Taxing Campaign Contributions

Bananaman strongly believes in public financing for political campaigns. The current "system" of donation-funded campaigns only magnifies the influence of wealthy donors. Unfortunately, the American public would never support "welfare for politicians." How might we create a more equitable campaign financing system within the limits created by U.S. political culture and the "corporations are people" doctrine that holds sway among a majority of current Supreme Court justices?

One idea is to tax campaign contributions and use the revenue to support a system of partial public funding. This would neither eliminate the disproportionate influence of wealthy contributors nor create a level playing field for underfunded candidates, but it potentially could tilt the balance in a more positive direction. 

Of course, any revenue from taxing campaign contributions is really just revenue and could be used for any purpose, and perhaps we do have more important needs than the need to publicly fund political campaigns. Nevertheless, like using a gasoline tax to fund road construction, this idea has an underlying symmetry that could justify a policy that would be, in ordinary circumstances, tremendously unpopular. And, the system could easily fund itself.

The details would need to be worked out, but Bananaman envisions a system of progressive taxation of contributions. The revenue would be placed in a fund and distributed to all candidates (or perhaps all candidates who adhere to a system of spending limits) based on the number of votes received by their party's candidate for the same office in the most recent general election.

What are the problems with this idea? Well, an article from 2004 (Gamage, David, "Taxing Political Donations: The Case for Corrective Taxes in Campaign Finance, 113 Yale Law Journal, 1283) considered this question in detail. Gamage concluded that such a system would probably withstand court challenges. He worries, however, that this might magnify the influence of the superrich (who would be willing to pay large taxes) at the expense of the merely wealthy. Of course, it would have little or no impact on small donors as long as the tax was progressive. However, his model seems to imply that the tax would completely replace current limits on individual donations - essentially allowing unlimited (but heavily taxed) contributions. Admittedly, this model makes sense from a market-based perspective and would have the added benefit of maximizing the tax revenues. Still, Bananaman doesn't see why a cap of donations could not remain in place - though Gamage correctly concludes that even the current limits probably only channel money away from candidates and parties and into the coffers of third-party groups. Bananaman would be inclined to significantly increase (but not eliminate) the current limits.

Let's tweak the recipe and make a delicious banana creme pie from this idea! 4 bananas!

Making all tax records public

Here is an idea that Bananaman wholeheartedly supports, but unfortunately will never happen in the U.S.

Everyone's income and tax information should be public knowledge - easily available in a searchable database. This exists to a certain extent in Norway and Sweden, but even in those countries it is more difficult to access this information than it should be. Bananaman would support complete disclosure of every individual's income and tax returns - only addresses, phone numbers, and Social Security numbers would be off limits.

Why is this a good idea?

First, it would very effectively expose the vast levels of income inequality in the U.S. Most people are clueless about the extent to which wealth is concentrated in the hands of the few. Although wealth and income are not identical, this information would tell a similar story.

Second, it would expose the extent to which wealthy people avoid taxes. Perhaps it would shame them into paying more. Even better, perhaps it would increase pressure for a more progressive tax system.

Third, many of us already have our income information made public. It might add a little perspective to learn that a teacher's $60,000 salary is what a corporate lawyer earns in a month. Which job is more important to society? To Bananaman, the answer to this question is obvious.

Lastly, this data would provide extremely valuable information to expose cases of discrimination. It is very hard for a woman or a member of a minority group to know that he or she is compensated less than a white man in a similar job (and hard to demonstrate this in court.) Public disclosure of all income information would be make such discrepancies clear.

Aside from the fact that a rather large subset of Americans would go ballistic, what are the drawbacks to this idea? I suppose it might help thieves target wealthy households, but it is already pretty easy to figure out who has something worth stealing. It might make it harder for low earners to get dates, but on the plus side, they would know that their dates were not gold-diggers. The only real concern that Bananaman would have is that it would make it even easier for businesses to target consumers with money and purposely not market things toward low earners.

What about privacy? That is clearly a concern, but, to be blunt, Bananaman cares far more about reducing income inequality than about privacy. If you do not want your income and tax information made public, it is probably because you are ashamed. If you are poor, there is a social stigma that must be overcome. If you are rich, you probably know that you earn way more than you deserve, you pay too little in taxes, and you should be ashamed.

Oh yeah, this might increase resentment against the rich. Well, if you don't resent the rich, this blog is not for you. This idea is sweet and herbaceous - 4 bananas!

A really stupid idea.

For the sake of balance, here is a really stupid idea (that doesn't really even deserve Bananaman's attention):

There is a petition circulating around the Internet about the "Congressional Reform Act of 2012." It includes all kinds of erroneous information about Congress that has been debunked elsewhere. See this article.

The semi-interesting part is the quote from Warren Buffet, which is apparently real. He told CNBC, "I could end the deficit in 5 minutes. You just pass a law that says anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election."

It is unconstitutional, undemocratic, and bad economics. So why is this idea appealing?

1) People are stupid and don't understand Congress or economics.
2) There is an ingrained cultural assumption that rich people have some kind of special knowledge.
3) There is a dangerous myth that the budget deficit is among the most important problems facing the United States.

Bananaman will address points 2 and 3.

