Quote Of The Day

Now we learn that on an income of $1.7 million, the Obamas paid $450,773 in taxes, taking full advantage of the Bush tax cuts. I think it is fair to ask: If the President believes that people like him ought to be paying more, then why didn’t he pay more? There is absolutely no rule against sending in more money than you owe.” – Steven Landsburg, professor of economics on Obama and Taxes

Update: For readers interested, more on this discussion here.

22 Responses to “Quote Of The Day”


  • There’s a difference between “feel good” actions and “do good” actions. Obama can send more money, but is that actually going to accomplish anything? No. I view boycotts this way. Like drinking Coke or buying gas at BP. I could stop, but what would that accomplish? Would Coke notice if I didn’t drink Coke? No. If there was a sustainable organized campaign then maybe they would, but such a thing doesn’t exist.

    Whether Obama is right that taxes on the rich should be raised (despite the fact that he just lowered them while raising taxes on the poor) is something that should be debated on the merits. He didn’t pay more than he needed to, but maybe that’s because he would regard it as meaningless. It wouldn’t actually do anything. But passing a law would do something.

  • This is a silly argument. I’ll let Kevin Williamson explain why.

    http://www.nationalreview.com/corner/265289/paul-ryan-hypocrite-kevin-d-williamson

  • Jon,

    Why meaningless? Steve Landsburg argues that its MORE meaningful, he writes:

    Now you might say that the Obamas believe it’s important to raise many billions more in taxes, and that sending in an extra hundred thousand or so would make essentially no progress toward that goal. But I don’t think you’d continue to say that if you thought about it. If the Obamas are one of, say, a million families in their financial position, and if the Obamas, and only the Obamas, send in some extra money, that’s only (by Mr Obama’s reckoning) one one-millionth as good as repealing the Bush tax cuts — but at the same time it’s costly to only one one-millionth as many taxpayers. Surely these things should scale.

    In fact, since you’d expect the first hundred thousand to go to the most urgent use, the president’s contribution should be worth more than one one-millionth of a million contributions, while still imposing costs on only one one-millionth as many people. If repealing the Bush tax cuts is a good deal, the Obamas’ extra voluntary contribution would be an even better one.

    Your thoughts?

  • LaurenceB,

    There is a difference though: with government programs and transportation, you are already forced to pay into it. The “free-market” alternative is to get rid of BOTH the paying into and the benefiting from. If you are already FORCED to pay into it, I don’t see it as hypocritical to get the “benefits” of it.

    For example, if it was legally possible, I would opt out of social security and other government programs. But I would only do so if they let me keep my payroll taxes! Forcing me to give up my payroll taxes, year after year, AND then asking me to ‘morally’ refuse to get on social-security is the opposite of hypocritical: its an actual endorsement of a government program I may be against (it would be like donating money to the social-security ’cause’).

    So I see the two as fundamentally different.

    Let me give you another analogy: let’s say that hypothetically, Obama and even Bush had 18 year old boys at the time that the Libyan war and Iraq war started, respectively. I truly believe that it would have been hypocritical for them to both advocate for each war and NOT encourage their son to go fight said war. Wouldn’t you?

    Now lets say you have two citizens that are against both wars. Yet their son was drafted and forced to go anyway. Lets say god forbid, their son died in the war and left no surviving relatives except his father. Would it be hypocritical for the father to have accepted the life insurance payment? I certainly dont think so! Though he was against the war…his son was forced and went.

    Obama, on the other hand, is like the president who advocates for war but refuses to send his own son. Paul Ryan, is like the father opposed to war.

  • I don’t get his point on scaling.

    He says that Obama’s additional payment would fund the most urgent use. Why think that? It would probably end up reducing government borrowing by that amount with negligible effects. It’s a feel good action, not a do good action. Tax increases may actually do some good. His additional payment wouldn’t.

    Another way to look at your response to National Review is to say that if Obama pays additionally he should have an expectation of receiving the corresponding benefits. Let’s say he’d want a more egalitarian society and it’s consequent benefits. Maybe he doesn’t need it personally, but it gives him pleasure to drive through a city like Chicago and it doesn’t have a south side awash in poverty. If he alone pays he won’t expect to receive that benefit. If everyone does he will. So expecting him to pay isn’t rational. It only produces the benefits if everyone pays.

  • Jon,

    His point is the economic concept of marginal gain. You are right, it wont “solve” the problem, but it will help. Think about it this way: lets say I believed that people should have a carbon footprint smaller than X. I’m even using the power of the government to FORCE this restriction on others. Do you think it would be hypocritical to, prior to the law being established, currently live with a carbon footprint of X+? I certainly think so!

