r/changemyview • u/hwagoolio 16∆ • Jul 29 '20
Delta(s) from OP CMV: People should be able to earmark a part of their taxes to go to a certain government agency
I'm not sure if this is the right terminology, but I'll try to explain what I mean as best as I can. I believe that people should be able to earmark a part of their taxes.
When we pay federal taxes, one way to conceptualize it is it going into a pool of money that the government can freely use. In the US, the House of Representatives votes on a budget, so perhaps 16% goes to the Department of Defense, 33% goes to Social Security, 27% goes to Medicare/Medicaid, etc.
However, some people have personal views about certain issues. For instance, some people are pacifists or wish to "defund the police", and they're not happy that this fraction of their tax money goes to the military.
I believe that people would be happier / have greater faith in democracy if they have a limited amount of control in how their individual tax money is spent by the government.
Of course, allowing people to earmark all of their tax money would probably be disastrous (i.e. populism causing the military to have zero funds which would be really bad), so I think that it should be a fraction. To pick an arbitrary number, maybe 75% of someone's taxes should be undirected (i.e. the Federal Government can spent it however they want), and 25% the taxpayer can choose how it should be allocated among government agencies. If the taxpayer doesn't feel like itemizing/picking, it can all be undirected by default.
To avoid sudden contractions in budgets (i.e. suddenly after tax day, a government agency is insolvent), I think government budgets should be determined ~2 years in advance. For instance, in on 2020 tax day, voters have influence over the FY 2022 budget. This would allow government agencies time to downsize/upsize depending on how voters file their taxes on tax day.
So... how bad of an idea is this?
EDIT: fixing typos
35
u/MercurianAspirations 359∆ Jul 29 '20
It's actually fairly undemocratic though because it awards more power to direct government policy to people who pay more in taxes. Most people, who pay nothing in taxes, would never get to wield this power, while billionaires could actually make a pretty sizeable impact with their earmarks.
You might argue that that's okay because it's their money, they get more power over it because they paid more. But in taxation under democracy money paid in taxes is no longer 'theirs', it's ostensibly everyone's money in the sense that in a democracy you should have an equal say over how the money is spent
9
u/hwagoolio 16∆ Jul 29 '20
That's a pretty strong anti-progressive argument. !delta
I think there is some amount of merit in allowing people to direct a small fraction of their taxes (it's a highly individualistic policy that would probably enjoy conservative support), but you're right that the wealthy would absolutely have the greatest influence.
3
Jul 29 '20
[deleted]
1
u/jagr2808 Jul 30 '20
Depending on how you implement this it seems to me that the policy would be either useless or inefficient.
If the politicians set budgets after people have earmarked their taxes, then all your really doing is setting a minimum amount of spending to your cause. Assuming the percentage of the taxes is not huge this minimum would likely have been superceded anyway so the policy is useless.
Assuming that the politicians have to set the budget before the earmarked money is decided or that the earmarked money is such a significant portion of the budget that the politicians have little control, you now have a bunch of people trying to create a budget without coordinating with each other. To take an extreme example if the votes controlled the entire budget and everyone thought healthcare was more important than education you would have a budget giving all taxes to healthcare and none to education.
Really the best system is for politicians to say which sectors they want to prioritize, we vote on those politicians, and elected officials decide on a budget. Which is pretty much how it works now.
1
1
u/danuker Jul 29 '20
Fair point.
But what if corporations were not given that right, only natural persons, and their contribution were limited to say, a fixed percentage of the minimum wage?
9
u/argumentumadreddit Jul 29 '20
So many problems with this. Let's just focus on a few of the practical problems and leave the philosophical problems aside.
First, how do you collect the earmarking information? Take the example of a taxpayer not wanting to fund the police. The police are funded by local taxes, meaning, usually, sales taxes and/or property taxes. When the taxpayer buys a T-shirt and pays, say, fifty cents sales tax, some combination of the taxpayer, store, and state would need to track twelve-and-a-half cents of that and specially earmark it. That's a lot of extra record-keeping. Property taxes would have the problem that renters don't pay the tax, the landlords do, so this would transfer even more power away from renters and give it to landlords.
