Paul L. Caron

Tuesday, September 27, 2011

Morse: Tax Compliance and the Love Molecule

Oxytocin Susan C. Morse (UC-Hastings), Tax Compliance and the Love Molecule:

Oxytocin [the "love molecule"] is relevant to tax policy because it affects people’s decisions to contribute to the funding of public goods, a basic goal of taxation.  ...

Oxytocin infusions might also increase citizens’ willingness to fund public goods through tax compliance, particularly if taxpayers perceived that their tax payments would benefit their in-groups.  Of course, the government cannot distribute nasal inhalers along with Forms 1040.  But it could try to increase taxpayer oxytocin levels nonpharmacologically, by presenting tax compliance as part of a trusting and reciprocal relationship.  But what reciprocal relationship should the government try to trigger?  There are at least three possibilities: (i) taxpayer-government reciprocity, (ii) taxpayer-taxpayer reciprocity framed by cooperative funding of public goods, and (iii) taxpayer-taxpayer reciprocity presented as a more intimate personal connection, for example with the help of an advertising narrative.

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How much of a warm glow would donors to PETA feel if a portion of their donation also went the NRA? Surely the associated feeling would be more akin to a cold prickle.

People feel a warm glow when they make donations because they can directly choose which non-profits receive their donations.

The only way that taxpayers will ever feel a warm glow is if they are allowed to directly allocate their taxes to the various government organizations at anytime throughout the year. Would this be a good idea? would be an awesome idea.

First, we've long since established that the visible hand is not even remotely as efficient as the invisible hand at allocating resources. This is because the quantity of "public signals" that congresspeople can evaluate is minuscule in comparison to the quantity of public signals that 150,000,000 taxpayers encounter in their daily lives.

Second, government organizations will never operate efficiently unless they are forced to compete for funding from countless individual taxpayers. Give taxpayers a choice and they will be very reluctant to give their hard-earned taxes to a government organization that is just going to waste their money.

Third, we can finally settle this ridiculously loooong debate on the responsibilities/scope/duties of government. A division of labor between taxpayers will reveal the ideal division of labor between the private and public sectors.

For more on pragmatarianism please see my blog...

Posted by: Xerographica | Sep 27, 2011 12:10:48 PM