Voice of the people

Too tired to read, I was watching the GSN game show Divided, which requires multiple contestants, none of whom know each other, to agree on the answers to various questions, before at the end they must agree on a 60-30-10 split of their winnings.  (That’s the most interesting part, of course.) In fairly short succession, there were two questions about the U.S. fiscal system – one subjective (what did survey respondents say?), and the other objective. Each was interesting in its way.

Subjective question: 100 people were asked, which is the most unfair tax system?  The available choices were (A) gasoline taxes, (B) income taxes, (C) excise taxes on cigarettes and alcohol.

All 3 of the contestants agreed that income taxes would be called the most unfair – they disagreed on whether gas taxes or cigarettes/alcohol would be ranked #2.

Correct answer, in terms of predicting what the survey respondents said: A – B – C (gas taxes deemed most unfair, then income taxes, then cigarette and alcohol taxes).

Making this harder to interpret: We have 2 Pigovian taxes wrapped around an ability to pay tax. Maybe the survey respondents’ collective rationale is: externality plus “sin” should be taxed, but externality without “sin” shouldn’t be taxed.

Or perhaps it is that taxing “necessities” is worse than taxing ability to pay (since the respondents may feel they need their cars), but taxing “luxuries” (or sins) is better than taxing ability to pay.

Then again, maybe I am trying to make too much of this, when you consider how Divided contestants dealt with the objective fact question about the fiscal system.  They were asked: On which of the following items does the federal government spend more than 5% of tax revenues? (A) the Pentagon and the military. (B) Health care programs, (C) science research?

For this one, they would have gotten $25,000 had they immediately answered it correctly. But instead, they let the time tick down for a while – reducing the value of a correct answer – and then got it wrong by answering: A only.

They were right, of course, about military spending, and also about science research’s missing the cut (the host said it’s at about 1%), but oh so wrong about healthcare. (I mean, c’mon – Medicare? Medicaid? No need even to worry about whether the exclusion of employer-provided health insurance is included, as a tax expenditure – although I’d presume not.)

I guess they’d never heard it said that the U.S. federal government is an insurance company attached to an army.