I think it’s also worth highlighting how this intersects with neurodivergence; there is a whole class of people who are systematically disadvantaged in these situations due to, for example, autism.
I'm trying to get more socons like me mad about the SSI rules, because they're incredibly intrusive for families and directly yank state benefits if your mom doesn't treat you like a stranger. My gloss on the imputed rent rule (from here: https://amzn.to/4oW9ig6)
> "When an SSI recipient lives with friends or family, they are still presumed to be responsible for their "fair share" (an equal share) of the rent. Their benefits are docked accordingly if they don't pay up. This holds even if no one in the household thinks a "fair" share is an even split. If there is no rent at all, because the person receiving SSI is living in the spare room of a friend or a member of their family who owns the house outright, the Social Security Administration requires them to calculate their imputed rent. That rent calculation is based on what the recipient's mother would get if she rented her child's bedroom on the open market. It doesn't matter that the mother has no intention of renting part of her home to a stranger as a boarder. From the government's point of view, the only fair way to evaluate the worth of her aid is to estimate what she would charge a stranger to live alongside her in her home."
I'm glad you're on this! The way we treat people on SSI is just awful - it really does set up government aid as in opposition to community assistance, instead of as a supplement to it
What's the fair thing to do here, though? If you don't count free rent as a financial benefit, the pressure to lie is even worse! Then everyone has a huge incentive to not report rent payments, because if you just say you're getting rent for free then you'll get a big bump in your SSI payments.
If you have to calculate the value of free housing to someone, imputed rent based on market price seems like the fairest way to do it.
I think this misunderstands how it works. The idea is not that you get extra pay if rent is free, but just that you get the same payment whether you are renting a place or staying with your mom. There's no advantage to hiding that you're renting a place.
Another example is unemployment benefits. At least in my state, to receive the benefits you're required to apply for at least 3 jobs per week that you reasonably think you're qualified for, and to accept any interviews or job offers you receive. I took this literally, so when I was really depressed one week and didn't manage to apply to any jobs, I was honest about it. Not only was a denied my benefits that week, I got a call from the state where I was yelled at and required to go to a three hour job search training. This training was clearly meant for extremely disadvantaged people who didn't know the basics of finding a job, not young professionals who had an off week. It was a complete waste of time.
Of course I realized later that what I was "supposed" to do in that situation was quick apply to 3 BS jobs I wasn't qualified for and just report those, because nobody was going to audit my job applications.
That said, I think the reason we end up with policies that de facto expect lying is because there is no set of rules that, if enforced literally, would make people happy. With unemployment benefits, for example, most people don't want to deny them to a responsible adult who just had one bad week where they didn't apply to any jobs. But most people also don't want unemployment benefits going to people who treat it as a government subsidized vacation and put zero effort into finding another job. I don't know how you formalize that in official policy, since the line between a responsible adult and someone taking advantage of the system is inherently fuzzy and subjective. So the equilibrium is we have a tacit agreement that normal adults can lie, and we keep the rules on the books so that we can go after the egregious cases, or at least be able to judge them for violating the rules even if there is no enforcement. It's not great, but I can see why, politically, we end up here.
This reminds me of the California Employment Development Department essentially telling people to lie on their unemployment insurance recertifications during covid because the policy had changed but they couldn't update the tech to reflect the new policy. (the story is in my book Recoding America. Sorry no link to it online.)
I own your book (thanks for the work you do!) and found it:
But the EDD’s systems were hardwired to ask all unemployment claimants two questions on a biweekly basis: “Were you too sick or injured to work?” and “Was there any reason (other than sickness or injury) that you could not have accepted full-time work each workday?” Before the pandemic, if you said “yes” your claim was temporarily suspended pending a phone interview and eligibility review. During the pandemic, with the department accruing a backlog of 1.2 million claims, there were obviously no resources for these phone calls and claim reviews, so saying “yes” effectively meant you were cut off from your benefits. Yet instead of recoding the system to allow for a “yes” answer, the EDD just issued press releases and posted FAQs in which they essentially implied that claimants should lie. “The EDD has found many claimants are having issues answering the first two questions on the required bi-weekly certification,” one such announcement said. “The usual requirement to look for work each week is temporarily suspended during the conditions associated with this pandemic.… Answering YES to these questions could disqualify you for benefits.
you go on to explain the rules that make it so hard to adapt the questions so people don't have to lie:
The EDD team gave us several reasons for this inelegant hack. One was obvious: it was hard to update the system for all the same reasons it had been hard to count the backlog. Fixing these questions would take resources away from other urgent problems.
