2018-12-29

Transparency in taxation heap good

Andrew Dessler tweets:
Economists love a carbon tax because it is transparent. But it turns out that people don’t actually want transparency. They would much rather pay a high price they can’t see rather than a low price that they can.
I'm a touch dubious abut the truth of this proposition - it reads more like someone finding an argument that they like, and agreeing with it - but no matter. For the purposes of this post, let's assume the assertion is true: that people don’t actually want transparency. They would much rather pay a high price they can’t see rather than a low price that they can. One answer is to simply accept that we're a democracy, and the people should get what they want1. But if I believed that I'd be one of the plebs, not a member of the liberal commentariat, so I need to do better. And I can, without even mentioning Brexit or Hanging or Immigration.

And that is to observe that the laws, and policy making in general, should be framed in general terms first and only applied to specific cases later. Laws, or policies, made specially for individual cases are in general a bad idea.

So the first question you ask people is, do you want your laws and your taxes to be transparent, or would you rather be taxed in subtle ways that you will find it easy to miss? The answer to this question will of course be, "we want taxes to be transparent". Because it is not true that what people want is to have money taxed from them invisibly. The observation is different: that people complain about overt taxation, and don't complain about, errm, things they don't notice. That doesn't mean they're any happier about losing money that way, though.

Only having established the general principle do you move onto the specifics of individual taxes.

Notes


1. Dignified with the name of "majoritarianism" perhaps; see-also Gunz: constitutionalism and majoritarianism.

Refs


* Milton Friedman Helped Invent Income Tax Withholding.

2 comments:

Andy Mitchell said...

I was quite keen on hanging bad people, then I discovered Donald Trump gets to choose the judges.

Silly Dreamer said...

I prefer hidden. As in when I buy something, I want the price shown to include all taxes, so that it is what I pay. But its just a personal preference.