    Now, you might rebut that one person reducing their carbon footprint to X will not have the same effect as a million people reducing their carbon footprint to X. Which is true. But it scales. If its good for a million people to reduce their carbon footprint by X, its ALSO good for ONE person to reduce their carbon footprint by X. Its better for TWO people to reduce their carbon footprint by X. Its even better for THREE people to reduce their carbon footprint by X. Its even better for FOUR….all the way to a million. If its a MILLION times better to have a million people reduce their carbon footprint by X, its atleast 1x better to have ONE person reduce their carbon footprint by X. These things scale.

    And Landsburg’s argument is even stronger: because of diminishing marginal returns, its actually the first reductions that matter most. To keep the same analogy, it was probably the environmental regulations of the 1970′s that had a bigger impact than (assuming they are scaled equally) environmental regulations today. Moving someone from coal to nuclear power is a far bigger gain than moving someone from nuclear power to say wind power, or solar panels.

    The same with added government tax revenue. Say the Bush tax cuts do expire. You would expect the first government programs to be funded to have the most need for the funding. After a while, after more and more tax revenue keeps pouring in, eventually you start hitting less needy government services and some even wasteful ones. So on this point, Obama’s added tax revenue would have had more of an impact than the millionth taxpayers added tax revenue.

    In short, if its good for the rest of us, its good for YOU! And coming from Obama, the MAIN driver of expiring Bush’s tax cuts overall – its especially hypocritical.

  • Jon,

    Lets use your analogy, you write: Let’s say he’d want a more egalitarian society and it’s consequent benefits. Maybe he doesn’t need it personally, but it gives him pleasure to drive through a city like Chicago and it doesn’t have a south side awash in poverty.

    But his payment will get you on the way towards that goal (again, assuming as Obama and his cohorts do that added government tax revenue gets you towards that goal). Maybe it will help just one family out of poverty. While thats not full egalitarianism, it helps! And it has the same cost/benefit (atleast!) as one million people doing the same. One million people doing the same might bring one million families out of poverty – also going towards an egalitarian society, but thats the same as one persons taxes bringing one family out of poverty.

    And given diminishing marginal returns, like I said above, Obama’s tax revenue would get us closer than the last persons tax revenue.

  • I truly believe that it would have been hypocritical for them to both advocate for each war and NOT encourage their son to go fight said war. Wouldn’t you?

    No.

    But let’s consider one of Kevin Drum’s scenarios. The example he presents is both a little cleaner, since it doesn’t require more than one person, and also doesn’t involve the compulsion that you object to.

    http://motherjones.com/kevin-drum/2011/04/annoying-hypocrisy-trope#disqus_thread

    So… A lawmaker who rages against earmarks, yet accepts them for his district (voluntarily, I might add). Hypocrite, or not?

    I think not.

    Feel free to disagree, but I think Drum on the left, and Williamson on the right both make a compelling case.

  • I see now what you mean by scaling. But I still don’t agree. It scales, but for a lot of effort on my part the benefit is minimal. Suppose I bike to work every day and it takes an hour. The effort is large. What’s the payout? It’s not noticeable. So it makes sense to skip it. If however there was a law and I knew everyone was doing it I’d know that my large effort will in fact produce an improved outcome.

    That applies to the egalitarian claim. No, him paying won’t help a single family because state welfare measures are not going to be impacted by an extra quarter of a million dollars in the general fund. It really won’t do anything for a single family. And it’s a lot of effort for a single person (Obama). Giving up that money is like him putting forth effort and giving it away.

    He really wants to drive through south Chicago and see happy people, not slums. He’s willing to make the effort and give his money away. You’re asking him to make the effort knowing that it won’t change anything he sees in south Chicago. There’s no point. You pass the law and you get everybody on board. Then when he makes that effort and gives away that money he can expect to be rewarded. Seeing happy people, not slums, gives him pleasure. It would give me pleasure. I’d pay more if I thought it would make the difference. I’m not going to pay more without a law because I know nothing will change on that scenario.

  • LaurenceB,

    I still disagree. I think a politician that is willing to send MY son to war but not HIS son is in fact a hypocrite (unless of course its a security concern…ie, son of Obama would be in danger precisely because he is son of the President but thats a different point).

    I also think that if you are opposed to earmarks, you should be opposed to them in your district and do what you can to prevent them from going to your district!

  • Jon,

    But the effort also scales! Its the denominator. The tax is the numerator. No matter how you cut it, the ratio is the same (and again, this ignores diminishing marginal returns!).

