Aaron Ross Powell
Director and Editor

Aaron Ross Powell was the director and editor of Lib​er​tar​i​an​ism​.org, a project of the Cato Institute.

Warren Buffett thinks rich people don’t pay enough taxes. He tells us his secretary pays a higher rate than he does (though that’s probably not true), a claim President Obama brings up when pushing for the “Buffett Rule,” which would increases taxes on the very rich.

Libertarians, when we encounter this sort of thing, often respond by pointing out that, hey, the Treasury Department accepts donations. If you don’t think what you’re paying is fair, go ahead and cut them a check.

Matt Zwolinski did exactly that over at Bleeding Heart Libertarians, saying that if Buffett “really believes that he ought to be paying more taxes, then what’s stopping him?”

But is that fair? Will Wilkinson doesn’t think so. “This is a pretty lousy argument,” he writes, “and I can’t see why libertarians keep making it.” Why’s it lousy? Because of collective action problems.

Suppose I’m a utilitarian convinced that human consumption of meat causes a huge amount of animal suffering. And suppose I love meat, and giving it up would leave me worse off. I would happily comply with a no-​meat-​eating rule if I thought others would likewise comply. But in the absence of a mechanism (whether internal/​moral or external/​political) to enforce compliance, I rationally believe that my compliance with the no-​meating-​eating rule will have zero effect on market demand for meat. And suppose I rationally believe my heeding the rule will only make me worse off while making no animals better off. In that case it is perfectly rational to continue to eat meat even if I believe that it would be immoral to eat meat under conditions of general compliance with utility-​maximizing rules. I think Matt’s voluntary taxpayer case is exactly analogous.

But it’s not, at least not within the terms of the debate as framed by Buffett and those sympathetic to the “rich people should pay their fair share” argument. That kind of argument isn’t couched in terms of effectiveness. If it were, Buffett would have an out precisely as Wilkinson describes.

Instead, Buffett and Obama and people like Elizabeth Warren argue from a principle of fairness. What’s wrong with Buffett paying a lower rate than his secretary is that it’s unfair. Rich people, the claim goes, don’t pay their fair share. The idea isn’t to raise taxes on the rich because with enough money we’ll get to some magic threshold where government will start working better. Instead, the idea is to tax the rich more because they benefited more from the government we all paid for.

So the meat-​eating analogy doesn’t quite fit, because it’s not concerned with fairness. To get at that sort of moral argument, imagine a rock band.

This band, seeking to mix up the standard music business model, posts their latest album on their website as a free download. Right next to the link, they put a notice reading, “Instead of asking you to pay up front, we’d like to you download our songs, listen to them, and then send us money based on how much you enjoy them. The more you like them, the more you should pay. By downloading, you’re agreeing to this arrangement. Thanks!” Then there’s a suggested pay scale. If you don’t like the music, pay nothing. If you like it a little, but probably won’t listen to it too often, pay a dollar. Like it a lot, pay $10. If it changed your life, send the artist $20. The scale looks completely fair to you.

So you download the songs and love them. Looking at the suggested payments, you see that you ought to send the band $15. You could pay that without causing yourself any noticeable hardship–but, really, you’d rather only send a buck.

To justify your decision to send one-​fifteenth what the suggested pay scale says you think, “Look, I know nobody’s sending these guys anything. I mean, how many people are really going to pay, no matter how much they like the music? So until enough of us get together and pay what we’re supposed to, none of it makes any difference to the artist. My $15 really isn’t going to help him much.” In other words, you raise Wilkinson’s collective action excuse.

Now, it may be true that your $15 in isolation won’t do a lot of good. And it may be true that the artist won’t make enough money to thrive unless we pass a law requiring everyone to pay. But those two truths don’t seem to get you out of fulfilling your obligation. Your moral obligation in this case isn’t to figure out how to earn that band a living, it’s to pay what fairness says you ought to pay. Just because everyone else is falling down in their moral duty doesn’t mean it’s okay for you to do so, too.

This is why libertarians can continue making Zwolinski’s argument. If Buffett thinks it isn’t fair that he pays less than his secretary then on his own terms he ought to pay more, regardless of whether the government makes him or how many of his peers are cheapskates.

The other stuff about collective action and efficacy of government vs. private charities is worth discussing and ought to inform the debate about tax policy, but it doesn’t get Warren Buffett off the hook.