The Effects of a Tax Receipt

Over at YouGov’s Model Politics, I have a post on what happens when people view a tax receipt.  A tax receipt is just a record of the programs on which the government spends tax revenue.  The concept has gained a lot of currency (no pun intended), and given many Americans’ lack of knowledge about the federal budget, I was curious whether viewing a tax receipt would change their views of taxation or the budget.  The post reports on a small survey experiment that I conducted in May 2011.  Here is a summary of what I found:

A tax receipt may be a valuable reform, even if it does not change how Americans feel about their taxes or how they might attempt to cut the budget deficit. Nevertheless, it is perhaps surprising that the receipt had such small effects in this experiment, given how little many Americans know about how the government spends its money.

More details and graphs at the post.


2 Responses to The Effects of a Tax Receipt

  1. Brad June 21, 2011 at 10:55 am #

    I’m not generally a fan of James Buchanan, but I think his observation about deficit spending, termed “the Fiscal Illusion” are important to consider here. Buchanan suggests that deficit-spending makes us seem like we’re getting a good deal by getting more government for the same price(i.e. the same tax rate). Of course, we’re not actually getting a good deal, we’re just deferring paying for it. It’s as if we felt like we were buying a house for the cost of the down payment, not considering the cost of the mortgage.

    The problem with the tax receipt idea is that it hides how much government services actually cost. For instance, if your tax receipt says you’re paying $3000 for national defense, it seems like a much better deal than the true cost, which is closer to $5000 before accounting for interest accrued on debt.

    In general, I like the idea of a tax receipt, but it should also include the amount of government that’s going to be financed by future taxpayers.

  2. Joel June 21, 2011 at 4:02 pm #

    I am surprised that you are surprised. Actually, I would have expected a tax receipt to have an impact – by making people even grumpier about their taxes, as just one more reminder of “how much” taxes they are paying.

    I don’t really think the average American cares *where* their taxes are going as much as we might assume. They just want less of it to go there.

    (Of course, I am likely ignorant of polling data that say otherwise. But, on the other hand, taxes seems like the sort of thing on which people would misrepresent their own positions to a pollster … in the vein of “it’s not that I don’t want to pay for government services, I just don’t agree with what they’re spending my money on.”)