Posted by: captainfalcon | April 27, 2010

Ragnar Danneskjold may have been wrong

Neil Buchanan has an interesting post (and article) on the taxpayer / free-rider distinction. Those who maintain that there is such a distinction (including, until quite recently, me) claim that people who pay taxes are paying for all the public goods they consume plus all the public goods those who don’t pay taxes consume. This is a powerful rhetorical point. Though it certainly does not follow, one is pulled from it to the conclusion that those paying taxes are paying more than their fair share.

Buchanan denies the viability of the taxpayer / free-rider distinction. I think (though I could well be wrong) this is his argument. In order to maintain the distinction you must say that people who are taxed are paying for public goods. But in order to say that people who are taxed are paying for public goods you need to be able to say that they own their pre-tax income (and thus that it is transferred from them to the government). But they don’t own it precisely because it is owed in taxes. For somebody to own something is just for his legal system to give him title to it; pre-tax income ex hypothesi is that to which one’s legal system does not give one title. It is thus not privately owned.

There are two possible replies. The first, quite unpromising, reply is to insist that A’s pre-tax income is owned by A. He worked for it. It showed up on his paycheck as a sum with various subtractions from it. It’s his. The subtractions are taken from him by the government.

The problem with this line of response is that it makes functionally equivalent arrangements come out differently. So, to steal (the idea of) an example from Buchanan, imagine two different legal systems.

System One

Employer’s pre-tax income: $500,000

Employer’s post-tax income: $500,000

Employee’s pre-tax income: $100,000

Employee’s post-tax income: $80,000

System Two

Employer’s pre-tax income: $520,000

Employer’s post-tax income: $500,000

Employee’s pre-tax income: $80,000

Employee’s post-tax income: $80,000

In both cases each person has the same final income, and the same amount of taxes is collected. In each case, the legal system attributes the pre-tax income to different entities, but it’s arbitrary to whom it is attributed (for all we know it could be for accounting purposes). It’s thus arbitrary to say that in System One Employer is the free-rider and Employee the taxpayer, whereas in System Two Employer is the taxpayer and Employee is the free-rider. The distinction has no bite.

A second response acknowledges that the taxpayer / free-rider distinction can be arbitrary, but identifies a class of legal systems in which it is not, viz. the class of legal systems in which you have a prima facie moral entitlement to your pre-tax income. (Think, if you go in for this sort of politics, a legal system in which pre-tax income is the result of voluntary, non-fraudulent exchanges.) Then the distinction between taxpayers and free-riders is that taxpayers are those from whom things to which they are prima facie morally entitled are taken; free-riders are those whose prima facie moral entitlements are not violated.

While a bit more of a mouthful, perhaps the claim that taxpayers’ prima facie moral entitlements are taken to pay for the public goods they consume plus that consumed by those whose prima facie moral entitlements aren’t taken has similar rhetorical force. (Of course, it is also undergirded by a rationale that is riddled with dubious pronouncements. But I wonder if something like this rationale is what already inchoately undergirds the taxpayer / free-rider distinction.)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: