Can I Get a Receipt With That?

Ezra Klein shares a clever idea from the group Third Way: Rather than simply present taxpayers with a faceless bill for some large amount of money each year, why not give them a receipt showing what programs and services their money paid for? One potential problem is that, by necessity, the receipts would have to be simplified in order to be meaningful to the average taxpayer. Those simplifications would have to be closely monitored to ensure that they don’t end up being misleading. However, even a simplified receipt would still give taxpayers a better picture than they have now of how their money is being spent.

So as extremely small-bore reforms go, I think Klein is right that there may be some merit to the proposal. But some of the people who support the idea seem to think that it would highlight all the great services Americans get from the government and make paying taxes less of a pain in the you-know-what.

As Ethan Porter wrote earlier this year in an article rather amusingly titled “Can’t Wait ‘Til Tax Day”:

If done right, a receipt could have powerful and lasting consequences. It would make clear the enormous amount of goods and services provided by the government. It would dispel myths: America is not a nation of welfare queens, dependent on the public teat. The amount spent on safety net programs will, to some people, seem stunningly low.

Would it really help make voters happier about paying their taxes? I'm skeptical. Look at the top three items on Third Way’s mock up, which shows what the receipt would look like for someone making $34,140 and paying $5,400 in federal income taxes.  The biggest line item, by far, is Social Security ($1,040.70), followed by Medicare ($625.51) and Medicaid ($385.28). If anything, my guess is that this would focus taxpayers on the high cost of entitlement programs.

Medicaid, for example, strikes me as the obvious loser here. It’s the third largest item, but the program is aimed at the poor, not the middle class, which means that a lot of middle-income workers won’t be quite as sympathetic toward it. Combine that with the program’s dismal record and rapidly rising costs, and a line-item like this would probably create an incentive for reform rather than strengthen public support.

Social Security, on the other hand, is a fairly popular program that, at least in theory, is designed to benefit all Americans eventually. But would young American workers, many of whom start out with salaries in the neighborhood of the one that Third Way shows, really like being informed that they’re paying more than a grand a year into a retirement program that provides measly long-term returns and, without an overhaul, won’t be able to pay for its benefit obligations by the time they hit retirement age? How many of them would see a receipt like this and think they could do better with their own investments? The Medicare bill is smaller, but a receipt like this would highlight to the average 30-something that she’s putting hundreds (or more, as her income rises) each year toward a program that she won’t be able to access for decades (if its current form lasts).

Far from convincing taxpayers that their money is being spent well, I suspect it’s just as likely that many workers, especially those in their 20s and 30s, would see a bill like this and think to themselves, I could be doing something a lot more productive and satisfying with all that cash—saving it, investing it, and otherwise putting the returns toward individual priorities and programs that are designed around personal specifications rather than the government’s.

Combine this with a long-time favorite libertarian tax reform—requiring individuals to actually write out a check to the government—and you might actually end up with a taxpaying public that’s more acutely aware of both how much they’re paying and, more importantly, what they’re getting in return. Would that make them more excited about paying taxes? Somehow I doubt it. But if liberals want to find out, it may not be a completely terrible idea.

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  • ||

    Even that receipt lowballs MA and SSI - these amounts should include the matching amounts paid by your employer.

    Although I like the way the top 4 or 5 items provide no discernable benefit to the vast majority of taxpayers. My guess is this will piss a lot of people off.

  • ||

    Did you see what the 5th item is? Are you finally admitting it doesn't benefit us as a nation?

  • ||

    I'm on record as supporting a punitive expedition to Afghanistan, not trying to turn a clusterfuck of barbarians into a functioning modern society.

  • JB||

    +5

  • ||

    I think the SS estimate significantly low-balls FICA taxes: $1040 is only 3% of 34,140, but employee/employer combined is almost 13%. At this point I think the Townshend plan might be even cheaper than what we have.

  • Joshua||

    Several different varieties of bullshit here. SocSec & Medicare is said in the text to be $2610 & that roughly accounts for the employee's contribution, but the "employer's contribution" is strangely missing. Unless I'm wrong, it's still common knowledge that both amounts come outta employees' pockets right?

    But then the numbers on the receipt don't even add up to that smaller number. Somehow, what should be $4233 for SocSec + $990 for Medicare get strangely mutated. to $1040 & $625?

    Could these be outlays per person per month? so great, give me a receipt for money you're giving to somebody else. Thanks.

  • ||

    Sweet baby Jebu is this a phenomenal idea. The idiots in my office think the breakdown goes like this:

    50% - military
    48% - roads
    1% - social security
    1% - corporate welfare

    I would love for them to see what the fuck the money is spent on.