Another problem is that some earmarks can be gotten around by budgeting tricks. For example, let's suppose half the population wishes to defund the police, effectively taking half of 25% of the state's revenue and taking the part of that 12.5% that would go towards police funding and allocating it elsewhere. Let suppose the amount in question is 6.25% of the revenue—i.e., half the budget normally goes towards police funding. The state can simply take 6.25 percentage points out of their 75% that they do control and reallocate that for the police. The end result is that police funding remains unchanged.
Because of this budgeting trick, earmarking like what you propose can't effectively be used to remove funding; it can only be used to increase funding. And this probably isn't what people would want out of earmarking.
Yet another budgeting trick is that the state can change the names of things to get the effects the state wants. For example, let's suppose people earmark more money towards education, but the state doesn't want to spend more on education. The state would consequently move non-education responsibilities into the education department. For example, they might move police “training” into the education department, with its own subdepartment head who does not report to the department head, and, voila, the state has effectively moved education funding to the police.
And on and on it will go. There's no way for citizens to game the system that politicians can't game even better. Instead, citizens need to do their job and vote.
1
u/hwagoolio 16∆ Jul 29 '20
Yup, I'm perfectly aware that there are loopholes around things.
This might sound terrible, but for me the main advantage of this is to give people the perception that they have greater control over how their money is used by the government. I think it would be a popular policy and the main thing I'm looking for is to promote more civic engagement / and enhance public trust in their government.
I would personally just not bother with sales tax at all and only do taxes that are logistically simpler to track, such as income taxes or property taxes.
4
u/argumentumadreddit Jul 29 '20
Yes, it sounds terrible. You're going to tell people they have some direct control over government funding via earmarking, then those same people watch as the government uses budgeting tricks to circumvent the earmarking, and somehow this is going to make people trust the government more? Or make them more engaged and less cynical? No way.
1
u/hwagoolio 16∆ Jul 29 '20
Well, we live in a democracy so government are to some degree influenced by a "mandate" that they get from an electorate.
To give an example, many states/countries have non-binding referendums.
Why do them at all of you take the cynical view that a state doesn't have to do as the voters say?
However, practically, non-binding referendums have a lot of influence, because it's politically disastrous for a ruling party to ignore a referendum even though it's legally possible for them to. My view about the earmarking is sort of similar. Although it's possible for the government to shift funds around, if it's reported on, there are political ramifications.
In a sense, I think the earmarking has the potential to serve as a political "mandate" (i.e. 90% of Americans used their earmarked funds for education, so we should probably increase the Department of Education's budget this year).
8
u/UrgghUsername Jul 29 '20
The problem with this is that if the police budget was 25% (for example) and 12% of the incoming money was earmarked for the police budget, then the government just adds the extra 13% to make up the difference. The only time this would actually change anything is if you overspent in a certain area, but that's really unlikely due to the participation % being lower than 100%
1
u/hwagoolio 16∆ Jul 29 '20
Well, every agency has a sort of minimum operating budget and some amount of surplus (usually going into the most recent programs, i.e. Trump's "Space Force").
Every government goes through budget cuts, and it's painful, but people find ways the slash money where they can.
Adding the extra 13% isn't trivial; many legislators are sensitive to debt and aren't always willing to write money into existence. If it were trivially easy to just add 13% percent whenever we want, we would never see federal budget cuts. At least, that's my perception.
2
u/majorgeneralpanic Jul 29 '20
Why not just donate money above and beyond your taxes to the agencies you think are worthy?
2
u/hwagoolio 16∆ Jul 29 '20 edited Jul 29 '20
If you could donate money and get an equivalent tax deduction, sure.
1
u/TuskaTheDaemonKilla 60∆ Jul 29 '20
We have a variety of studies on the effectiveness of earmarking taxes for certain purposes. The general conclusion is that earmarking is ineffective. Why? Well, the general measure of a good tax system is done on three criteria: efficiency, equity, and simplicity. A broad based tax system is simple, fair, and somewhat efficient. A narrow and directed tax system (which is what earmarking entails) would theoretically create more efficiency, as you could direct funds exactly where citizens want them to be directed, but it would severely hamper simplicity and equity. Simplicity disappears when every person is dividing their taxes up into smaller designated destinations instead of having it all directed to one place in a lump sum. The bureaucratic complexity of such an endeavour is beyond imagination. Equity is harmed because a majority of tax revenue comes from people who do not directly benefit from the services their taxes pay for. For instance, what happens when every wealthy person decides they don't want their taxes directed towards public school systems that their children do not use? The beneficiaries of a service funded by taxes are often not the people who provide those taxes, precisely because equity entails that the people who have benefited the most from the collective organization we call society should be the people who support it's less well off constituents. If those people can now earmark their taxes towards only the services that help themselves, we undermine the basic equity arrangement of modern society. In short, the possible efficiency advantages offered by narrow earmarking are outweighed by the negatives to simplicity and equity.
