The tax-receipt idea is a compelling one, which is probably why so many people were quick to embrace it, but there are problems. My colleague Dan Rothschild has a good post listing reasons (on top of those that have already been raised) why the “taxpayer’s receipt” won’t work. An important one is the following:
The receipts list outputs, not outcomes. There’s no sense of what’s achieved here, what the final product is. When I get a restaurant bill, they bill me by the item, not the ingredient. The outcome is I get a hamburger. What is the outcome of health research or the DEA? Taxpayer receipts won’t give any meaningful sense of what social goals are achieved, thus giving taxpayers no sense of the benefits and costs of their tax dollars.
This is a great point. I have testified several times before Congress about Small Business Administration loans (against them, I should say), and each time, the Committee invites someone from Congress or from the agency to make the case for these loans. Each time, the success of the loan program is presented as being the number of loans extended in a given year and how many more loans the SBA guaranteed this year over the previous one. Instead, of course, they should be asking how much economic growth these loans have triggered.
But that’s not how the government measures success. It measures success, as Rothschild notes, by how much money is spent (output), not by what was produced (outcomes).
This idea — that if only taxpayers could see what our money pays for, they would constrain government spending — is just an extension of the idea that more transparency in government is the key to shrinking its size or improving its management. But while transparency is necessary to getting smaller or better government, it is not sufficient. That’s because without accountability, transparency won’t achieve much.