  • KPres||

    Yep. I love it. The canned response I ALWAYS get (literally ALWAYS) whenever I talk with statists about politics is "well, I support government spending because I happen to like having roads and fire departments."

  • Paul||

    In Seattle, sometimes they even take the roads away from us.

  • Masturbatin' Pete||

    Roads are substantially paid for by gasoline taxes, not shown here.

  • boomshanka||

    yeah, the percentage toward entitlements is staggering.

    but if you tally the different costs of maintaining a military at war (combat, personel, benefits, retirement), it comes out to about $530, or third on the list after SS and Medicare. equally disconcerting.

  • Rrabbit||

    The numbers appear to be either fake or outdated. The total of US military expenses currently is approximately 1 trillion a year.

  • boomshanka||

    true, but it is the third way. i've never known of a "centrist" who favored a reduction in military spending.

  • The Thinking Man's NASCAR||

    It'd only really work if we have a balanced budget. Or is there some provision to show how much cost to each taxpayer is being deferred by borrowing rather than paying up front each year?

  • Brett L||

    I think they need a line item for federal debt outstanding on there, or at least per-income-tax-dollar deficit accounting.

  • Masturbatin' Pete||

    Itemizing expenditures makes government look like a better deal than it is, particularly to lower-income individuals. $2.23 for Amtrak? That's not so bad. But wait - Amtrak isn't paid for. It's borrowed-for, like everything else in the budget.

  • Old Mexican||

    Medicaid, for example, strikes me as the obvious loser here. It’s the third largest item, but the program is aimed at the poor, not the middle class, which means that a lot of middle-income workers won’t be quite as sympathetic toward it.

    And that's supposed to be a bad thing, right?

    I mean, it's not like it's their money being spent by someone else!

    Oh, wait - it IS THEIR FUCKING MONEY!!! AND IT'S MY MONEY!!! YOU SUCK, SUDERMAN!!

  • Old Mexican||

    Sorry, Suderman. I understand now the tenor of your piece.

    YOU SUCK, DEMS!

    That's it.

  • Pip||

    You in this country legally, OM?

  • Anonymous Coward||

    From the Democracy journal article:

    By necessity, such a receipt would be an estimate, broken down according to what each taxpayer had paid the previous April. (Only the portion of the budget consisting of money generated by individual taxpayers would be deconstructed for each person.) The receipt would necessarily represent a bit of an oversimplification–the federal budget is a monstrously complicated thing. For our purposes, comprehensibility, as opposed to comprehensiveness, should be prized.

    In short, the people who pay few if any taxes will be given a piece of carefully worded bullshit that reinforces the idea that the federal government doesn't take "that much" of their money and that more taxes wouldn't be such a bad thing.

  • Peter Suderman||

    Right. It's complicated breaking down where the money goes. You want it to be accurate, but also meaningful and clear. That means simplification. But that means making choices -- choices which could be politicized. That's why I said that process would have to be closely monitored. But any simplification, if it's even close to accurate, is going to let taxpayers know that the bulk of their money goes toward entitlement spending (and on programs that aren't sustainable, either). And that's a message that I think taxpayers need to hear more often.

  • Anonymous Coward||

    Like all of the other closely monitored programs, processes, agencies, and departments in the federal government. Even the thrice-holy GOA is ready and willing to publish bullshit depending on the situation and the forces acting on it.

    Hell, Reason could hammer home the point of how much money the federal government spends on entitlements, adventurism, grants and makework jobs programs for people of all classes and rent-seeking, and vote-buying, broken down into a handy receipt format based on tax brackets.

  • Ben P.||

    Indeed, maybe Reason should come up with the formulae used to create receipts like that and then grab and register a new internet address to create a website for the average taxpayer to shove in the amount of taxes they paid last year and get it broken down. If the website has a neutral enough name, people wouldn't RUN SCARED FROM TEH LIBERTARIAN BOOGEYMENZ.

    Or something.

  • ||

    I'm positive that if publishing this sort of receipt for taxpayers were required, it would quickly be politicized beyond any usefullness or truthfullness. Just look at all the CBO estimates showing how well the stimulus is working by spitting out job creation numbers dictated by their model, or exclusion of energy and food costs from core inflation.

    Why doesn't someone make an online calculator to create this kind receipt? It seems like it would be a pretty simple project as long as you were willing to accept approximations.

  • Ben P.||

    Gah. I didn't even see you said this in the same sub-thread to which I replied. I am a goober.

  • ||

    Gosh, everything seems so reasonable. Only a nasty, evil, baby-eating Republican could oppose this.

    Wait, let's make it less reasonable and more, you know, honest...

