It may be more natural to compare to the situation where you have the same tax level but it’s going to the government, rather than the case where the you have less tax. That way we don’t have to consider the welfare or incentive effects of changing the tax rate.
Advantages compared to general taxation:
May be easier to build support for
Allows targeting of very high-value opportunities
Disadvantages compared to general taxation:
Money gets distributed according to what sounds good
Encourages people to give to charities that benefit them
I think this last could be a big one. If this tax were in place I’d expect to see a lot more money going to services (art galleries etc.) providing public goods in rich neighbourhoods.
The penultimate one could also be a problem. At least in the UK, government spending is meant to go past cost-benefit analysis. This keeps it doing a reasonable job of funding effective things and skipping ineffective things. This tax looks better the worse-run government spending is.
Even with good government spending it could end up having a beneficial effect if it increased the proportion of money spent on international aid. I’m not sure whether we should expect that.
Money gets distributed according to what sounds good
Isn’t that largely the case with government spending anyway? We have many government programs that merely sound good to voters/politicians without actually having much economic justification—from the ethanol mandate to the minimum wage to corporate welfare to the war on drugs to healthcare that fails RCTs to state funded art. My impression is the UK is in many regards similar to this. Whether replacing this with charity allocation would lead to more or less ‘stuff that sounds good but is actually useless’ seems like an open question rather than a clear mark against the policy.
During the policy comment project by the UMD effective altruism group, we found that in some government agencies there actually is a degree of cost effectiveness analysis and meritocracy. This leads me to expect that the government will do slightly better than the population at deciding where to give in a more direct manner. The government is less likely to actually go through with something like the ALS ice bucket challenge, but when you have this sort of tax system it seems to me that such things might get economically damaging levels of funding, and that this will discourage future donations and charity in general.
Effective altruism needs to be much more popular for this tax idea to have a chance of being a good thing.
It’s definitely an interesting idea.
It may be more natural to compare to the situation where you have the same tax level but it’s going to the government, rather than the case where the you have less tax. That way we don’t have to consider the welfare or incentive effects of changing the tax rate.
Advantages compared to general taxation:
May be easier to build support for
Allows targeting of very high-value opportunities
Disadvantages compared to general taxation:
Money gets distributed according to what sounds good
Encourages people to give to charities that benefit them
I think this last could be a big one. If this tax were in place I’d expect to see a lot more money going to services (art galleries etc.) providing public goods in rich neighbourhoods.
The penultimate one could also be a problem. At least in the UK, government spending is meant to go past cost-benefit analysis. This keeps it doing a reasonable job of funding effective things and skipping ineffective things. This tax looks better the worse-run government spending is.
Even with good government spending it could end up having a beneficial effect if it increased the proportion of money spent on international aid. I’m not sure whether we should expect that.
Isn’t that largely the case with government spending anyway? We have many government programs that merely sound good to voters/politicians without actually having much economic justification—from the ethanol mandate to the minimum wage to corporate welfare to the war on drugs to healthcare that fails RCTs to state funded art. My impression is the UK is in many regards similar to this. Whether replacing this with charity allocation would lead to more or less ‘stuff that sounds good but is actually useless’ seems like an open question rather than a clear mark against the policy.
During the policy comment project by the UMD effective altruism group, we found that in some government agencies there actually is a degree of cost effectiveness analysis and meritocracy. This leads me to expect that the government will do slightly better than the population at deciding where to give in a more direct manner. The government is less likely to actually go through with something like the ALS ice bucket challenge, but when you have this sort of tax system it seems to me that such things might get economically damaging levels of funding, and that this will discourage future donations and charity in general.
Effective altruism needs to be much more popular for this tax idea to have a chance of being a good thing.