Would You Like a Receipt With Your Taxes?

Yesterday, Ezra Klein flagged an excellent idea from progressive think tank The Third Way: why don’t we give taxpayers a receipt for their taxes?

As The Third Way’s David Kendall and Jim Kessler point out, many Americans pay more in taxes than on any other single thing. But for the most part they have no idea what their tax money actually buys. As Klein notes, Ethan Porter made a similar proposal earlier this year. Kendall and Kessler point to a 2005 Washington Post survey that found half of Americans thought foreign aid—which actually accounts for just around 1% of our spending—was one of the two largest areas of the federal budget. The federal budget is massive and complicated, after all, and politicians tend to inflate the importance of things like foreign aid rather than face up to the need to make cuts in social security or military spending.

So Kendall and Kessler propose that each taxpayer get a receipt saying roughly what their taxes bought. It actually wouldn’t be that hard to figure out, although few taxpayers are going to do the math themselves. Kendall and Kessler offer an example of what this might look like, breaking down the taxes of someone who pays $5400 in federal taxes. Inspired by their idea, Kareem Shaya has already mocked up a calculator so you can see where your taxes went. Producing receipts for everyone would probably add a few pennies to the bottom of our tax bill, but many of us would happily pay a few cents for a receipt showing where our tax dollars went.

It would be worth it in any case. Kendall and Kessler think it would help their progressive cause by showing that most of the programs they support don’t cost very much money at all. But of course it’s possible that taxpayers will still think that the small amount they pay for the Environmental Protection Agency is too much. The main thing is that they would be able to see for themselves how much they are spending to fund different government programs.

That would make it harder for politicians to distract Americans from the real issues. Everyone would be able to see that most of their taxes are spent on Social Security, Medicare, Medicaid, and the defense budget. They would know just how much the wars in Iraq and Afghanistan actually cost them, as well as how much money they spend every year servicing the national debt. They could ask themselves whether they really want to spend $30 of their own money on NASA. Even though they might think we spend pay members of Congress too much, they might worry less about it when they know how little Congressional salaries actually cost them. Above all, it would make us as a people better able to figure out how to reduce our tax bill and demand our politicians focus on what really matters to us.