>"An alternative would be a country full of people so similar to you that the average person would feel like their countrymen might as well be them."

What? If people really felt that way there would be no need for taxes.

If you have a lack of self-interest (or the sense of "self" is altered to refer to the group) you would freely give money to each other.

The only time taxes are required is when people will not freely give money for a project. That is literally the only reason taxes exist. Nothing is stopping people from donating to the government.

In fact, I was just thinking the other day that 50 million trump voters could donate $100 each to "build the wall" and be done with it. You could probably even donate $25/year for four years. $5 billion is nothing at those scales yet there is all this bickering (supposedly) about it.

Just because everyone is like me is not enough to for voluntary payment to work. The issue is when people can not pay and get what they want they will simply not pay.

If me and 10,000 people want a waste treatment plant we can individually chip in. But, in that case defecting would be so common that it's unlikely to be built. Or, we can vote to make payment mandatory and get what most people want, but nobody wants to pay for.

Now, if you disagree feel free to start a build a wall fund. It can work for specific kinds of things where donations feel good.

>"If me and 10,000 people want a waste treatment plant we can individually chip in. But, in that case defecting would be so common that it's unlikely to be built."

Ok, but my point is limited to the fact that taxes only serve a purpose when people will not voluntarily fund a project. So this agrees with me.

It delusional to think taxes are something more than a government taking your money and spending it on stuff (which may or may not benefit you).

>"Now, if you disagree feel free to start a build a wall fund. It can work for specific kinds of things where donations feel good."

I could personally care less whether there is a wall or not. It seems irrelevant beyond as a symbol that immigration laws are being enforced.

The distinction I am going for is people who would donate if and only if their donation makes a difference to project completion. If you can save your 100$ and still get what you want then that’s different than your 100$ being what allows something to happen.

My 100$ is not going to cure cancer so I don’t donate to cancer research. But, if I knew it would make the difference between a cure and no cure, then I would very much donate 100$ to end cancer.

>"The distinction I am going for is people who would donate if and only if their donation makes a difference to project completion. If you can save your 100$ and still get what you want then that’s different than your 100$ being what allows something to happen."

So you claim people won't voluntarily fund a project like a wastewater treatment plant since it doesn't make them feel rewarded or some other mental thing. Fine, doesn't matter why they won't do it. My point is that's the only time taxes are required to get a project done.

>"My 100$ is not going to cure cancer so I don’t donate to cancer research. But, if I knew it would make the difference between a cure and no cure, then I would very much donate 100$ to end cancer."

Even the NIH admits medical researchers waste 90% of the funds they pass out (I would put it much higher), so yea there really is no reason to give them any more money: https://nihrecord.nih.gov/newsletters/2016/07_01_2016/story3...

Cancer research is only one example, a new road also requires a minimum amount of money. Many people would happily pay for their chunk of a new road/bridge if it made the difference between having it and not because the cost is less than the utility. But, you don’t see charities to build roads because that model does not work in that context.

As to efficiency that’s not really relevant. What I pay to see a movie is divorced from what it takes to make the movie. All I care about is the utility.

If taxes didn't fund roads, businesses would fund them to transport their stuff around. Since an empty road is wasteful, they would also likely be toll/subscription/customers-only based for whoever else. So you would need to pay if you wanted to use the road. Now if a bunch of people want to donate a road to the world (like open source, it would happen), that is great too.

That’s a theory, but in practice that’s not what you see happen. Companies build a lot of really bad roads when they need them to get from A - B for example logging.

But, individual roads fit into a larger context. If you want to get from A to B and there is a road from A to C and from C to B then the utility is limited to time saved. Companies rarely build such roads and it’s even rarer to see them turned into public toll roads.

The US interstate highway system for example provides minimal individual benefit over existing roads, but massive collective benefit. Worldwide you don’t see companies building such things even when the demand is there.

>"That’s a theory, but in practice that’s not what you see happen. Companies build a lot of really bad roads when they need them to get from A - B for example logging. [...] Companies rarely build such roads and it’s even rarer to see them turned into public toll roads. [...] The US interstate highway system"

Why would companies be building roads like that when there is no need to do it?

