Seeing Where the Money Went

Rethinking Taxes: Proud to Pay

Such conflicts could be resolved relatively easily by making more information—the unabridged version of your receipt—available on the Internet. Taxpayers should be able to access their receipt online, and then burrow deeper into the areas of the budget that interest them for one reason or another with the click of a mouse. Any taxpayer who files a tax return electronically could receive an email version of the receipt with links to more details. Of course, a printed version would still be necessary for the millions of Americans who file by mail. As with the rest of this proposal, all the requisite data are available, just waiting to be presented to the taxpayers.

In her recent report, Olson noted that a receipt would be “relatively easy to generate.” But politicians, as we know, excel at mucking things up. Any of the decisions related to the construction of the receipt—whether it is about the accounting method or how to characterize spending on controversial issues such as war and welfare—would be fraught with rampant opportunity for political manipulation. A receipt designed to advance the progressive agenda could, for instance, use categorization techniques to overemphasize the defense budget while minimizing contributions to Social Security; conversely, a receipt created by conservatives could do the same by labeling welfare payments in some way to demonstrate maximum offense.

Indeed, there is social science literature on the effects that different descriptions of policies have on public support. Although this “framing” problem could never be entirely eliminated, it could be minimized by lawmakers from both parties agreeing in the legislation on a set of categories for the receipt. Anything less than an upfront political agreement—something that the IRS by itself could not accomplish—would subject the receipt to partisan feuds after changes in power. Although an occasional revisiting of the receipt categories would keep it up to date, the receipt will fail if it is reduced to a political football. It must be widely seen and accepted as a good-government product, above the petty partisan squabbles of the day. We believe that the categories in the sample receipt displayed in these pages—which include Social Security, Medicare, Medicaid, military personnel and procurement, and foreign aid, among others—are accurate, nonreductive, and nonideological representations of budget reality.

Our emphasis on a balanced set of categories should not be misinterpreted to mean that we don’t expect citizens to bring ideology to their receipts. Of course they will. Liberals, conservatives, and centrists will certainly have this or that to complain about. We’ll never be spending enough for some; we’ll never spend too little for others. The receipt, however, will bring such arguments closer to reality. By issuing receipts, the government would be demonstrating its trust in taxpayers to sift through the propaganda, look at the facts, and develop informed opinions. Evidence, as opposed to unsubstantiated assertion, would rule the day. The cost? For each taxpayer, about the price of a first-class stamp. Or less: Taxpayers who file electronically—about two-thirds of all returns—would receive a receipt by email. The information, after all, already exists. Additional administrative costs are likely to be minimal.

Political Consequences

With a well-designed receipt, myths and misconceptions about taxing and spending that refuse to die would be met with a mortal blow—and, we hope, replaced with more sober arguments that better acknowledge how complicated our politics can be. For instance, the idea that most of your tax money goes overseas, in the form of foreign aid and goodies to other countries, is a favorite trope of the anti-taxers. Why should we spend our hard-earned money to fix other people’s problems? asks this line of thinking. The thing is, it isn’t true; as the model receipt shows, the amount the federal government spends on foreign aid, narrowly defined, is remarkably small, about $43 a year for a typical taxpayer. We spend a good deal more every year on, say, law enforcement and homeland security.

Such myths gain purchase because the federal budget, such as it is, lacks immediate political salience. Consider the recent fight over health care. The Obama Administration tried to paint its reform effort as a way to bring down skyrocketing costs. Lawmakers and officials deployed a flurry of charts and graphs to make the point that costs had gotten out of control. Yet the idea never took hold in the public’s mind. This dynamic repeated itself only recently, when the recommendations of the President’s budget commission went down not in flames, but with a collective yawn. Simple facts about government spending were viewed as too distant and too abstract to make much of a difference in one’s policy preferences. A receipt would be a way of increasing public knowledge for everyone. By filing her federal tax return, the median taxpayer pays $1,355.13 for health-care programs that are both federal and state-based. Should we spend more? Or should we spend less?

Related questions would likely be asked about the amounts spent on Social Security and the debt. Given the heated political rhetoric surrounding the issue, the average contribution to the net interest payments on the federal debt—about $433.11—seems somewhat small; the amount the average taxpayer contributes to Social Security—$1,375.40—is higher. Do these numbers need to be adjusted? And, if so, how? Again, there would be many answers to such questions. But the ranks of those providing answers should not be limited to the expert, the wonk, and the political junkie. With the receipt in hand, all taxpayers would be capable of giving their own answers.

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