It's a shame and a sign of significant bias in EA that this got so many disagree votes. What are people disagreeing with? Presumably that taxes kill people but the author makes a very simple argument that nearly everyone in EA approximately agrees with. He then goes on to point out cases where the sign could be reversed or approximately 0.
This is lazy voting.
I didn't vote, but it is an article about the "mortality cost of taxation" which imputes significant mortality whilst completely disregarding the expected mortality reduction of the tax money being spent back into the economy, and the likelihood that the redistribution is net positive. It appears the author acknowledged that bit after getting the negative response. (I also think the estimation methodology is flawed, which is very well explained by Soemano Zeijlmans' comment)[1]
Sure, it's not in dispute that taxation, like giving to overseas charity, can result in economic deadweight loss, and ceteris paribus economic deadweight loss can lead to lower life expectancy. A really interesting paper might even have explored this (most likely coming to the conclusion that the benefits of redistribution to people on very low incomes and funding health and education vastly exceeded deadweight loss in modern welfare states, but it would be wise to ensure that very little of the tax burden fell on the poor and to minimise government waste). But if you write an article which is the equivalent of "the mortality cost of overseas aid" which skips the bit where actually overseas aid is pretty good at reducing mortality it's probably going to get some pushback, especially here.
I don't think it's "significant bias" talking, because I suspect an article about the "mortality cost of markets" which focused on the role of markets in depriving people of stuff and disregarded their role in getting stuff produced altogether would accumulate disagree votes here too.
though tbf I've seen other flawed methodologies estimate significantly higher mortality cost
I had hoped that it would be obvious that I was referring to the gross cost, not the net, especially after my post on Life-year Variability. Taxation does not automatically generate good things. Often it is wasted. It is an odd bias, or a failure of decoupling, to assume that 'taxation' always and automatically means 'tax and spend it effectively on good things'.
If a developed government spends a billion dollars on something, we should train ourselves to think 'You just killed about 100 people to do that. Was it worth it?' Public health and foreign aid usually is. Other things, not so much.
It is not about the deadweight loss, that is an entirely separate issue. Even taxation that caused zero deadweight loss would kill people.
Tax isn't "wasted" by making money vanish from the economy though (except for the deadweight loss) it's just redistributed to other people via payouts, jobs, loans or indirectly via goods purchases. Statistically, some of these beneficiaries will enjoy longer lives through the same indirect income-mortality relationship you invoke to associate taxes with death. This is true even of public spending which is - relative to others - extremely wasteful and not evaluated as lifesaving even by its proponents.[1]
Which is why I'd argue it makes far more sense to focus cost-benefit analysis on deadweight losses and [counterfactual alternative] uses of public funds. Because regardless of whether the tax is focused on creating "good things" or not, the net result of the transfer probably isn't killing people..
In a developed country with a progressive tax system, the demographics paying most of the tax are unlikely to typically need the income to survive more than state employees or other [indirect] recipients the resulting public expenditure benefits, even for ridiculous ideas like paying millions of dancers to create synchronised tributes to the president. So ignoring extremely indirect and difficult to quantify transfer effects (or explicitly treating them as netting out to zero) in favour of focusing on direct effects and deadweight loss in cost-benefit analysis probably if anything is biased against tax and spend. Empirically, tax burden is positively correlated with longevity, even amongst US states.
paying superfluous bureaucrats may be an inefficient way of saving lives, but in exactly the same way as taxing people is a very inefficient way of killing, especially where the tax is progressive above affordability thresholds and targeted benefits/rebates exist
I have a table here showing the difference between a country with low taxes (United States) and a country with high taxes (Sweden). What I want to say with the table is that people who are unemployed have much more money in Sweden compared to the US. Also, in Sweden the taxes are making the costs lower for elderly care, child care, education, health care, medicine and so on. So even if the taxes are higher, you probably have better access to health care, medicine and financial aid in Sweden even if you are living on a minimum income. Because of the redistribution of money, taxes are giving money to people in poverty.
| United States | Sweden |
Income tax for people earning below 50 000 USD: 10-12 %. Income tax for people earning over 50 000 USD: 22-37 %. | Income tax for people earning below 50 000 USD: 31 %. Income tax for people earning over 50 000 USD: 51 %. |
Value-added tax on goods and services: None. Instead some states have sales tax on around 6 %. | Value-added tax on goods and services: 25 % and all purchasers pay value-added tax. It amounts for 47 % of the total budget for the Swedish state. |
| Benefits in unemployment, share of previous income after five years: 9 %. | Benefits in unemployment, share of previous income after five years: 60 %. |
| Adequacy of minimum income benefits for a single person with no children: 6 % of median disposable income. | Adequacy of minimum income benefits for a single person with no children: 42 % of median disposable income. |
Net childcare costs for a couple with average wage: 32 %. Cost for one year in college: Over 9 000 USD / year. | Net childcare costs for a couple with average wage: 5 %. Cost for one year in college: None, you get money for that. |
Diabetes prevalence: 10.7 %. Epipen cost: 600-700 USD.
| Diabetes prevalence: 5.1 %. Epipen cost: 40 USD (if your medical expenses exceeeds 300 dollars a year, you get your medicine for free). |
| The social security contribution paid by the employer (caculated on top of the employee's salary): 7.65 %. | The social security contribution paid by the employer (caculated on top of the employee's salary): 31.4 %. |
This post is not about the total aggregate effect of taxing money and then spending it wisely. It is just about the taxation. Yes, Sweden saves more money with its social spending than it kills with its tax system. But Swedish life expectancy would be even higher if the money all came from natural resources, without any taxation.