>"Worldwide you don’t see companies building such things even when the demand is there."

This would be interesting to look at, where is there demand for roads?

> Why would companies be building roads like that when there is no need to do it?

Need is a poor way of looking at investments. Having a more direct route reduces travel costs. Which is while people use Toll Road‘s even when their are generally other options.

If you want to make the suggestion that companies will make toll roads you need to explain why the don’t even when their are many profitable bridges etc. Toll bridges could be profitable in many places yet they are not built largely becase the cost is so extreme.

I meant that in the US everyone expects the government will provide roads, and there are already many good roads to use for free (eg the Interstate Highway system).

As a result, people are not willing to pay much for more roads, so they aren't going to be built. It may not even be legally possible in many cases under current regulations.

Being US specific is not meaningful when it does not occur in any country.

>>The only time taxes are required is when people will not freely give money for a project. That is literally the only reason taxes exist. Nothing is stopping people from donating to the government.

I like this point and I make it a lot to my Democrat friends who insist rich people should pay more taxes. These people use the fact that they are themselves rich to support their argument ("I should pay more taxes too, you see!"). I always ask them, "Then why don't you? The Treasury accepts donations, you know."

It would be a persuasive gesture for folks like Bill Gates and Bernie Sanders who are insisting their tax bracket should be higher to write big checks to the Treasury for what they think is morally right.

But of course, they won't. Nor should they -- top charities deliver much higher societal ROI than government, in my opinion. And apparently Gates et al. agree with me privately. Publicly... they are all for higher taxes as long as it's forced by threat of imprisonment, apparently.

Systemic issues are not solved by individual action. Software people (generally) seem to understand that in our field; it's why we have standards and code reviews. I don't understand why that understanding leaks out of one's brain when it's applied to the rest of the world.

The issues that proponents intend to address with greater taxation on the wealthy have remarkably little to do with "the government doesn't have enough money". They have to do with "taxes form economic incentives and the current set of incentives suck for everybody". An individual--yes, including Bill Gates--paying more taxes has marginal impact on the systemic issues of high-end under-taxation. Had the phrase not been co-opted by dirtbags, we'd probably file the act you are asking your "Democrat friends" about under...wait for it...virtue signaling.

Taxes are more than just a revenue source, they also change people’s bahavor. So, donating money to the government and raising taxes results in different outcomes. I don’t think the US government needs more money, but the current tax structure distorts the economy and creates inefficiency.

Longer term, having the rich pay little taxes destabilizes the nation. Democratic rule is not perticularly stable over time and the US is heading down a very dark path.

In the end their are not enough billionaires where revenue from them really matters. Higher taxes on competent wealthy people has little real impact. However, ultra low capital gains is crital for creating a group of people who are incompetent, inherited lots of money, and stay powerful.

> "The only time taxes are required is when people will not freely give money for a project. That is literally the only reason taxes exist. Nothing is stopping people from donating to the government."

This really sounds true, but it disregards game theory. For concreteness, let's say the government proposes to upgrade a waste processing plant for $500 million, and you think it's a pretty good idea. There are varying levels of being willing to "freely give money":

1. You are willing to personally pay for the waste processing plant out of your own pocket. You happen to have $500 million, and regardless of what anyone else in the country thinks, you think the waste processing upgrade is badly needed and you're willing to devote your entire personal fortune to it. Maybe the waste processing plant will be named after you.

2. You are willing to pay for it, but only if your fellow citizens also pitch in. The waste processing plant serves 5 million people in the area. You aren't willing to personally pay $500 million, but you are willing to enter a contract with your 5 million fellows that you'll all pay $100 each.

3. You would be willing to join a pact to pay for it, but not if you can easily get away with being a free rider, where the plant gets built without your support. If a generous billionaire will personally donate to the government to pay for the entire thing, then why should you pay anything? Or, if 1 million of your fellow citizens will happily pay $500 each, then why should you pay anything? But that's not to say you don't think the plant is worth the money. You'd even be willing to pay for it if there were no other way to get it built. You'd just prefer not to waste your own money on it if the plant gets built even when you opt out of the payment contract.