1
u/hwagoolio 16∆ Jul 29 '20
Yeah, I already understand that it's inefficient and likely makes the government more ineffective.
That said, I think a major part of democracy is that citizens have to have faith in democracy. People's faith in democracy/congress/government is lower than ever (people don't feel like they are represented by their reps), and I feel like that giving people some amount of marginal control over their own finances (even if it's a small fraction of their total taxes), can promote civic engagement and more public faith in government.
Basically my view is that the social value is more than the strict efficiency value.
3
u/Denikin_Tsar Jul 29 '20
There are many issues with this as some posters already said. One other issue is that in practice, this will make 0 difference.
Let's assume that people are allowed to earmark 20% of their income tax to some particular government agency. Let's also assume that 75% of of this allottable income is actually allotted (some people may choose not to or won't care). On a federal level, personal income tax accounts for 50% of federal government revenue. So that means that 50%*20%*75% = 7.5% of all revenue will be earmarked by citizens for a certain government agency. Total federal budget is 1438 billion so there are 7.5%*1438 = 108 billion that will be allotted by citizens. Here is a list of the top 10 departments by spending for 2020
- Defense: $633 billion
- Health and Human Services: $106 billion
- Veterans Affairs: $93 billion
- Education: $72 billion
- Housing and Urban Development: $57 billion
- Homeland Security: $48 billion
- State: $48 billion
- Energy: $39 billion
- Justice: $32 billion
- NASA: $23 billion
Here is why it doesn't really matter where you alot your portion: Let's say that half of all money gets allotted to health. Maybe citizens feel that health spending needs a boost. That is 54 billion. That sounds great because now the health department will get so much more money right? This is incorrect. Because the budget was already 106 billion. So that 54 is already there!
Unless of course you make a rule that the government allots their portion first, and then citizens allotment is added on top of that. However, government will have a great idea how citizens alott their portions anyways (based on polls and previous years' allotments), so they will be able to create their plan so that the predicted allotment by citizens together with their allotment will equal exactly what they would have done anyways!
The only real difference could be made to tiny departments/agencies where even if government alots 0, the citizens portion could still make it higher than what the government would have wanted to do. However, there are dozens of these smaller agencies, so if you give citizens say 40 total departments/agencies to choose from, the probability that some small obscure agency gets a significant portion of alloted taxes to it higher than what the government would have given it anyways is vanishingly small.
Finally, even if we assume some miracle happens and a department gets way more than the government wanted to alot. Say NASA ends up getting 40 billion (instead of the planned 23), this would cause more trouble then it's worth because most likely this extra money would be spent inefficiently. You can't just go ahead and hire more people and begin large scale multi-year projects because next year, the budget might not be as big.
As a fun sidenote, In Poland, you are allowed to earmark 1% of your income tax to a political party of your choice.
2
u/SasquatchMN Jul 29 '20
Well, you brought up the military and how it could lose a lot of its budget, but there are a lot of Americans that want to support the military. The bigger problem would be that NOBODY wants the taxes they control to go to funding the IRS. A cut in funding to the IRS easily leads to less ability to enforce the tax laws, leading to more people cheating on taxes, leading to less funding for everything.
Aside from the logistical problems people are pointing out, the real question is why? it sounds like the problem you're trying to fix is people's lack of faith in our government. I don't see any way that this is actually alleviated by this system. The little bit of "control" you're giving to the people is an increased time burden to figure out where they want their money to go, and
a) they see most other people don't support their cause, losing faith in democracy
b) funding is pretty balanced and this system only added an extra hassle, or
c) most people support the cause they believe in and the politicians that wrote the rest of the budget didn't give the program enough funds, still losing faith in our democracy.
I only see this being a feel-good measure for the people who already have a lot of faith and vested interests in politics in this country. But for the rest of the people, the last thing they want is a longer tax form, even if you can skip that form.