And changing the system in the middle of such a maelstrom would require the department to keep track of who had answered the questions under the old scheme, and who under the new scheme, and which weeks were which, and how these mapped onto the shifting federal policies.
There was another difficulty: regulations regarding equity. In theory, the EDD could have updated the wording of the certification questions on its website to bring them more in line with the new federal guidance. But updating the paper version of the certification form was another matter. The EDD could issue a new form, but the old one was around at all sorts of advocacy and support agencies, some of whom would likely miss the changeover. It was also all over the web as a PDF.
And there are a variety of policies at both the state and federal levels that dictate that the applicant experience should be the same across different groups and channels. If online claimants got a different question from paper claimants, it could violate these equity policies.
Of course, an online experience is by definition different from a paper application. A paper application is always going to involve either an in-person visit or an envelope and a stamp, for instance; an online application will just have a “submit” button. More importantly, web forms can make things easier for users in ways that paper can’t, like hiding questions that are unnecessary for a particular user based on the answers they have already given. (If you don’t have dependents, for instance, you don’t need to see or answer questions about dependents.) But equity policies are often interpreted to mean that the questions asked across the different channels must be exactly the same..."
In many ways this is just a subset of lying to the federal government. The mortgage fraud and bank fraud statutes are nominally justified because the banks being "mislead" are federally insured and the mortgages guaranteed by GSEs. Otherwise, why not just let this be normal, regular non-criminal tort fraud?
(Or wire fraud, which essentially criminalizes lying on the internet so long as money or property is involved)
As to 18 USC 1001 - I agree with Ken White's criticism. Frequently it's a bullshit process charge and there should be a stronger materiality element necessary for a criminal conviction under this statute.
One of my biggest pet peeves about housing assistance is that we strongly discourage applicants from having roommates, even when that is clearly cheaper than living on your own.
This is one of the arguments for replacing housing vouchers with cash payments. If someone can find a place to live that is cheaper than the value of their housing voucher and let them pocket the difference. This will also save the government money with lower administrative costs.
But the downside is that we risk making these programs much less popular, as people typically like the paternalistic parts of these programs. We also risk anecdotal stories about people using this money badly undermining public support for the programs.
I think those downside risks explain a lot of these stupid rules. Whoever relaxes the "marijuana use disqualifies security clearance" risks damning news reports if a there is a security leak that is associated with someone who would previously have been disqualified. Even if the leak is not related to past drug use, and they would have lied if the rule had still existed, the person who relaxes that rule exposes themselves to real downside risk. But they are not likely to get much credit if nothing goes wrong.
The reason those rules often make no sense is that the rules to make the rules also incentivize lying.
Suppose some people believe that borders should be open for all immigrants and other people believe that borders should be closed and immigrants already in the country should be kicked out. In a functional democracy, neither group will get what they want, they'll need to compromise.
Since open borders is not on the menu, some people might favor a policy of deliberately poor enforcement of existing immigration law. Not because they like fraud, but because from their point of view it's a lesser evil. They want immigration for all, so if a few illegal immigrants slip through the cracks that's directionally speaking a win for the cause.
Since kicking out all the immigrants is also not on the menu, some people might favor a policy of ridiculously high standards for legal immigration. It's not that they are not aware that this policy will alter the ratio of honest to dishonest immigrants for the worse, but because from their point of view it's a lesser evil. They want no immigration at all, if some foreigner is dissuaded from immigrating due to all the stupid rules it's still directionally speaking a win for the cause.
Not to mention that they can then parlay the fact that more dishonest immigrants are making it through the process as another argument to further cut immigration.
Not the most important point in the post, but as someone who is mixed race but looks mostly white and therefore self identifies as white on official forms, I have nothing but disdain for people like Mamdani who try to use specious claims of minority ancestry to get a leg up in an affirmative action scenario. It is beyond pathetic to try to game them for personal advancement and in a more just world, doing so would be a disqualification from holding any position that requires the public's trust.
Taxes in general are even more full of these situations. It’s just hard to design a complicated system without incentives for lying. It’s easy to say, well don’t design a complicated system. But there just might not be a simple system that achieves the political goals of the ruling coalition.