Unfortunately, the common mentality of option (3) usually prevents options (1) and (2) from being feasible, because anyone who doesn't agree to pay still gets the benefit of the plant upgrades. Option (1) can still work for very prestigious projects that make a good legacy-building donation, but probably not waste processing plant upgrades. The free rider problem prevents almost anyone from voluntarily forming a pact to share the cost burden even when the plant upgrades are direly needed.

Fortunately there is a fourth option.

4. You would be willing to pay for it conditional on your fellow citizens fairly sharing the bill. Thus you support entering a mutually-binding pact which will also bind any potential free riders in the municipality who also benefit from the waste processing plant. The pact takes force as long as the motion to upgrade the waste processing plant wins majority support. In order for this kind of pact to be possible, you all (even the free riders) voluntarily agree ahead of time to support the legally-binding force of these kinds of pacts, and the conditions under which the majority will be determined. In other words, you choose to live under a democratic government.

Of course there's also a fifth option:

5. You don't think the waste processing plant needs upgrades, and you don't support yourself or anyone else paying for it.

I often hear from Americans that taxation equates to theft, or slavery, or being held at gunpoint to pay for other peoples' things. But this naively assumes that anyone who doesn't have opinion (1) must have opinion (5). In fact, I think the vast majority of people have opinion (4), because it's the Nash equilibrium for people who support a public works project, but I never hear opponents of taxation even talk about the existence of opinion (4).

Perhaps they haven't imagined that someone would be unwilling to donate $100 to the government, but be enthusiastically willing to have that same $100 forcibly taken from them (as long as it's also taken from their fellows)? I certainly am. That's why I vote to raise taxes even though I wouldn't donate to the government.

This concern for "free riders" doesn't seem appropriate to me. Who cares as long as you get your waste treatment plant (or whatever) for the stated price?

Was my explanation inadequate? We're not the people in category (2) who are concerned about free riders; we're all the people in category (3) who would be free riders. But we also want our water treatment plant. And we are willing to pay for it, but only if we have no way to personally avoid the obligation ourselves. And the same is true of our peers. We're an entire civilization of would-be free riders. So we're stuck because nobody will personally commit to pay unilaterally, even though we all want to. So how do we make ourselves happy? How do we get together and sign a contract to pay for it, without defecting on each other?

That's what taxes are. They're not there to coerce payment from people who aren't willing to donate. They exist to coordinate payments from a bunch of people who want to get things done but don't want to be the only sucker left with the bill. That's the whole point. And we get our schools and water treatment and garbage pickup and nobody has to make personal donations to the government to make it happen. We won't get our treatment plant any other way.

>"And we are willing to pay for it, but only if we have no way to personally avoid the obligation ourselves. And the same is true of our peers. We're an entire civilization of would-be free riders. So we're stuck because nobody will personally commit to pay unilaterally, even though we all want to. So how do we make ourselves happy? How do we get together and sign a contract to pay for it, without defecting on each other?"

How do people get together to invest in anything in this world you describe? How do you get 100 people to invest in your real estate venture without defecting on each other?

Sorry, but I don't see it. It seems like a solved "problem", even when there is no desire guaranteed to be fulfilled at the end.

In my real estate venture, the dividends are paid exclusively to the investors who are my shareholders. So there are no free riders; the people who don't invest don't get the same benefits as those who do. For ventures like this, we don't need the government to coordinate anything.

For projects like waste treatment plants, it's very hard or impossible to ensure that only the "investors" (ie, people who volunteered to fund it) get the benefit. If the waste gets treated, the tapwater is safe to drink, that weird smell in the streets goes away, the coliform count goes down, the beaches are open for swimming in the summer, and fewer people get sick. That's wonderful but how do we limit the benefits to the shareholders of the waste treatment plant, so as to convince people to invest in it?

>"In my real estate venture, the dividends are paid exclusively to the investors who are my shareholders. So there are no free riders; the people who don't invest don't get the same benefits as those who do."