Warren Buffet is rich (and may even be well meaning), but he is not an expert on politics or economics. Some of his ideas are good. Others (like this one) are loony. These ideas need to be evaluated on their merits. His wealth does not give him any special insight.

Budget deficits are difficult to forecast and are absolutely essential during periods of economic contraction. Forcing governments to balance budgets removes the most effective tool to stimulate the economy. If the U.S. government had massively cut spending and/or raised taxes in 2009, we would be in the middle of a great depression today.

Allowing parents to vote on behalf of their children

Children are clearly citizens, but because they cannot vote, they lack a voice in the political process. Although a strong case has been made that lowering the voting age would be beneficial (see Henry Milner's, The Internet Generation), for obvious reasons there needs to be a minimum voting age. Therefore, it has been suggested that parents should be able to cast votes on behalf of their children because otherwise children are disenfranchised. See this article in the Globe and Mail.

Bananaman tends to agree that extending the franchise to children is justified by an equal rights argument. This post will consider whether it is also justified from a social justice perspective.

Elections are about the future. There are both short-term and long-term consequences to electoral outcomes. All of us have a stake in the short-term consequences of elections, but younger people actually have a greater stake in the long-term consequences of elections. Maximizing the voice of those with the most at stake in elections potentially can redirect some of our political debate toward long-term goals and, perhaps, create incentives for politicians to look beyond the next election cycle.

We live in a society where school levies are often defeated and public education is chronically underfunded. Much of our infrastructure is crumbling. The cheapest energy options in the short-term are probably the most catastrophic for the planet in the long term.

The simple math is that the older you are, the less likely you are to be affected by the long-term consequences of poor policy choices. Should we restrict the vote for the elderly? Perhaps. (This will be the subject of a future blog post). From a social justice perspective, we should do everything possible to enhance the voice of those with the most at stake. Allowing parents to vote on behalf of their children is an interesting approach for accomplishing this.

The idea does raise two important concerns: one logistic and one philosophic.

First, as a practical matter, this would be complicated. If a child has two parents, which one should cast his or her vote? If parents disagree politically, would it be possible to have each cast one half vote? How would children without legal guardians be represented? Managing the voter rolls in a scenario where proxy votes are allowed would be challenging, and opportunities for voter fraud would increase. In addition, voter turnout remains low in the United States. If parents fail to register to vote, they disenfranchise not only themselves but also their children.

Second, would parents (or guardians) truly cast votes in the interests of their children, or would they cast votes based upon their own interests? Although one might assume that these interests would generally coincide, it cannot be taken for granted that this is the case. It would always be the adults who are casting the extra votes. The equal rights argument is weakened if the end result is that the interests of parents are magnified at the expense of the interests of childless adults.

This idea is not fully ripe, but it definitely deserves further consideration. Three bananas!

Great idea from Switzerland

Let's start off with a real winner!

Fines for traffic citations in Switzerland are based on the offender's income (as well as on the nature of the offense). As a result, this very wealthy idiot who was driving his Mercedes over 180mph will have to pay of fine of roughly $1.4 million. See the story here

I love the idea of linking fines to income. It is an easy source of revenue from the government; it discourages dangerous behavior; and, it seems much more fair than our system of having the same fines for everyone. For a poor college student, a $200 ticket might mean a diet of ramen noodles and Natty Light for month. For an ordinary worker, it is a big dent in the monthly budget. For Bill Gates, it is about what he makes about every 5 seconds. The Swiss system at least partially equalizes the pain that each offender experiences.

What is the downside? It really doesn't do much to reduce income inequality or to raise revenue, but it sure feels right.

What might be the unintended consequences? People in expensive cars might become the prime targets of traffic enforcement (sounds like another benefit to me). It could create incentives for bribery. I am not sure how much it would take to bribe the local police officer to let me off with a warning, but I suspect that it is more than than the fine for the traffic violation. On the other hand, if Richie Rich is looking at a $1 million ticket, he might offer a large enough bribe to tempt an otherwise honest cop (or traffic court judge). I am willing to take that risk.

This idea is loaded with potassium goodness: Five Bananas!

Welcome to Bananaman's blog

Welcome to Bananaman's blog. Bananaman believes several things:

• The level of wealth inequality in society today is immoral.
• Government spending is needed to achieve long-term goals.
• Protecting the environment is essential to the future of civilization.

If you believe that the gap between the rich and poor is not a problem, government spending is inherently bad, and/or that climate change is a myth, this blog is not for you.

This blog will consider ideas (large and small) that redistribute wealth from the 1% to the 99%, enable ordinary people to effectively exercise political power, encourage socially desirable behaviors, and invest in the long-term needs of society.

Bananaman is interested in ideas that are "outside the box" and is not especially interested whether or not these ideas are feasible in the short term. Each idea should be considered on its merits. At the same time, Bananaman firmly believes that all ideas should be evaluated based on evidence and that many well-meaning ideas have negative unintended consequences.

Bananaman will rate ideas on the Banana Scale


Five Bananas: Great idea!

Four Bananas: Seems Promising

Three Bananas: Good idea. Might have some problems

Two Bananas: Well intentioned but flawed

One Banana: This won't work

No Bananas: This is just stupid!


Join Bananaman as he unpeels interesting ideas.