This article from the Economist looks at a behavioral argument for higher taxes. The article examines and summarizes a paper from Yale University on the subject of how higher taxes could help poor countries get better governments. Many countries in Africa have relatively low % of GDP as taxes in comparison to Europe and the United States. As a result some of these African countries receive foreign aid to close that gap. However, the paper argues that much of this money is pocketed by corrupt politicians. The behavioral aspect showed that citizens in these countries were less upset that money they MIGHT receive was stolen but were shown to be infuriated when their taxes were pocketed. Because of this idea, the conclusion of the paper suggests that if a country has higher taxes they will typically have a more politically engaged public ensuring that their taxes are being spent properly.
Do you agree or disagree with the paper presented by the article? Why or why not?
Source: http://www.economist.com/news/finance-and-economics/21642199-behavioural-argument-higher-taxes-no-representation-without-taxation
3 comments:
While higher taxes may help, the first issue that must be solved is corruption. Undeveloped countries where a large gap between the rich and poor exists, more often than not have "natives" at the bottom and "colonizers" or people of European descent at the top in terms of social hierarchy. I do believe that higher taxes will cause the rich to expect more development, but it must be insured that the poor are not suffering as a result of the increase.
In accordance with the previous comment there is no guarantee that a large portion of taxes might not be pocketed by the government, or redistributed unfairly. Unless there is a proper system in place higher taxes could very well make the citizens poorer, and they may not even get any benefits, social welfare, or public services from the government. However, it seems like a good model as long as the citizens are politically active, and are able to direct their taxes for their benefit rather than the governments’. The main point is that the citizens should not be suppressed by the powerful government.
I have to agree that government corruption is the real issue here. Even if paying higher taxes would create a more politically engaged public, there is nothing that public can do if their government is corrupt.
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