The investors don't care if there are free riders as long as they get the expected benefits. The neighboring property values may rise, for example.

>"That's wonderful but how do we limit the benefits to the shareholders of the waste treatment plant, so as to convince people to invest in it?"

I just can't get past this. This is just not something I consider in any way when choosing to make an investment/donation. I simply do not care if other people may benefit, that is not my concern.

I mean lets take a smaller task:

Say I feel like doing the dishes so I can have a clean plate later in the day. Once I get going with doing dishes, its not a hassle to finish them.

Should I be upset if someone else uses one of the dishes I cleaned? Should I not do the dishes, even if I want to, because eventually someone else may do them? If it was likely for someone else to take care of it, why hasn't it already been done?

I'm not sure why this concept is such a challenge for me to convey. I'm probably not doing a very good job of it.

The investors aren't particularly concerned about small positive externalities such as the increase in surrounding property values. (If the positive externalities are very large, they would probably attempt to capture them somehow -- such as buying up the whole neighbourhood before proceeding with the development. This is why profitable train companies in Asia build train lines to where they own the land, and develop the area around their stations into shopping malls and residential complexes).

That's very different than having free riders. If you give your investors the option of paying $100 per share, or $0 per share, and in either case they'll get the same number of shares, then you suddenly won't find any investors willing to pay. Even if it's a profitable endeavour at $100 per share!

Why would you be offering such a strange deal to your investors? Well, you wouldn't, because it would totally undermine your ability to get your project funded. But it's exactly the model you're proposing when you suggest that private citizens might donate to the government if they really want public infrastructure to get funded! The ones who don't donate are paying $0/share, and the ones who do are paying $100/share, and they all get equal use of the infrastructure.

The free rider problem is not when you try to get investors to buy into your project, even though a few people who don't buy in will also benefit slightly. It's when you try to get investors to buy into your project, even though anybody who doesn't buy in benefits just as much.

Having said this, now let me put it in the context of your quote:

> "This is just not something I consider in any way when choosing to make an investment"

When you consider purchasing shares of a company for $100/share, do you not consider in any way the possibility that these shares might be available for a lower price from another seller? I would expect you would do research and pay the lowest price that is on offer. And if someone is offering them for $0/share, wouldn't you consider that when deciding whether or not to pay $100?

edit: Let me bring this back to the example. How are you going to pitch investors to pay to upgrade a water treatment plant, when they'll reap exactly the same gains from it as their neighbours who didn't contribute a dime? Or, after attempting this and failing to raise any funds whatsoever, let alone the required $500 million, how might you alter your fundraising strategy to make it more successful?

To simplify, let's assume that every one of the 5 million citizens has equal wealth, and the identical preferences, and is willing contribute up to at most $200 for this project, but prefers to pay the minimum possible amount and will always opt to pay $0 if the treatment plant gets built regardless.

>"But it's exactly the model you're proposing when you suggest that private citizens might donate to the government if they really want public infrastructure to get funded! The ones who don't donate are paying $0/share, and the ones who do are paying $100/share, and they all get equal use of the infrastructure."

Why do people donate nearly a billion dollars per year to American Heart Association (https://www.forbes.com/companies/american-heart-association/...) even though I won't, but I could still get the same benefit for free? Because my benefit is irrelevant to their decision...

The only time it makes sense to care about someone else benefiting for free is if it means you are benefiting less for the same price. This concern about free riders is irrational.

>"And if someone is offering them for $0/share, wouldn't you consider that when deciding whether or not to pay $100?"

I'd take the free shares and then go ahead with the purchase for $100/share as well. Edit: Actually, best thing to do is take the free shares, then dump them on the market. Then use the original funds to buy more shares at a lower price.

>"How are you going to pitch investors to pay to upgrade a water treatment plant, when they'll reap exactly the same gains from it as their neighbours who didn't contribute a dime?"

Explain the benefits of the plant, telling them to see if they can get any of the neighbors to contribute too so it will be cheaper for them (nb: the price per person becomes more favorable, not the benefits). And anyway, you can always charge people for the water later so this example is not even very good...

The price per person goes down if everyone pays.