A Monumental Error

29 June 2015

Imagine that, under some law passed long ago, some group of persons was able to take $10 000 from you, without your consent. Further imagine that they spent this money on a statue of your beloved dog, Earl, and presented it to you.

The statue is actually rather nice. The artist truly managed to convey Earl's personality! Setting aside what it cost you, you'd like it a great deal. And, if you'd tried to have one made like it, it would perhaps have cost you $20 000, rather than $10 000. (They have many statues made, and get each at significant discount.)

None-the-less, you don't like it as much as you'd like $20 000; you don't like it as much as you'd like to have kept your $10 000. And no one else is willing to pay $10 000 for a statue of your dog.

Most of us would say that you're entitled to feel yourself worse-off, not-withstanding that, by some accounting, you've got a $20 000 return on a $10 000 cost.

Yet officials and other citizens who complain about Federal tax burdens (or about intervention in general from the Federal government) are often mocked as supposed hypocrites if they come from jurisdictions in which the Federal government spends more than it takes in revenue. The principle may be exactly the same. Even if the Federal government delivers money (rather than commodities) to the constituent state, if it requires that the money be spent in a particular way, then this is like compelling someone to buy a statue of Earl. And the constituent states were not themselves the taxpayers, so giving those states money without mandates still leaves people with reason to feel aggrieved, even when the money is more than that taken from taxpayer. (It is not as if each constituent state has just one taxpayer who is also its one voter, able then to direct how the money be spent.)

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