Edit 2 Dec 2024:
It looks like there is some confusion here. I am not claiming that taxation usually causes harm on net if spent on sensible projects, or that low-tax jurisdictions have a higher life expectancy. I work in public health, and I know that good spending saves more lives than it kills, and I routinely advocate for policies that will raise taxes (or impose regulatory burden) for public-health spending.
My point is that taxing and spending is like a trolley problem: you have to kill some people to save others. The process of government taking money from people always causes harm. The taxed people have fewer resources to spend on their own well-being, and as a result they will have a lower quality of life and also a lower quantity. Sometimes that harm is more than offset by spending the money well, and sometimes it is not. This post is only about the harm caused by taxation, before any of that money is spent.
I also added explanations to clarify the math.
Linkpost for https://allegedwisdom.blogspot.com/2024/09/mortality-cost-of-taxation.html
Here are some interesting questions:
1) If Japan raises $1 billion by increasing taxes on investment income, how many people will die as a result?
2) If Kenya raises $1 billion with a bundle of sales taxes, how many people will die as a result?
3) If the USA raises $1 billion with a tariff on Chinese goods, how many people will die as a result?
(If it is not obvious to you that these numbers are all more than zero, consider the basic facts that poverty kills people, and taxes take money from people. I like telling people that cost-benefit analysis is how to do "primum non nocere" for public health policy.)
In a competent civilization, there would be an academic sub-discipline devoted to these Mortality Cost of Taxation (MCT) questions. University professors would research MCT methodology and develop MCT best practices, and there would be a neutral MCT agency in all G20 countries that estimated the mortality effect of every tax policy under consideration. Then people would estimate how many lives would be saved by spending the tax money, and compare. (In reality, they would use a metric like the DALY, to account for both quality and quantity of life lost, but I am focusing on deaths in this discussion to keep things simple and vivid.)
In the world we live in, this academic discipline only exists in my head (as far as I know, and I would love to learn otherwise), and I suck at it. The best answer I can give is:
1) Ask a taxation or tariff economist how much the policy will impact GDP.
2) Divide that number by the country's GNI per capita.
3) Divide that number by 100.
So, in Japan (GNI/cap $40k), every $4 million in economic impact will kill someone, and in Kenya (GNI/cap $2k), every $200,000 in economic impact will kill someone.
My answer assumes that all taxation is basically the same, and assumes that the inverse of the MCT, i.e. the amount of economic impact that kills someone, is roughly half of the Value of Statistical Life (VSL). So if the VSL is $14 million, then $7 million in economic impact will kill someone. This is the best I can do, and it probably isn't wrong by more than an order of magnitude.
VSL estimates come from looking at the wage differences between similar jobs with different occupational fatality rates, for example lumberjacks and gardeners. In the USA, for every $13 million or so in increased wages among we-assume-otherwise-identical jobs, one person dies on the job. In Kenya, many more people will die for $13M in increased wages.
If everyone responded to the tax increase by working a more dangerous job, then the VSL would be the correct estimate of the MCT. But this is obviously impossible at a societal level; the composition of jobs is roughly fixed and the tax change does not alter occupational safety standards.
If everyone was perfectly rational and made consistent tradeoffs between money and mortality risk, then the VSL would be the true estimate of the effects of people reducing their consumption in response to a tax increase. But we know that the all-cause mortality rate among people with dangerous professions is higher, so they cannot be turning their extra income into lower risk via consumption at the VSL rate.
For this reason, and for various other handwavey reasons I can't formally justify (e.g. budget constraints, short-run elasticities being lower, behavioral-economics effects, and vaguely gesturing at the literature on how people respond to income shocks), I assume that broad-based income loss from taxation or tariffs turns into mortality at roughly twice the VSL rate. (i.e. If the economic impact is $1 billion and the VSL is $10 million, then the taxation will kill about 200 people.) Although I still use the VSL in all my work, because that is the current methodological standard and I can't cite anything better.
If you think you can do better, or know someone who has done better, or would like to collaborate to find ways to do better, please let me know.
PS Obviously the story becomes different with more targeted taxes. Taxing rich people causes less mortality (assuming that the tax incidence actually falls on them). Taxing harmful substances or things with negative externalities could have zero or even negative MCT, if it doesn't move much activity into a violent black market. I would assume that taxing positional goods causes roughly zero MCT, but there may be weird side effects I am not considering.
PPS It's a weird feeling to be so bad at something, and also the best in the world, because nobody else is even trying. I have looked, and can't find any discussion of this. Maybe I'm just missing it. But in all the discussion of VSLs and how to use them and how to derive them, nobody seems to justify the methodology by pointing to the harm of taxation, or to make the obvious point that taxation kills people so it would be nice to know if your policy is saving more lives than it kills.