Consider inheritance taxes. In order to tax the transfer of wealth from party A to party B you need to force these parties to disclose all transactions, and to place a value on everything. But the value can get arbitrarily complicated, because you can create all these structures like trusts, or foreign entities.
There is just no simple system that achieves the goal. So the system becomes extremely complicated and incentivizes lying, and also the “technically not lying” sort of behavior you get when you hire a team of lawyers and tell them to not lie but optimize the outcome.
The only simple solution is to drop inheritance taxes. Just like the only simple solution to means tested benefits is to stop offering them. But those aren’t really the solutions you want, here.
The solution is to tax all inheritance as income of the inheritor rather than as a transfer from benefactor.
It's even worse for gifts (which are part of estate taxes aka the final gift tax). Any annual gifts over 19,000 in total need to be reported. A rich parent supporting a mid 20s kid in Brooklyn absolutely does not report this in any way.
For an example of how bad it is now, there is a multi million dollar piece of art that contains a bald eagle feather, making it illegal to sell. Is it worth millions or 0? Who knows????
Good column; per Joseph's comment I think it should frame itself as a question (”Why do laws make liars of us?”). Democracy is a mashup of incommensurable views. Euphemism, arbitrariness and unenforceability are duck tape we apply to sort of hold the system together, as hypocrisy is the tribute vice pays to virtue. Many of Patrick McKenzie’s essays on banking sound this theme.
You might also acknowledge the classic **Liberal** maxim that government should be minimal because governing actively and well is extremely difficult. Or the many accounts of how a normal person going about a mundane life breaks many laws a day. Or the many accounts of how speeding cameras are intolerable to voters because they work—voters want laws against speeding, and they don't want those laws to be enforced against themselves. Which leads us to Wilhoit’s “There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”
The government wants us to lie because we lie to ourselves to maintain our self-image and to each other to smother conflict before it can roar into conflagration.
Speed limits in general are a "great" example here. Nobody wants to actually enforce the limits we have, so it becomes an "unwritten rule" that going less than 10 mph over won't get you a ticket, and even speed cameras often don't ticket for less than 10 over. The one and only class of vehicles that actually follows the limits exactly is self-driving cars. (There is a legitimate measurement error issue both with the camera/radar and the driver's speedometer that probably means the right enforcement threshold is not the exact limit-- but 10 mph is way bigger than the relevant error bar).
Interestingly, self-driving cars don’t actually do the stupid thing of following the laws as written. In Los Angeles, everyone knows that to make a left turn, you nose out into the intersection during the green, and then actually complete the turn at the beginning of the red if you didn’t get a chance during the green. The Waymo I rode a few months ago did it perfectly, even though it’s a violation of official law (which says you’re not allowed to enter the intersection unless you can already clear it, and which I followed for my first few days in Los Angeles and made a lot of people very angry because I was waiting for three light cycles to do a left turn with other turners backing up behind me.)
AFAICT this is legal. At least according to my legal expert, ChatGPT:
California law allows drivers to enter an intersection on a green (or yellow) light, even if they cannot complete a turn immediately. If the light turns red while you're inside, you may legally finish your turn once it's safe to do so—this is commonly referred to as "completing a movement lawfully begun on green".
The key is entering the intersection before the red signal. You must not enter after it turns red.
Oh, that's right! The illegal thing that is standardly tolerated in Los Angeles is the second (and sometimes even third) car doing a left turn after the red. I can't remember what my Waymo did.
Both aspects of this are important: they do formalize some _de jure_ illegalities that are _de facto_ legal such as the one you call out, but they also stick to the unpopular letter of the law in other ways, notably maximum speed as Nicholas observes.
Love the self-driving car observation, which extends to automation generally. San Francisco liberals (as distinct from their local opposition, the progressives) are rolling out traffic cameras across much of the city. I got a warning during the trial period (I was doing ... 37 in a 25 zone?)—if I recall correctly, the language of the warning implied that even after the trial period ended, the usual 5+ MPH grace would be extended. Baumol's cost dynamic and general we-are-smarter-and-more-decent-progress means that we can no longer maintain public order with cheap undertrained skull-breakers. Police are much more expensive, more law-abiding, and better trained than they used to be, which means that 80mph chases past schools must be replaced with drone tracking, rousting “undesirables” from streets in “good” neighborhoods must be replaced by coordination with social services, etc. Policy becomes more _explicit_ and _legible_, which replaces old failure modes (the speeding suspect kills a kid in the crosswalk, benefits are for the right ethnic groups in the right neighborhoods) with new ones (everyone is on government cameras, you have to lie to get food stamps you clearly deserve).
