The eCrozier

Tax cuts are in the air. The political class seems committed to making that happen. I hope we’ll all be skeptical of any politician’s claim about the benefits of their particular tax cut proposal. Regardless of political party, they all seem to make the same mistake: They assume their proposed tax cut will lead people to modify their behavior in a way that’ll benefit both themselves and others. In other words, they assume that if people receive a tax cut, then with the extra money, they’ll make choices that’ll benefit our society rather than be solely selfish. For example, let’s say a politician proposes a particular tax cut. Their rationale for the tax cut is that it’ll do something good, not only for those receiving the tax cut, but also for others as well. So, they say: If we cut this particular tax, then that’ll cause those receiving the tax cut to (and here we can fill in the blank) create jobs, or re-invest the funds in a business, or somehow spur economic growth. Notice the assumption being made: People receiving this tax cut will behave civic-mindedly rather than doing something else that would only benefit themselves.

Richard Thaler, Nobel Prize winning economist and the unofficial “father” of behavioral economics, points out that human behavior’s historical modus operendi shows quite clearly that these assumptions about such civic-mindedness are mostly not warranted. He contends that people, regardless of their income level, simply don’t behave that way in real life. They don’t do what we want them to do (to our great consternation). In the example above, sure, some people might do noble, civic-minded things with their tax cut, but others are just as likely to make choices with those funds that are purely selfish; that don’t create more jobs, build new businesses, and the like.

Human sin being what it is, we all want the benefits of a safe, civilized, and just society we just don’t want to pay for them (or, more truthfully, we want someone else to pay for them). Taxes force selfish, well-off people like me to share so we all can have some semblance of the common good. We’d all like to keep more of what we earn, but such a desire doesn’t account for an honest recognition of human sinfulness. There’d be no need for taxes if everyone, left to their own devices, behaved generously and readily supported the common good. But they don’t and they won’t this side of heaven.

There’s no such thing as a “Christian” tax policy. In fact, the word “Christian” should never be used as an adjective (e.g. “Christian” aerobics?). Still, Christianity’s teaching on human behavior should make us wary of any public policy proposition (concerning taxes or anything else) that assumes people will mostly act selflessly or behave civic-mindedly. Some of us will some of the time, but not often enough for any society to be healthy, safe, and good. So, it’s naïve to make public policy on the assumption that if we’d just leave everyone to their own devices, then we’d have a just, civilized, and safe society. That may be true in a politician’s bar graph, but human behavior in real life disproves it.

Supreme Court Justice Oliver Wendell Holmes, Jr. famously wrote that “taxes are what we pay for a civilized society.” True that. I’d add that taxes are the price we pay for an honest recognition of our sinfulness. Taxes should mitigate the worst of our impulses.

+Scott