Last week I argued that no one actually thinks their own taxes are too low. Laura at 11D says she's willing to pay higher taxes:
Megan McArdle had a post up last week about whether or not people willingly pay taxes. (link when I'm not so tired). I'm willing to pay the higher taxes in New Jersey. I'm getting things for that money -- better schools, a home that holds its value, access to better paying jobs, proximity to New York City, access to grandparents. Taxes aren't always about money for other people; it's also about services for you.
The first question is "higher than what?" New Jersey taxes are lower than those in New York City, which Laura moved out of. Higher than Alabama? Even if she weren't particularly willing to pay them, she wouldn't have much choice, because her husband's job is tied to New York's financial services industry. In that sense, I am willing to pay the higher taxes of the United States in order to avoid living as a stateless person in some refugee camp somewhere, but that's not really a very helpful guide to how I feel about the general level of my taxes.
Does Laura think that her property taxes should be raised? Very few people do . . . and those who do seek an increase in their property taxes are almost always looking to fund large increases in spending on the services they use, like the schools, in the knowledge that many of the people who do not use them will be forced to kick in. This goes to the heart of the argument I heard over and over again: that it's perfectly rational to think that you should pay higher taxes, but only if other people do, because taxation is somehow a collective action problem. A collective action problem, if you're not familiar with the term, is one where there is a potential equilibrium that makes everyone better off, but it's hard to get to because of incentives to defect. Think casual Fridays: most people prefer not to wear suits and ties, but unless there's some sort of enforcement mechanism, the hyperambitious will ruin it for everyone by showing up in a suit. Next thing you know, everyone's back in a Brooks Brothers sweat sack, because they don't want to look less serious about their job than those around them. These problems generally require the creation of some enforcement mechanism--including, but not limited to, a formal law--to punish defectors.
Henry Farrell, for example, compared paying taxes to shopping at Wal-Mart. Far be it from me to criticize anyone who sends me free books, but this does not really work. Leave aside my questions about whether people really prefer downtowns to Wal-Marts, which is hard to agree upon empirically--I say I care deeply about poverty in Africa, but if that's true, how come I bought a new iPod instead of sending the money to Chad? Collective action problems generally apply to situations where the outcome is binary: either you have a Wal-Mart nearby, or you don't. Tax revenue is not binary--it's an upward sloping line. Some of the things the government spends the money on are binary--but given the existing level of tax revenues, this is simply not a reasonable objection to sending the government additional money. People who say they want higher taxes on themselves generally think the government does not have enough money to do the things it is already doing; as long as you think the government has a better (in some moral sense) use for the money than you do, then you have a moral obligation to send it in.