    -Bailing out the banks: $448
    -Writing a blank check to Fannie & Freddie, so they can buy even more high-default risk mortgages: $739
    -Constituent pork: $367
    -Shovel-leaning ready projects: $1,026
    -Lost fixed assets: $2,864
    -Unsustainable public employee pension promises in fat times: $874
    -Payoffs to the teacher's unions: $639

    And so on...

  • ||

    No, they will say that was paid for by debt, not taxes, so it won't be included.

    And you know I'm not kidding.

  • robc||

    Another good point. You are on a roll in this thread.

    So, not only are the numbers not adding up, they actually need to add up to more than the total paid, balanced out with an "addition debt" line.

  • ||

    In reality, yes. In government, no. They would say that debt is accrued through the issuance of bonds.

  • Rrabbit||

    No, not an "additional debt" line. A "future taxes you still have to pay(*)" line. And another "taxes on past government expenses you still owe(*)" line.

    (*)Interest rates of 6% per year apply.

  • Gilbert Martin||

    Where is the itemized annual interest paid on that debt on their list?

  • ||

    VERY nicely done!

  • KPres||

    What about the corporate tax?

    One line item on this person receipt definitely needs to be this:

    "Higher prices on all goods and services due to the 35% corporate tax rate, which is ALWAYS paid by consumers --- $5,000.00"

  • Paul||

    So for someone making $34,000, their top line item is paying retirement benefits to the wealthy Americans.

  • Bingo||

    Hey, bribing old people for votes isn't cheap.

  • ||

    This receipt is extremely misleading.

    Of his $5400 in federal tax, half is for social security and medicare. And, as others note, the amount his labor is actually taxed is double that.

    Regardless of the missing FICA tax match, this accounting clearly inflates the receipt towards things he might imagine he gets back -- Social Security and Medicare -- and completely downplays the vast spending that the government does that is paid for by taxpayers who earn more than Mr. Median here.

  • ||

    Word, their should be a "receipt for FICA" with the employer match included. On a 50k salary, that's about 7,500 for social security. Sucker.

  • KPres||

    What happens when somebody decides to add up all these "receipts" for everybody in the country and it only comes out to about 35%-40% of government expenses?

    Will they ask "Where is the rest of the money coming from?"

  • ||

    No
    because most people believe that "free shipping" really is free, done by completely altruistic unicorns, powered by rainbow ass propulsion...which also applies to all benefits from the gubermint

  • bubba||

    I attended a college that line itemed student fees in this manner.

    The best part was they let you demand a refund for those student groups you didn't like. So, if I didn't like Pell Grants, I could get a refund of my $29.75.

  • KPres||

    Here's another great one that needs to be added:

    "Lost income/higher prices due to regulatory compliance costs -- $2500

  • ||

    Actually, since we don't have a balanced budget, every Amercian would run out of taxes before we even got to Medicare...

  • Abdul||

    Now that I got a receipt, who do I see about a return or exchange?

  • ||

    Hey, maybe you're right.
    As a Liberal, I figure Social Security and Medicare have the vital constituency of Old People. They can take care of themselves, and if it gets restructured a bit, then it happens. I figure it's well worth it to explain that foreign aid, funding for the arts, earmarks and congressional salaries are really not where the vast bulk of the money is going.

    @KPres "Lost income/higher prices due to regulatory compliance costs -- $2500"

    Yeah, but then you'd have to break it down into 'not having your fingers chopped off in the workplace' and 'having air that isn't filled with toxic fumes' et cetera. Let's just get direct spending there, and we can quibble about the rest later.

  • Pip||

    You forgot forcing churches to throw perfectly good food meant for the poor into the garbage because it doesn't meet the state's fat content guidelines.

  • KPres||

    "Yeah, but then you'd have to break it down into 'not having your fingers chopped off in the workplace' and 'having air that isn't filled with toxic fumes' et cetera"

    And? That's true of any of it. If the military budget was zero we'd be taken over by Cuba. The point here is to show what the costs are. My guess is most people think regulations are free. Just pass a law and it's done.

  • ||

    If the military budget was zero we'd be taken over by Cuba.

    At least we'd be able to smoke in public.

  • ||

    I think a "Total Spent" column would need to exist, to put some perspective on what the contributions of 200M taxpayers add up to. 0.19/person for Congresscritters is easy to write-off as inconsequential until you look at the total.

    And yes, as others have said, the FICA employer match is a must.

  • ||

    Or perhaps, "amount disbursed per recipient", which would make clear that you're spending a lot more to support each individual member of Congress than you are spending to support each disabled vet or Medicare recipient.