    Since you are an engineering, lets speak mathematically. What I am arguing is that:

    (1 persons tax revenue)/(1 persons effort)

    is THE SAME (Equal to!) as

    (1,000,000*(1 persons tax revenue))/(1,000,000*(1 persons effort))

    What you are arguing is that this is worth it:

    (1 persons tax revenue)/(1 persons effort) is the same as (1,000,000*(1 persons tax revenue))/(1,000,000*(1 persons effort))

    I’m saying FINE, *IF* you think that is worth it (as Obama certainly does!), then this must be worth it too:

    (1 persons tax revenue)/(1 persons effort)

    Sure, I concede that his payment wont make a big difference. But it certainly WILL make a SCALABLE difference. Meaning, it gets us CLOSER to that ultimate goal by a SCALABLE amount (if his added tax revenue was 1% of what would be collected, it would get us closer to that goal by 1%).

    If that still doesn’t convince you, then address my analogies above. What about the war example? What about the environmental example?

  • Really quickly because I’m about to leave so I can’t address all your analogies, but another quick thought. There’s two options.

    1-Make a lot of effort with an unnoticeable effect.

    2-Make a lot of effort with a noticeable effect.

    Obama is willing to do it in case 2, but not in case 1. I think that’s perfectly reasonable.

  • I’ll wait until you have more time. I think the analogies get at the heart of our disagreement.

  • I guess we will just agree to disagree. I have absolutely no problem with a lawmaker favoring legislation to prohibit earmarks while simultaneously doing everything he can to obtain earmarks for his district.

  • I’m sorry but the McArdle quote is either intentionally misleading or just idiotic. McArdle states:

    What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we’d give the money to charity.

    Am I really supposed to believe that McArdle thinks that Obama and other wealthy individuals such as Warren Buffet who are in favor of higher tax rates on the wealthy are “really in favor of higher taxes on other people”? Really? Seriously? I’m supposed to believe that McArdle actually believes that? Really? Because I don’t think she’s that stupid.

    Nobody could listen to Obama or Buffet and believe they just want other people to pay more taxes. To the contrary, they are sincerely committed to a plan which they feel (rightly or wrongly) will help the country even if it means more sacrifice on their part. And as much as McArdle would like us to believe otherwise, there is nothing wrong with that. It is the very definition of patriotism.

  • LaurenceB,

    Nobody could listen to Obama or Buffet and believe they just want other people to pay more taxes.

    Her argument isn’t that they don’t say this clearly, her argument is that their actions don’t show this.

    At the very least, you can agree that Obama and Buffet dont believe they should pay taxes unless everybody else at their income or above is also forced to pay the same percentage (or more!) in taxes.

  • Btw, I ran yours and Jon’s responses past Steven Landsburg in the comments section of his blog, this is what he responded:

    I think it’s important to distinguish between a) situations where the fact that others aren’t contributing makes my contribution worth less, b) situations where the fact that others aren’t contributing makes my contribution worth more, and c) situations where the fact that others aren’t contributing doesn’t change the value of my contribution. I would absolve people of the hypocrisy charge in case a). For example, if I think all 100 of us should push on this rock so we can move it out of here, but none of you guys are pushing, it would be silly for me to push, since the rock won’t move anyway. The problem is to decide what are examples of type a), what are of type b) and what are of type c).

    I am inclined to think that all of the examples in your new post are of types b) or c), hence arguably hypocritical.

  • I think my prior post sort of addresses the environmental analogy. I can make a lot of effort and not enjoy any benefit or I can make a lot of effort and enjoy the benefit. Doing it for the former is fine. Nothing wrong with it. But if you choose only to do the latter that isn’t hypocrisy.

    I think the war analogy is useful. Suppose Bush has a son and he wants to fight scary Muslims. But the country disagrees. Even though the country doesn’t agree to fight them as a whole should Bush send his son to fight all terrorists in Afghanistan? It would do some marginal good. He might kill 1 or 2. That scales. Of course he’d die, but still, if he really believes he should send his son.

    In Bush’s mind killing one or two isn’t going to seriously diminish the terrorist threat. He doesn’t actually get to enjoy the benefit of a reduced threat, but he pays a large burden to receive a marginal benefit. Should he do that to avoid charges of hypocrisy?

  • Her argument isn’t that they don’t say this clearly, her argument is that their actions don’t show this.

    If that’s her argument, she should make it. Instead she claims they are insincere. If she made the argument you claim she is making, she would still be wrong, but at least it wouldn’t be so insulting.

