Tax Report Cards

I think the biggest problem with taxes is that nobody likes paying them. I know that this sounds overly simplistic, but I promise it isn’t.

I do mean it in the simple sense: the experience of paying taxes is pretty unpleasant. Just about everyone in America knows the minor indignity of waiting for your first paycheck at a new job to figure out just how much smaller your take-home pay is than you expected. And although I actually enjoy filing my annual tax return (sometimes I feel like an unpaid spokesperson for FreeTaxUSA), I realize I’m in a very tiny minority.

But I also mean it in a much more nuanced and important way. People tend to treat taxes like NIMBYs treat housing — we’re often on board with the idea of increasing taxes on others, but we reject any suggestion of increasing taxes on ourselves. Politicians understand this, so they usually advocate for lowering taxes on whichever constituency matters the most to them, and increasing taxes on whatever constituency matters the least. Taxes thus become a game of hot potato, where whoever has political power immediately tosses the burden to someone else.

This tends to make for bad policy, but it also makes a lot of sense. Contributism actually explains the problem with taxes quite well: giving is what makes us feel fulfilled and dignified, and taxes are pretty bad as a form of giving. Across the FARE metrics — free, active, relational, and effective — taxation performs poorly on all four. Taxes are not given freely; as Chris Rock once said, “you don’t even pay taxes — they take taxes!” They’re not given actively; you usually find out about the withholding after the fact. They’re not relational; the IRS is the poster child of nameless, faceless bureaucracy. And it is increasingly hard to say that they’re effective, as we regularly hear stories of more billions of dollars spent on foreign wars of uncertain aim, while the government continues to cut essential services domestically.

It is hard to imagine a world in which taxes are truly contributist — where we feel humanized when we contribute our resources to generate socially-distributed goods and services instead of lightly exploited by them. But I think this is a failure of our collective imagination. What I like about contributism is that it provides the language for us to understand problems that are otherwise obscure to us — and to think of solutions.

I don’t think there’s a single solution that will remake taxes into something fully contributist, but there are a number of things that can be done, at all levels of government, to shift our economic relationship with the government into something more politically healthy. The previous proposal in the Giving America series, Participatory Budgeting, aims at making a portion of our tax contribution more free, active, and relational. The proposal before that, G-Corps, would give corporations the free choice to replace taxation with a more direct social profit-sharing structure. And the Giving America Fund would tie funding for social spending to the prosperity of the economy itself, rather than relying on post-hoc extraction from investors.

Today’s proposal would be a step towards making our taxes more relational and effective.

Proposal: Tax Report Cards

I think every government that collects a broad-based tax (property or income tax; city, state, and federal) should be required to provide an annual report card to each taxpayer, detailing where their taxes go. At minimum, these report cards should detail where every dollar the taxpayer contributed went that year. At best, the report card would be the first step in allowing taxpayers to clearly indicate their spending interests to the government, and to have a direct, meaningful say in where their tax dollars go.

Tax report cards are not a new idea: the UK and Australia have both been doing it for about a decade.