A government that works well is a government that taxes easily
Eric Felten makes the conservative case against government efficiency: The easier the government is to use, the less resentful people will be over its costs.
Make it easier and more convenient to collect fines and fees, and soon you'll be collecting more fines and fees. Take Montgomery County, Md. Last month it started a new program that lets motorists pay at parking meters with their cellphones. How easy! How convenient! How civilized! No more digging around the ashtray for dimes and quarters. No more pestering passersby to change a dollar. Of course, when you have to scrounge for coins to feed the meter, you're painfully aware of just how much the parking regime is costing you. Not so with the mobile-phone parking app. According to a demonstration on the Web site of the company powering the service, you just key in how long you'd like to leave your car, and you're on your way. The pesky question of how much you've just paid doesn't come up.
No doubt you can find out later from your online statement, and surely there are some savvy and well-organized folks who do. Yet for most of us the cost fades toward invisibility, and that's when fees go to town. Policymakers have long understood that the less visible — or "salient," to use the economist's term of art — a tax is, the easier it is to raise. Which is why Milton Friedman, looking for ways the federal government could collect more money during World War II, recommended the creation of income tax withholding (an innovation he was not proud of). It's also why "value-added taxes" act like steroids when it comes to bulking up government.
Technologies sold on convenience can prove to be awfully convenient for those setting prices. Consider electronic toll collection systems such as E-ZPass that let drivers blow past highway tollbooths. How wonderful to no longer have to wait in infuriating lines to pay our traffic tribute. And yet, zipping past the toll plaza, how many of us give a thought to how much we were just charged? Could it be that our new electronically induced ignorance gives a green light to those who would super-size the fees? That's the question that MIT economist Amy Finkelstein asked in a recent study of toll-collection nationwide. She found that there was "a strikingly lower awareness of the amount paid in tolls by those who pay electronically," and thus, not surprisingly, that "toll rates increase after the adoption of electronic toll collection," usually by 20% to 40%.
This also underlies the preference some conservatives have for income taxes over consumption taxes. Paying your income tax is a horrible experience that ends with an unexpectedly eye-popping sum. Paying a sales tax or a value-added tax is a mostly automatic process that happens in affordable increments. The income tax is much better for keeping people angry about taxes and mistrustful of the state.