Paul L. Caron

Wednesday, April 4, 2012

Gamage Presents Three Essays on Tax Salience Today at Penn

GamageDavid Gamage (UC-Berkeley) presents Three Essays On Tax Salience: Market Salience and Political Salience, 65 Tax L. Rev. 19 (2011) (with Darien Shanske (UC-Hastings)) at Pennsylvania today as part of its Center for Tax Law and Policy Speaker Series convened by Chris Sanchirico and Reed Shuldiner:

This Article analyzes the literatures on how individuals understand taxation (i.e., “tax salience). We evaluate how taxpayers respond to different presentations of tax prices both in their roles as market participants and as voters. We aim to combat naïve notions about tax salience that currently exert a pernicious influence on tax lawmaking. In particular, we argue that it is normatively desirable for governments to reduce tax salience with respect to market decision making, and that there is nothing objectionable about governments reducing tax salience with respect to political decision making.

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From the paper:

"Taxes decrease economic welfare to the extent that market participants perceive the costs imposed by taxation and alter their market decisions in order to avoid those costs."

Untrue. When people overspend because they underestimate taxes, they end up short of money. Then their choices are altered suddenly and drastically.

The quoted argument reminds me of advocacy for unlimited deficit spending as cost-free, forgetting that the piper has to be paid.

Posted by: AMTbuff | Apr 5, 2012 9:13:25 AM

If there's nothing wrong with making tax rules deceptive and obscure, why do we need the euphemism "reducing tax salience"? Follow the example of gay rights activists who proudly, confidently, and successfully call themselves queer.

From now on, just use "Stealth taxation" instead of "Reduced salience taxation". Be proud and confident as you win converts to your beliefs. Use the AMT, phaseouts, special-purpose taxes, tax withholding, bracket creep, non-tax mandated costs, spending vastly more than total tax revenues, and other examples to prove your point. Explain how we all benefit when the government continually tricks us with hidden taxes. Exhibit a typical phone bill as the paragon of taxation. Do all this and I will respect your arguments much, much more.

Until then, using a euphemism is an implicit admission that your position runs contrary to common sense notions of fairness.

Posted by: AMTbuff | Apr 5, 2012 9:11:57 AM