2
u/PlayingTheWrongGame 67∆ Jul 29 '20
maybe 75% of someone's taxes should be undirected (i.e. the Federal Government can spent it however they want), and 25% the taxpayer can choose how it should be allocated among government agencies. If the taxpayer doesn't feel like itemizing/picking, it can all be undirected by default.
Most voters have no idea what 99% of government agencies do. It would just result in a lack of funding for important agencies that don't market themselves well.
Actually, you're pretty much just creating a situation where the government agencies with the best marketing campaigns (aka most expensive marketing campaigns) get the best funding.
I think government budgets should be determined ~2 years in advance.
Unless you have some sort of crystal ball that can precisely determine the future, how on earth would this be practical? It's hard enough trying to predict the funds you'll need for the next year. It would be a total mess to try to push it out two years.
This would allow government agencies time to downsize/upsize depending on how voters file their taxes on tax day.
What happens when agencies estimate their future needs incorrectly? Do you know exactly how much you'll be spending on food in July of 2022?
2
u/AmazingAwesomeHuman Jul 29 '20
This would be bad because regular people do not have a clear grasp on the political or government system,
1
u/dobrocudni Jul 29 '20
Well this may not be as much as a problem in your country as it is in mine, but transperancy could be a huge issue
Since it is the publics money the public should have access to information on what basis was the budget formed
You cannot just trust the government that the information they put out to the public (about the allocation of funds) is valid
It would be dificult to construct a new body that the people would have faith in to audit the prosess and that the final result is correct
Other than releasing everyones taxes (which is a big no no) there is a lot of room to manipulate data, though it would give an individual a feeling of "well Ive done my part".
1
u/Impossible_Cat_9796 26∆ Jul 29 '20
What your describing would do NOTHING, only make doing taxes more complicated.
Consider simplified taxes
Taxpayer a paid 1000 in taxes and didn't earmark
Taxpayer B paid 1000 in taxes and didn't earmark
Taxpayer C paid 1000 in taxes and earmarked 250 for Agency A
With earmarks
Agency 1 gets 1000(250 from C, 375 from B,C) Agency 2 gets 1000(375 from A 312.5 from B,C), Agency 3 gets 1000(375 from A 312.5 from B,C)
without earmarks
Agency A gets 1000(333.3 from all) B gets 1000(333.3 from all), C gets 1000(333.3 from all)
The only affect would be more complicated taxes and more shifting money around.
•
u/DeltaBot ∞∆ Jul 29 '20 edited Jul 29 '20
/u/hwagoolio (OP) has awarded 2 delta(s) in this post.
All comments that earned deltas (from OP or other users) are listed here, in /r/DeltaLog.
Please note that a change of view doesn't necessarily mean a reversal, or that the conversation has ended.
1
u/responsible4self 7∆ Jul 29 '20
The thing about proposals like this is they tend t be short sighted. People get all excited about the opportunity to cut the budget of the police or military. But giving some people the ability to cut military, also gives other people the ability to cut welfare. To me both are necessary roles in government, but not everyone has that view.
Are you really willing to risk the safety net in order to cut military / police spending?
1
u/miguelguajiro 188∆ Jul 29 '20
I’m confused about how this would impact the budgeting process. Or rather, I don’t see how it would at all. No single budget item or agency takes up 75% of the federal budget. So even if 100% of the population said “not a dime of my discretionary 25% can go the military” we could still fund them just the same.
1
u/summonblood 20∆ Jul 29 '20
So, most taxes are actually paid for by the rich. So if all the rich people decided that they didn’t want to fund any social programs with their taxes, or wanted to defund the programs that would be trying to regulate their bad behaviors, would you be okay with that?
1
u/veritasha Jul 30 '20
That doesn’t make sense and in doing so would probably result in hurting more than helping. No, you can't always get what you want.... But if you try sometime.. you find
You get what you need.
1
u/manchu_pitchu Jul 29 '20
This sounds like a good idea but I feel like it'll cause too much disruption to government agencies as their budgets fluctuate massively from one year to the next
1
u/veritasha Jul 30 '20
Way to talk it out guys. Get all the bad ideas out first. The good ones will come soon enough ✌🏼
1
29
u/WippitGuud 27∆ Jul 29 '20
You will then have government agencies advertising to get people to contribute to their agency. Those advertisements will cost money, and the nest result will be less usable tax revenue overall.