I like the idea of measuring or anticipating the effects of a tax in units of deaths avoided/caused and quality of life gained/lost instead of in monetary terms. The monetary measurement of the impacts of a tax (the common approach among economists) can be quite a bad proxy for actual things we care about: saving and improving lives. There's actually a growing field of economics aiming to replace the GDP measure with quality of life measurements.
I understand your causal mechanism to be as follows: (1) taxation reduces people's income, (2) having less income makes working risky jobs financially more attractive, (3) this causes more people to die. While this sounds plausible, I see quite a few problems with the approach that you're suggesting, which I'll cover below. (I won't go in-depth into the calculation you used since you already mentioned that it's not accurate and I assume the point of your post is to advocate for starting a subdiscipline of economics, rather than providing a method for calculation.)
Use of VSL estimates
VSL estimates are intended be used to understand how people value small reductions in risk, not to predict the outcome of increased wages on deaths. Greater risk leads to higher pay, but higher pay doesn't lead to this increase in deaths per se. For example, demand for risky jobs like firefighters isn't very elastic (the number of firefighters society needs is more or less fixed), and even if that wasn't the case, less qualified or experienced people may enter the field. I wouldn't use the VSL for this purpose since the methods used to calculate it don't establish this causal link.
Not a lot of people die in workplace accidents
I don't think people taking riskier jobs, as the VSL approach would assume, is the primary negative impact of taxation. Rather, I think reducing people's spendable income makes them less likely to buy healthy food, less likely to live in air-conditioned or heated houses, and less likely to be able to afford medical bills. Only a very small number of people actually die in accidents - let alone workplace accidents. So if we want to know the mortality effect of a tax, it would be more interesting to research questions such as: what is the effect of this tax on cardiovascular health (e.g. unable to buy healthy food) or lung health (e.g. air pollution).
Taxation is used to reduce mortality
Interestingly, having low income, low wealth, low education, and low social status are very strong determinants of early mortality. This is exactly what taxation is trying to tackle. If we take the data for my country (The Netherlands), for example, we see that more than half of all public spending goes to healthcare and social security, and another 12% goes to education. In short, taxation is mostly used to make healthcare affordable or to alleviate social determinants of mortality.
So no, I don't think we can assume that taxation kills people.
People in poverty are mostly exempt from taxes
Looking at distributive effects is probably really important here. I can imagine that taxing people to the point that they enter poverty (as you suggested) makes things a lot worse for them. Most countries have some type of tax-free threshold under which you don't have to pay income taxes. Low incomes are only taxed relatively little. Some taxes, like VAT on food, fall disproportionately on the poor since they spend a larger share of their income on food.
So, theoretically it's possible that taxation causes poverty, and poverty causes deaths. But if we look at the top causes of global poverty, we see that poverty is mostly caused by things we can tackle by spending tax money: on safety nets and food programmes to stop hunger, on healthcare systems to improve access, on sanitation and clean water to improve hygiene and save time, on education to give kids a prosperous future, on infrastructure so that people can get to work, on creating jobs...
Summary
In summary, I'm in favour of researching the effects of taxation and public spending on mortality, but I expect the sign on most taxes to be negative (i.e. reducing mortality), at least when the tax incidence is not on people in poverty and public funds are spent on sensible projects. I think the method based on the VSL is probably not appropriate, but your proposal to have a government consider the effects of mortality makes sense since we can probably make a good guesstimate of the effects of a tax or government programme on social determinants of mortality.
"I understand your causal mechanism to be as follows: (1) taxation reduces people's income, (2) having less income makes working risky jobs financially more attractive, (3) this causes more people to die."
No, the mechanism is: (1) taxation takes money from people, (2) people have less money to spend on their own well-being, and (3) this causes death. For example, someone with a take-home pay after taxes of 40k euros will, compared to someone with 60k euros, eat fewer fresh organic vegetables.
"I don't think people taking riskier jobs, as the VSL approach would assume, is the primary negative impact of taxation. Rather, I think reducing people's spendable income makes them less likely to buy healthy food, less likely to live in air-conditioned or heated houses, and less likely to be able to afford medical bills."
This was my point. We need to research how many people these effects kill. But I am forced to use the inaccurate and improper VSL in my cost-benefit analysis because we have no better number.
"I can imagine that taxing people to the point that they enter poverty (as you suggested) makes things a lot worse for them. Most countries have some type of tax-free threshold under which you don't have to pay income taxes. Low incomes are only taxed relatively little."
We agree that taxing poor people has a high mortality cost. But there is also a mortality difference between a middle-class lifestyle and an upper-middle-class lifestyle. Much of the tax burden in developed countries falls on the middle class, and they do suffer meaningfully from those taxes.
"I expect the sign on most taxes to be negative (i.e. reducing mortality), at least when the tax incidence is not on people in poverty and public funds are spent on sensible projects. "
Please see the clarification I added at the beginning of the post. The tax itself will always kill a nonzero number of people; the value of the spending after taxes are raised, and whether it outweighs the cost of the tax, is a different issue.