All Commentary
Thursday, October 12, 2017

Volunteering to Pay More Taxes Doesn’t Make You a Saint

Stop it. You're not helping.

As seems to happen whenever tax rate reductions that could be demonized as “tax cuts for the rich” are proposed, the Trump administration’s tax reform framework has triggered vehement opposition, because “we need the money” to finance government programs.

However, such advocates must divert attention from the ethics of forcibly imposing greater burdens on one group of people who already bear the greatest burdens, which we would call theft in any other setting. So to inoculate themselves from criticism, some rich people publicly volunteer to pay more in taxes. Tom Steyer provided the most recent illustration in October 5’s Los Angeles Times, with “I’m a billionaire. Raise my taxes.”

Displays of such “sainthood” deflect consideration from the central issue—what can ethically justify such coercion of others against their will—to how much the self-sainted signal that they care. Further, it implies that those who disagree with them are merely selfish. However, no such implication can be drawn. That some will volunteer to bear higher taxes to support government programs they like (as long as others are forced to do the same, even if they disagree) is perfectly consistent with the existence of excellent reasons to oppose a vast array of such government programs for waste and ineffectiveness, rather than out of cold-heartedness.

You’re Not Helping

If a few rich people each volunteer to pay more in taxes to fund some “caring” government program, that would not demonstrate they believe it is effective enough to be worth its cost. That implication only follows from donations that fund programs without the coercion of others. Only that shows a belief that a program is effective enough to justify its cost (although when  donations are tax deductible, even such private donations do not demonstrate that). But that is far different than what they propose.

One could be Mother Teresa, rather than Scrooge, and still not support what they propose. Rich tax volunteers are not just private benefactors; they mainly propose imposing “coercive charity” on others. However much they may preen about their moral rectitude (which they can always display directly through their own independent, private giving), they offer to pay only a small share of the total cost of trying to do what they consider good through the tax code. They are primarily volunteering others, who need not in any way share their views or evaluations of the programs in question, to pick up the vast majority of the tab for their favored causes. 

To be willing to contribute, say, $100,000 more, out of a cost that may total billions of dollars, reveals very little about how much one cares or how effective a program is. When the same person is unwilling to give the same amount privately and directly, they reveal that they don’t think the good done is worth the cost.

Yet given the low price of coercive charity to them (especially when the controversy generated gives them far more positive publicity than private giving), it only reveals a belief that at least a small amount of good will be done for what can be a far heftier price tag. A program may greatly undermine the incentives of those helped (and so create even larger burdens in the future), lose huge amounts to administrative costs, waste, and corruption, and seriously burden those forced to pay most of the bill, yet still garner support from rich tax volunteers. 

Given those low standards, even honest, good-hearted tax volunteers often act more as agents to promote ineffective and even counterproductive programs than to achieve the good they seek.  This is especially so, given that a great deal of far more effective private charity will be crowded out by the taxes imposed involuntarily on others as a result. One could be Mother Teresa, rather than Scrooge, and still not support what they propose.

  • Gary M. Galles is a Professor of Economics at Pepperdine University and a member of the Foundation for Economic Education faculty network.

    In addition to his new book, Pathways to Policy Failures (2020), his books include Lines of Liberty (2016), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).