Thanks for the kind words, but it sounds like I failed to express myself clearly. My point is that dishonesty is a necessary cost of maintaining consensus, not that it is a big mess that we can clean up if we work “immensely hard”. If we want less dishonesty, we need less governance. Sometimes that’s a good trade; other times it isn’t.
I'm pretty all in on "less governance" – it's hard to be competent when one's responsibilities are so unfocused.
But you expressed yourself just fine – my point was NOT that you're wrong that "dishonesty is a necessary cost of maintaining consensus", but that I hate that that's the case!
I think there's quite a lot that COULD be done, on the margins, even if the core necessity can't be ENTIRELY quashed.
the political sustainability for welfare programs is that they are relatively cheap and are perceived to go to the deserving poor. trying to convince people that free loaders don’t exist is not only inaccurate but a political loser. This is why welfare income cliffs exist where benefits quickly disappear as you move up income brackets. If you made the benefits either universal or at a higher income threshold, then you’ll massively increase fiscal costs and have people benefiting from programs they don’t need.
so do you want to pay higher taxes to fund bobs meth drug habit? if you feel like that’s a loaded, unfair question, keep in mind that’s how a lot of voters and tax payers think. people think there are deserving and undeserving poor and they want to torch programs that they perceive going to the undeserving poor. progressives ignore these political problems at their peril.
and so that leads to government trying to figure out the income people have and then take away benefits once income hits the threshold. people respond by trying to game the system and hide their income. the government responds with more regulations. and the dance continues. this is in fact exactly what rich people do but it’s not like progressives are suggesting we get rid of the income tax.
I think that people who you'd hope would be eligible for programs not being eligible due to a stupid technicality is also damaging to the case for them, in purely practical terms. I know people who can't get food stamps because they live with roommates and it makes me mad! I pay my taxes so that my friends who hit a really rough patch or make minimum wage won't go hungry. I understand that it'd be unpopular if food stamps are literally for everyone but is there a massive constituency for the degree of testing we impose? I think only because most people don't realize how much there is.
There's probably some truth to that, but also I think the reality is "people taking advantage of the system" is always going to trigger a stronger response from voters than "the system is overly restrictive/complex and denies some deserving people".
Imagine we loosen the rules so that people with roommates can get food stamps. Inevitably some TikTok of someone who is living with their middle class boyfriend and using food stamps to buy expensive meat will go viral. Then it's on Fox News and angry constituents are calling into their representatives telling them how outraged they are that their tax dollars are funding food stamps for these people. Protestations that making the policy more restrictive might hurt some "deserving recipients" won't have the same weight. If you're a politician, you're very wary of this scenario.
These "honesty taxes" are everywhere. Two commonplace examples are speed limits and open container laws.
Everybody, including the cops, know that the real speed limit is around 5 MPH above the posted limit. The only people who don't know this are new or inexperienced drivers. This creates problems: one slow driver has more potential for causing accidents than everyone traveling at a faster, but uniform speed.
I think it’s also worth highlighting how this intersects with neurodivergence; there is a whole class of people who are systematically disadvantaged in these situations due to, for example, autism.
Came here to say this
I'm trying to get more socons like me mad about the SSI rules, because they're incredibly intrusive for families and directly yank state benefits if your mom doesn't treat you like a stranger. My gloss on the imputed rent rule (from here: https://amzn.to/4oW9ig6)
> "When an SSI recipient lives with friends or family, they are still presumed to be responsible for their "fair share" (an equal share) of the rent. Their benefits are docked accordingly if they don't pay up. This holds even if no one in the household thinks a "fair" share is an even split. If there is no rent at all, because the person receiving SSI is living in the spare room of a friend or a member of their family who owns the house outright, the Social Security Administration requires them to calculate their imputed rent. That rent calculation is based on what the recipient's mother would get if she rented her child's bedroom on the open market. It doesn't matter that the mother has no intention of renting part of her home to a stranger as a boarder. From the government's point of view, the only fair way to evaluate the worth of her aid is to estimate what she would charge a stranger to live alongside her in her home."
