Is paying taxes, like throwing money down a rat hole?

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Tom Yamachika, Tax Foundation of Hawaii
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Tom Yamachika, Tax Foundation of Hawaii
Tom Yamachika, Tax Foundation of Hawaii

BY TOM YAMACHIKA – When you think about paying taxes, most people seem to think that it’s about the same as throwing money down a rat hole. You never see it again, and you have no idea what happened to it.

In our daily lives, most of us pay for lots of different things. Groceries. The mortgage. Electricity. Rent. Clothing. But paying for these things doesn’t bother us so much because we are getting something for the money we paid. And for the most part, we have a choice as to whom we pay.

If we aren’t satisfied with the clothes we buy from Store A, we can return them and get better clothes from Store B.

In the few instances where we don’t have a choice of suppliers, such as buying electricity, there are mechanisms such as regulation to help get consumers appropriate value for what they are paying.

And if those mechanisms are working correctly, we can see that we are getting value and we aren’t bothered when we pay for it.

Therefore: if we can see value in what we purchase, we don’t mind paying for it. And, at least in theory, those businesses that deliver great value stay alive, and those that don’t, don’t.

Charities, like the Foundation, necessarily deliver value a different way. Charities rely on contributions, which means we take money in without giving anything back to the giver.

We can stay alive if, and only if, we are perceived as delivering value to the community we serve. Saving lives in hurricane-ravaged lands? Donors can see the value in that. Finding a cure for cancer? That would be a great thing. Educating lawmakers and the public about Hawaii’s complicated tax laws? Obviously relevant! (I couldn’t resist that one.)

Now what happens when it comes to government? Government needs to demonstrate its value to its taxpayers the same way that for-profit and nonprofit enterprises must. Those who hold the reins of power simply can’t assume that the public will obediently cough up whatever taxes and fees the government chooses to exact.

Dissatisfied members of the public do have tools they can use. They can cause upheavals at the ballot box, as they did in our Democratic Revolution of 1954. Or, as discussed last week, they can move elsewhere to a place where they think their government is giving them adequate value.

Now, I am not talking about politicians tooting their own horns. In an election year there is certainly enough of that going around already. In the case of our government, value can be demonstrated through the clear communication of government programs and services available to the public.

It should be part of the duty of government to tell their citizenry that these programs and services exist and the ascribed value of these programs. If disclosure of such a program is an embarrassment, then maybe we, as taxpayers, shouldn’t be paying for it, or the program should be changed to something that the agency is proud to stand behind.

Disclosure shouldn’t be difficult for the agencies involved, at least in theory, because they already do it each year when they go up to the legislature to brief lawmakers on their budgetary needs.

This is called transparency, and we need it. Once we have it, watching our hard-earned money go out the door to pay taxes will seem more like paying something for value and less like throwing it down a rathole.

Tom Yamachika is the Interim President of the Tax Foundation of Hawaii. Mr. Yamachika’s commentary is printed each week in the Maui News, West Hawaii Today, Garden Isle News, and the HawaiiReporter.com.

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