On taxes, fair taxation and political communication

The author of The Migration Period blog proposed that very few people actually care about taxes as such: whenever they protest against their taxes, they basically mean that they disagree what their taxes are spent on.

Two minor disagreements first:

1) I think most right-leaning people disagree not as much about spending them their taxes on poor people but about spending their taxes on fat bureaucrats who pretend to care about poor people.

2) Even with taxes spent for the best possible purposes, one should’t really want too much of the GDP spent by a government because that means central planning and you know how effective is that. Keynes, not exactly a hardcore libertarian, guesstimated the healthy upper limit of sanity at around 25% of GDP.

But what I would really like to point out is this: I think it also matters how things are communicated. Why is it so that in the USA welfare is always communicated as the rich helping the poor, while in  Germany welfare is always communicated as citizens buying services from the government for themselves?

I mean, in the German healthcare system the taxpayer thinks like a customer. I paid my dues, now give me good  service. In the USA Medicare / Medicaid is specifically defined so that the average employed middle-aged person does not qualify for them. So indeed it is a charity from the rich for the poor instead of a service every taxpayer would get in return for their taxes. Does anyone have an idea why?

Similarly, unemployment insurance in Germany is something basically everybody is going to draw once in a while. Why not? They paid their dues hence they feel they are not only legally but also ethically entitled to this service while they look for another job. I think in the US it has more of a “the rich paying a dole to the poor” flavour, perhaps the average American upper middle class software developer would feel too ashamed to draw unemployment if he decides to look for a better job? Is there a stigma attached to it? But why – he paid his insurance premiums, so what would be wrong about getting the benefits? Perhaps the issue is that the whole thing is not communicated as insurance, but as welfare, dole, charity. And I don’t mean that today or yesterday, I mean it in the sense of how it was historically established.

Of course there is a perpetual welfare  class in both countries, but that is more related to child-oriented welfare.  Having children early, perhaps  as a teenage single mom, is usually the primary negative feedback loop, the primary idleness disincentive and welfare-trap in both systems. I personally don’t know of that many abuses of adult-related welfare like unemployment or health insurance. The loophole is the children.

Perhaps the devil is in the details. The German unemployment office is really strict, if the clients don’t show up at the first call and accept whatever crappy job they want to give them they start cutting their money quickly. In the US Warren Meyer of Coyote Blog complained that he tends to hire people seasonally, summers only, they go on the dole for the winter, often vacationing in Mexico and the California unemployment / welfare office does not seem to able to catch them.

But beyond the technical details, I think the primary difference could be something as simple as communication. It seems in the US Lefties find it necessary to communicate it as redistribution / charity, because they are essentially Puritans, so they have to make things grandiose, like a big Gnostic battle between good and evil, or “healing the world”. In Germany the whole thing is communicated far more soberly, in a more objective, more level-headed way, basically a vendor-customer relationship between state and citizen: you pay this, in return you will get that.

For example if you go to the German language Wiki page for taxes, you find that there are three large categories of payments citizens pay to the state. Paying taxes create no claim to a service in return because they are used to finance generic spending.  Paying contributions like social security create a claim to a service, like healthcare or unemployment insurance. Fees are paid for actually using a service. For example, while the dog tax is actually used to clean up dog crap, they don’t want to call it a dog contribution because they don’t want give citizens the impression that the government is responsible for cleaning up after their dogs: the owners are.

Interestingly, you rarely find this objective level-headedness in English-language discussions of taxation. Or at least not on American websites – perhaps in the UK or Ireland more, but they have less of a web presence. I think the American Left is largely using a Puritanical ideological attitude to see welfare not as a service to taxpayers but as a charity / redistribution device, while elements on the American Right seem to have a similar, almost quasi-religious indignation to that (financing idleness, punishing hard work, so basically doing the Devil’s work).

In other words, the American state resembles a church, or fighting churches, while the German state something more similar to a  sovereign corporation – although a terribly bureaucratic and wasteful one at that, too. But it at least talks more like a sovereign corporation.

I think one thing an the author of The Migration Period can easily agree about is this: focusing too much on taxes, spending and government size is a mistake, because it is downstream in the causal stream. The actual causes of too much taxation and spending, be that a Puritan ideological move, a Beamterstaat or a overall corruption, are probably going to cause other problems as well. So focus on the causes.