Annie Lowrey on the Time Tax, Fraud, and Rationing by Paperwork

Tyler Cowen (0:04)

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real world problems. Learn more at mercatus.org. For a full transcript of every conversation enhanced with helpful links, visit conversationswithtyler.com.

Hello everyone and welcome back to Conversations with Tyler. Today, I'm very happy to be chatting with Annie Lowrey. She has a new and excellent book called The Time Tax.

How the government wastes our time and how to fix it. So the government does not just waste your money. Annie is a staff writer at The Atlantic. She has worked in the past and written for New York Times, slate.com and many other outlets. She also has an earlier book, Give People Money on Universal Basic Income. Annie, welcome.

Annie Lowrey (0:57)

Thank you.

Tyler Cowen (0:59)

Could you start by giving us a single clear example of your main thesis about the time tax?

Annie Lowrey (1:04)

Absolutely. So in most of our peer countries, so wealthy countries, democratic countries with decent public administration, you do not have to do your own taxes. In Japan, if you earn a salary, you do not have to do anything. You do not have to engage in the tax process at all. And in many other countries, they pre-fill your tax forms, send them to you. You can make a correction if desired or if necessary.

But the tax authority does much of the work for you. We could do this.

Nine in ten American households take the standard deduction and have fairly simple tax situations. We do not do this. The IRS is legally not allowed to do it.

Tyler Cowen (1:47)

And if you had to pick a part of government, taxes aside, where in general these obstacles and time taxes are the worst, what else would you name?

Annie Lowrey (1:56)

The single worst program in my mind is TANF, which is cash welfare and a lot of other things. This is a program that hypothetically is supposed to address child poverty. It does not change the child poverty rate. It is enormously onerous and punitive to comply with. It's a terrible waste of the $16.5 billion a year associated with it. So just in general, I would say safety net programs are not great. Programs that are mostly used by higher-income Americans are much, much, much better, but the safety net and specifically welfare is the worst.

Tyler Cowen (2:31)

As you know, under Biden, for a brief while we had a child tax credit, and it seemed to me from a distance pretty clean and simple. Yes. Yet it was not greatly loved. What is your read of the political economy of that?

Annie Lowrey (2:43)

I think that there is a tension with all submerged benefits, so they work much better. They're easier for the government to administer. They have higher participation or take-up rates because people do file a tax return. It's fairly unusual not to. Even very, very low income because below a certain level, you're not actually required to file federal taxes. That's like pretty, pretty uncommon. So they work better.

The problem with them is, you know, and I look to Suzanne Metler's work on this, is that people don't know that they are receiving benefits.

These programs are not visible. They're not understood by the recipients. And you could look at the CTC. I remember I went reporting about it. People had no idea what it was, even when they were getting the money. I think that there's ways to get around that. You could send checks. The IRS could send checks with like the program name on it, instead of direct deposit. But it is, you know, like that's, that's a little bit less elegant too.

Tyler Cowen (3:36)

And if you were to pick an area of government that works pretty well, US government, and does not have such a big time tax overall, what would you point to as us getting it right?

Annie Lowrey (3:47)

The Postal Service and Social Security's retirement programs. Those are, those are both pretty good. So Social Security also has other programs, SSI, which is mostly used by very, very low income seniors with disabilities or who are blind. Disability Insurance is run by the Social Security Administration. But the retirement program is, you know, it's less than 1% overhead. It's great. It does all the work for you.

Tyler Cowen (4:12)

Isn't our whole postal office, Postal Service, a kind of time tax in the aggregate? So Denmark just this year abolished its Postal Service. They don't have any. Now, I understand we're not in a position to do exactly the same. But shouldn't we be moving away from Postal Service, basically zeroing it out over the next 10 years?