I'm glad you're on this! The way we treat people on SSI is just awful - it really does set up government aid as in opposition to community assistance, instead of as a supplement to it
What's the fair thing to do here, though? If you don't count free rent as a financial benefit, the pressure to lie is even worse! Then everyone has a huge incentive to not report rent payments, because if you just say you're getting rent for free then you'll get a big bump in your SSI payments.
If you have to calculate the value of free housing to someone, imputed rent based on market price seems like the fairest way to do it.
I think this misunderstands how it works. The idea is not that you get extra pay if rent is free, but just that you get the same payment whether you are renting a place or staying with your mom. There's no advantage to hiding that you're renting a place.
Another example is unemployment benefits. At least in my state, to receive the benefits you're required to apply for at least 3 jobs per week that you reasonably think you're qualified for, and to accept any interviews or job offers you receive. I took this literally, so when I was really depressed one week and didn't manage to apply to any jobs, I was honest about it. Not only was a denied my benefits that week, I got a call from the state where I was yelled at and required to go to a three hour job search training. This training was clearly meant for extremely disadvantaged people who didn't know the basics of finding a job, not young professionals who had an off week. It was a complete waste of time.
Of course I realized later that what I was "supposed" to do in that situation was quick apply to 3 BS jobs I wasn't qualified for and just report those, because nobody was going to audit my job applications.
That said, I think the reason we end up with policies that de facto expect lying is because there is no set of rules that, if enforced literally, would make people happy. With unemployment benefits, for example, most people don't want to deny them to a responsible adult who just had one bad week where they didn't apply to any jobs. But most people also don't want unemployment benefits going to people who treat it as a government subsidized vacation and put zero effort into finding another job. I don't know how you formalize that in official policy, since the line between a responsible adult and someone taking advantage of the system is inherently fuzzy and subjective. So the equilibrium is we have a tacit agreement that normal adults can lie, and we keep the rules on the books so that we can go after the egregious cases, or at least be able to judge them for violating the rules even if there is no enforcement. It's not great, but I can see why, politically, we end up here.
I hate this element of UI. I've had to do the dumb, fake applications while awaiting an offer I planned to accept, which was a waste for everyone.
This reminds me of the California Employment Development Department essentially telling people to lie on their unemployment insurance recertifications during covid because the policy had changed but they couldn't update the tech to reflect the new policy. (the story is in my book Recoding America. Sorry no link to it online.)
I own your book (thanks for the work you do!) and found it:
But the EDD’s systems were hardwired to ask all unemployment claimants two questions on a biweekly basis: “Were you too sick or injured to work?” and “Was there any reason (other than sickness or injury) that you could not have accepted full-time work each workday?” Before the pandemic, if you said “yes” your claim was temporarily suspended pending a phone interview and eligibility review. During the pandemic, with the department accruing a backlog of 1.2 million claims, there were obviously no resources for these phone calls and claim reviews, so saying “yes” effectively meant you were cut off from your benefits. Yet instead of recoding the system to allow for a “yes” answer, the EDD just issued press releases and posted FAQs in which they essentially implied that claimants should lie. “The EDD has found many claimants are having issues answering the first two questions on the required bi-weekly certification,” one such announcement said. “The usual requirement to look for work each week is temporarily suspended during the conditions associated with this pandemic.… Answering YES to these questions could disqualify you for benefits.
you go on to explain the rules that make it so hard to adapt the questions so people don't have to lie:
The EDD team gave us several reasons for this inelegant hack. One was obvious: it was hard to update the system for all the same reasons it had been hard to count the backlog. Fixing these questions would take resources away from other urgent problems.
And changing the system in the middle of such a maelstrom would require the department to keep track of who had answered the questions under the old scheme, and who under the new scheme, and which weeks were which, and how these mapped onto the shifting federal policies.
There was another difficulty: regulations regarding equity. In theory, the EDD could have updated the wording of the certification questions on its website to bring them more in line with the new federal guidance. But updating the paper version of the certification form was another matter. The EDD could issue a new form, but the old one was around at all sorts of advocacy and support agencies, some of whom would likely miss the changeover. It was also all over the web as a PDF.
And there are a variety of policies at both the state and federal levels that dictate that the applicant experience should be the same across different groups and channels. If online claimants got a different question from paper claimants, it could violate these equity policies.