  • cynical||

    Apparently one Congressman is worth 1000 soldiers, or something. Good thing the numbers work out so well ($192 versus $0.19)

  • Gilbert Martin||

    "It would make clear the enormous amount of goods and services provided by the government. It would dispel myths: America is not a nation of welfare queens, dependent on the public teat. The amount spent on safety net programs will, to some people, seem stunningly low."

    Really.

    Let's see the govt send out a chart showing who actually pays the bulk of the taxes.

    And another chart detailing all the benefits being received by those who pay no income tax.

    Klein's deal is merely another variant on the old liberal tactic of trying to change the subject to FICA taxes when anyone points out that about half the popualation is not paying any federal income taxes.

    How about a chart showing people who DO pay taxes how much lower they would be if those who don't pay them were required to start paying for the value of the services that they were getting?

  • ||

    equally unpopular are charts showing that the top 10% pay a higher share of taxes than their share of income, and that has increased during the bush years

  • Billary||

    But rich people aren't like the rest of us; they don't pay their fair share.

  • Rrabbit||

    There is a long history of confusing income with taxable income. To have any meaningful statistic, income and losses that currently are not taxable (such as changes in market value of stock market investments) have to be taken into account.

    Say, Warren Buffet shows up in "taxable income" statistics with approximately 50 million a year. But his average annual income per year was a bit more than 1 billion.

    When Buffet said a couple of years ago that his personal tax rate was 17.7%, that was his personal tax rate on his taxable income. His actual tax rate was approximately 1% because the bulk of his income isn't taxable.

  • Masturbatin' Pete||

    There is a long history of confusing income with taxable income.

    There's an even longer history of confusing income with capital gains. That confusion has continued through at least 1:26 AM EDT on October 2, 2010.

  • MJ||

    Great, are you actually suggesting that unrealized appreciation of an asset should count towards income tax?

    If such a thing had been implemented a decade ago what would have said to all the people who saw the value of their homes skyrocket during the real estate bubble but had those gains evaporate in the last three years?

    Also, realize that it is very difficult to tag real value of an asset until you actually sell it. What you suggest would be largely unenforcable, easily corrupted, and an active discouragement to investment.

  • Rrabbit||

    No, of course not, silly.

    I am saying that an unrealized appreciation of an asset should be counted as income when creating statistics on taxes rates as percentage of income paid by different population groups.

  • ||

    Yeah. They also need to release a chart for the guy making $20k a year that pays no taxes and one for the guy making $100k a year that pays $22k in taxes.

    Then the people with higher incomes could at least fight the class war with some ammo.

  • Fred Sanford||

    hmmm, I see military pay, benefits, and retirement broken out, but not for other federal employees, except Congress. Why obscure those numbers?

  • mad libertarian guy||

    Because the military is evil. Duh!

  • cynical||

    Did your wife make you post this? I just saw the same story on the Atlantic.

    "It'd only really work if we have a balanced budget. Or is there some provision to show how much cost to each taxpayer is being deferred by borrowing rather than paying up front each year?"

    Yeah, they should have two columns. One for money the government spent out of your cash, and one for money the government put on your credit card.

  • ||

    Rounding each line item to the nearest dollar and adding yields $3260. So we're missing $2140 of the tax-funded expenditures (not to mention this citizen's share of the deficit), which is about 40% of the taxes paid.

    "selected items" indeed.

  • robc||

    Good point, the numbers didnt seem high enough. If they are going to do this, the total needs to add to that number at the top, even if there is a catchall "other" category.

    Of course, other better not be very big or items should be broken out of it.

  • prolefeed||

    They should have a column which you check off if you want to continue paying for it.

    If you don't check it, you don't pay for it and can't collect any such benefits.

    Now, that would drastically downsize government.

  • Lowdog||

    Because, then there would be poor and old and mentally handicapped people and children dying in the streets!

  • Brett L||

    Think of all the jobs that will produce when the rich people pay to have them removed from the streets they frequent.

  • Trespassers W||

    I applaud you, sir.

  • KPres||

    Tony?

  • ||

    Among the missing line items, from a 2009 outlay chart...

    $232 for TARP

    ...putting it at number 5.

  • cynical||

    They probably also have "if the cost of the program was split up evenly among all US residents, this would be your share", to keep things in perspective.

  • ||

    interesting how "defense" is not listed, only "combat operations in iraq & afghanistan"

    i assume that is to make it look worse by putting all defense spending in that category, but there is a lot more to the military budget than that

  • cynical||

    For it to be honest, it would have to be the difference between current expenditures in all defense categories, and estimated expenditures in those categories if the wars were to end (and, of course, the latter number would have to be used in each category to avoid double-counting).

