “exactly the same.” Nor does the lack of government intervention equal “the proper market level.” To wit:

—People would open schools, and based on that good old supply/demand thing, I would guess that we would have just about as many kids in school as we do now (and probably learning more).—

First of all, it’s probably NOT true that about as many kids would go to school. Many might choose to work instead of going to school. Probably less would go to school over all. That may or may not be the “efficient” level of schooling, but there are some good reasons why it might not be: why we would expect the private markets to underinvest in education. Simply getting the government out of the game of running the schools is not the same as getting them out of subsidizing education, which itself is not the same as getting them out of it entirely.

—The other boogieman here is police. I would be interested in someone explaining how they are a deterrent to anything.—

When criminals are tracked down, even after a crime, when crimes are prosecuted, when cops are around and waiting to stop criminals, the price of crime goes up. Therefore, we’d expect to see less of it. Is that really so hard to see?

—The detective work that they do could easily be taken care of by interested parties paying private investigators.—

Maybe, but there’s something to be said about a monopoly of coercive force: it at least is easier to control than a chaotic competative market of violent reprisal (and its certainly easier to place a framework of standardized practices and rights on it). Some good theoretical studies have been done thinking about how competing criminals might eventually agree to limit their theiving in order to benefit their profession: eventually leading to the formation of governments. If given a choice between the Mafia and the government fighting, or one or the either, I’d prefer one or the either with (hopefuly) some input into the practices and limited authorities of that one, than both at once. Having to pay one large protection racket probably has better returns to scale than two slightly smaller ones.

17

I think Binarydrone has a point but there are certain items that a government is needed. I think these items include police, fire, roadbuilding and other infrastucture, military, foreign policy, post office, etc. . These items just cannot be done effectively in the private sector.

Take something possibly debateable like the post office. It is good that the post office delivers to all addresses. If the private sector was to step in, then they would not deliver to some addresses since it wouldn’t be cost effective. There needs to be some government but as small as possible.

18

I disagree strongly with this sentiment, as you might imagine. Canada’s health care system isn’t perfect but no country’s is. Yes, some Canadians obtain medical services in the US – it’s a bigger country with more specialized professionals. We don’t have an equilivlent to the Mayo Clinic or Johns Hopkins but that’s hardly a failing of the system. It’s not a one way street either – looking up services designed to get cheaper prescription drugs for seniors from Canada to the US gets you dozens of hits on Google.

We also don’t have 10.8% of our children and 14% of our population without health coverage (admittedly, this number is falling, but that’s still millions of people).
http://www.ucpa.org/ucp_channeldoc.cfm/1/16/11431/11431-11431/3907
What kind of love do you have for the HMO system?

19

I am going to assume that the snide tone that you are taking here is unintentional, and not a sign of disrespect.

To respond to the points that you raise here; my impression is that most violent crime falls in to the category of what one might call “crimes of passion”. My further impression is that these sort of crimes are extremely resistant to deterrence, specifically because people aren’t thinking about what they are doing when they perpetrate the.

In looking property type crime, such as theft, it might be argued that the prospect of getting caught might act as a deterrent for organized theft rings, or smuggling but I don’t think that it is very useful in cases of necessity, or perceived necessity (such as the junkie mugging people for his next fix).

The point that you make about a monopoly on coercive force, on the other hand, is extremely well made. In that realm, I guess that I think that it is too bad that the folks that have this monopoly don’t act a little more like honest thieves but rather cloak what they are doing in rhetoric suggesting that they have the public good in mind.

20

This page of chartsshows who does and doesn’t pay taxes by quintile. The people who made this page seem to be showing how unfair the tax structure is to the rich showing the bottom 20% of wage earners (but not the next quintile) not paying taxes. It also shows this group averaging a little over $8,000 in income. Greedy bastards!

So, your wild claim that the bottom 50% of Americans pay no taxes is a wild claim.