    At the very least, you can agree that Obama and Buffet dont believe they should pay taxes unless everybody else at their income or above is also forced to pay the same percentage (or more!) in taxes.

    Of course I agree with this. So what?

    By the way, do you take the mortgage interest deduction when you file your taxes? Because from our previous conversations I got the distinct impression you were opposed to tax credits. Doesn’t that make you a hypocrite? (By your definition, not mine.) I hate to make this personal, but perhaps introspection would be appropriate for you at this time. Nobody is forcing you to take that deduction. Or, as McArdle would say, perhaps you are only interested in seeing other people forgo that deduction? Come on, HP, as you would say, let’s see actions, not just words.

  • Okay, Jon’s (about military and sending your son) point AND LaurenceB’s point (about mortgage deduction credit) are both really good. And definitely something I have to chew on. Maybe I am a hypocrite? Or maybe Obama isn’t one after all? Let me think about this for a while.

  • Okay, the more I think about it the more I still think Obama could be charged with the hypocrite tag. Let me explain:

    Jon,

    Your point isn’t the same as mine. In your analogy, the president sending his son alone would be a DRAMATIC rise in risk. Far above him being merely one soldier in an army of many. For example, it would be like saying that Obama is a hypocrite if he didnt give almost all of his income to taxes to help accomplish his government policies. Clearly I am not saying that.

    I am merely asking him to do what he wants everybody else to do. Risk (or pain) is constant.

    LaurenceB,

    Regarding the mortgage interest deduction, this is what Professor Landsburg responded, which I think makes sense:

    …I think you can oppose the deduction, take the deduction, and still not be a hypocrite. Because in this case, the reason for opposing the deduction might very well be that you think it screws up the housing market, which is something that your deduction has no effect on.

    Now if you *bought a house because of the mortgage interest deduction* while still opposing it, that, I think, would arguably be hypocrisy. Your argument is that the deduction causes too many people to buy houses, and then you go and buy a house because of it….

    This makes sense. It’s not just a tax increase that Obama supports, its the reasons WHY. He thinks the rich should give more of their “fair share” to help fund the United States deficits and government programs. Well he could already do that…and it would go towards achieving the same goal (again, proportionally!) yet he doesn’t.

    So just to be clear, in order to get the hypocrite charge a minimum of three things must be established: 1. the “pain” must be the same, 2. your contributions must atleast “marginally” (proportionally) help the “problem” and 3. You rationale behind the the scenario must work in both situations.

    Here is a better example (stolen from the comments on the Landsburg post): Gross shortages of blood causes Obama to argue that the healthiest Americans should be forced to “donate” a pint per quarter. Yet Obama, one of the healthiest Americans, is willing to wait until the law passes before he “donates.” Hypocrisy? I certainly think so.

  • I went through McArdle’s several posts on this again and thought I’d quote some of my favorite quotes of hers that explains the hypocrisy charge best:

    People who say they want higher taxes on themselves generally think the government does not have enough money to do the things it is already doing; as long as you think the government has a better (in some moral sense) use for the money than you do, then you have a moral obligation to send it in.

    Or this:

    No, I simply cannot grant that people really believe that they pay too little in taxes. It seems more like they think the government has a better use for everyone else’s money, and should therefore take it. They believe this so strongly that if they have to pay some of their own money to rectify the situation, they will do so. In other words, they don’t so much want higher taxes on themselves, as to purchase the good “State coercion of other affluent people”. That is not the same moral intuition as “I have too much money, and the government should take it away”, however much nicer it would be if that were true.

    Or this:

    I concede that there is a collective action problem in providing actual public goods, like the military and statues of politicians on horseback; that is why I am not an anarchist, or even a minarchist. There is also a collective action problem in setting up a tax system in the first place; people will not participate if they think other people are not participating. This is one of the many problems with the budget of Eastern Europe.

    But if you think that you have more money than is fair–money that the government should, by rights, be using for some more noble purpose–then there is no collective action problem. You can send the money to the government. They will spend that money on either actual public goods, or things that you think should be paid for out of the common weal. (Or at least, they will do this to exactly the extent that they would if you plus 20 million of your fellow citizens were forced to send them money via a new tax bill.)…You, alone, can secure more public goods by putting your extra dollars in the treasury–exactly as many public goods as your dollars will secure if you vote for a politician who extracts that tax money, plus the same amount from other similarly affluent people, via the tax code.

    This last point is the main point I dont think is grasped by Jon in our dialogue. Just like the environmentalist analogy above, your marginal tax rate, or reduction in carbon footprint, will have the exact same marginal affect – regardless if others also participate or not.

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