  • robc||

    Needs a trend.

    So, there should be 5 columns, showing this year and the previous 4, so you can see what programs are going up in cost and which are going down.

    So, for example, people could see the interest on debt going up.

  • jed||

    Interest rate went down, so interest on debt went down.

  • robc||

    Not if total debt goes up more than interest rates goes down. Consider most US debt is longer term, its terms didnt change.

  • ||

    Most US debt is short term. 55% will mature within 3 years, and much of that is within 3 months.

    http://online.wsj.com/article/.....pics_obama

  • robc||

    A lot of people would be upset with $2 for Amtrak, since it isnt even in existence around most americans.

  • ||

    Yeah, it's a great idea, but it bogs down in the details, because everyone will have their own way of presenting the data.

    My preference would be three sections.

    1) What you pay in taxes

    a) $5400 in income tax and fica (for this family)

    b) amount that employer pays

    c) social security/disability/medicare

    d) estimated tax burden of corporate income tax, gas tax, cigarrette tax and other fed taxes on this household, based on income & number of dependents.

    2) Your share of this year's deficit and debt

    a) Your household's share of this year's deficit.

    b) Your household's share of the total debt.

    3) Spending

    How your total of items 1 and 2 are spent.

  • alan||

    from the group Third Way

    Gag!!! The phrase 'third way' is so old it was originally marked by dinosaur urine.

  • DRM||

    Meh. It's far more valuable, I think, to point out that Fascism is the third way . . . both etymologically and in actual economic policy.

  • Mike M.||

    Sure, some silly liberals might think this is a good idea for them right now, but they won't when interest on the national debt eventually becomes the top item on that list.

  • ChrisO||

    "Combine this with a long-time favorite libertarian tax reform—requiring individuals to actually write out a check to the government"

    Now this is something I can wholeheartedly endorse.

    The itemized bill is complete hogwash. The feds don't even know where all that cash is going, and wouldn't be honest about it if they did.

  • ||

    If nothing else, having a receipt like this would set off a debate every single year about what should be itemized on the receipt, etc., which strikes me as a good national conversation.

  • robc||

    A more accurate version:

    $1581 Social Security
    $1510 Dept of Defense
    $1299 Welfare/Unemployment/Manditory Services
    $1030 Medicare
    $660 Medicaid
    $373 Interest on Debt
    ...
    etc
    ...
    ------
    $8055 Total Spending
    $2655 New debt
    ------
    $5410

    Categories are what I could find, obviously they could broken into smaller bits.

  • robc||

    For those wondering about my numbers, I used this for percentages of budget, and found total budgetary spending of $3.55T with estimated deficit of $1.17T.

    Unless I cant do math, all my numbers should be reproducible. Unlike the 3rd way chart.

  • jed||

    Note to everyone commenting here. Buy a calculator, and stop pulling numbers out of your @$$.

  • jed||

    Note to everyone commenting here. Buy a calculator, and stop pulling numbers out of your @$$.

  • robc||

    Learn to fucking single click.

  • robc||

    And why the fuck is that in response to me?

    Fucker.

  • ||

    robc, do you include the employer share of MA and SSI?

  • robc||

    No. I took the $5400 and divided it by the percentages of federal spending (first adjusting for deficit spending, to get to 8055). I then screwed up the last two lines, somehow having 5410 in my head.

    If I had included employers portion, the total wouldnt have come to 5400, would it have?

    That will be on the employers portion receipt form.

  • Mike Laursen||

    A nice start, but it still doesn't give the real picture unless it also covers how much your money has been devalued. Inflation is the new taxation.

  • Billy Shakespeare||

    Excellent point.

    Inflation is big, and is potentially huge.

  • I am not the government's ATM||

    Couldn't we simplify this? Just call it "waste".

  • ||

    That's the easy half of the battle. It'd be nice if we could roll up all the excise, property, local, and national income taxes, all the fees, charges & surcharges (I don't know the difference), bond payments, paid by each and present it as an invoice. I think people might be surprised how much of their labor and investment belongs to the guys selling protection.

  • Almanian||

    Fuck me. Take everything below "Military Retirement Benefits" and stop spending it. As a start. We'll go from there.

    Oh, we'll give back $0.05 of the $0.19 for "Congressional Salaries and Shit".

    Fuck you, Federal Government. Thanks a lot, Peter - I needed this before heading off tae bed, ya bastard....

    *shakes fist*

  • Mr. FIFY||

    I'm for this, as it could backfire and make a lot of people angry as fuck.

    Couple that to the 1099 filing requirements proposed in the healthcare bill... there aren't enough people willing to march on DC with pitchforks and torches, but there should be.

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