Of course, an online experience is by definition different from a paper application. A paper application is always going to involve either an in-person visit or an envelope and a stamp, for instance; an online application will just have a “submit” button. More importantly, web forms can make things easier for users in ways that paper can’t, like hiding questions that are unnecessary for a particular user based on the answers they have already given. (If you don’t have dependents, for instance, you don’t need to see or answer questions about dependents.) But equity policies are often interpreted to mean that the questions asked across the different channels must be exactly the same..."
https://en.wikipedia.org/wiki/Ed_Norris#Criminal_case
Also, notably, lying to the Federal government is itself a federal crime - 18 USC 1001.
I would say a worse crime!
In many ways this is just a subset of lying to the federal government. The mortgage fraud and bank fraud statutes are nominally justified because the banks being "mislead" are federally insured and the mortgages guaranteed by GSEs. Otherwise, why not just let this be normal, regular non-criminal tort fraud?
(Or wire fraud, which essentially criminalizes lying on the internet so long as money or property is involved)
As to 18 USC 1001 - I agree with Ken White's criticism. Frequently it's a bullshit process charge and there should be a stronger materiality element necessary for a criminal conviction under this statute.
This is great post – thanks!
I HATE BEING EXPECTED TO LIE!
One of my biggest pet peeves about housing assistance is that we strongly discourage applicants from having roommates, even when that is clearly cheaper than living on your own.
This is one of the arguments for replacing housing vouchers with cash payments. If someone can find a place to live that is cheaper than the value of their housing voucher and let them pocket the difference. This will also save the government money with lower administrative costs.
But the downside is that we risk making these programs much less popular, as people typically like the paternalistic parts of these programs. We also risk anecdotal stories about people using this money badly undermining public support for the programs.
I think those downside risks explain a lot of these stupid rules. Whoever relaxes the "marijuana use disqualifies security clearance" risks damning news reports if a there is a security leak that is associated with someone who would previously have been disqualified. Even if the leak is not related to past drug use, and they would have lied if the rule had still existed, the person who relaxes that rule exposes themselves to real downside risk. But they are not likely to get much credit if nothing goes wrong.
The reason those rules often make no sense is that the rules to make the rules also incentivize lying.
Suppose some people believe that borders should be open for all immigrants and other people believe that borders should be closed and immigrants already in the country should be kicked out. In a functional democracy, neither group will get what they want, they'll need to compromise.
Since open borders is not on the menu, some people might favor a policy of deliberately poor enforcement of existing immigration law. Not because they like fraud, but because from their point of view it's a lesser evil. They want immigration for all, so if a few illegal immigrants slip through the cracks that's directionally speaking a win for the cause.
Since kicking out all the immigrants is also not on the menu, some people might favor a policy of ridiculously high standards for legal immigration. It's not that they are not aware that this policy will alter the ratio of honest to dishonest immigrants for the worse, but because from their point of view it's a lesser evil. They want no immigration at all, if some foreigner is dissuaded from immigrating due to all the stupid rules it's still directionally speaking a win for the cause.
Not to mention that they can then parlay the fact that more dishonest immigrants are making it through the process as another argument to further cut immigration.
Man that's depressing.
Not the most important point in the post, but as someone who is mixed race but looks mostly white and therefore self identifies as white on official forms, I have nothing but disdain for people like Mamdani who try to use specious claims of minority ancestry to get a leg up in an affirmative action scenario. It is beyond pathetic to try to game them for personal advancement and in a more just world, doing so would be a disqualification from holding any position that requires the public's trust.
Taxes in general are even more full of these situations. It’s just hard to design a complicated system without incentives for lying. It’s easy to say, well don’t design a complicated system. But there just might not be a simple system that achieves the political goals of the ruling coalition.
Consider inheritance taxes. In order to tax the transfer of wealth from party A to party B you need to force these parties to disclose all transactions, and to place a value on everything. But the value can get arbitrarily complicated, because you can create all these structures like trusts, or foreign entities.
There is just no simple system that achieves the goal. So the system becomes extremely complicated and incentivizes lying, and also the “technically not lying” sort of behavior you get when you hire a team of lawyers and tell them to not lie but optimize the outcome.
The only simple solution is to drop inheritance taxes. Just like the only simple solution to means tested benefits is to stop offering them. But those aren’t really the solutions you want, here.
The solution is to tax all inheritance as income of the inheritor rather than as a transfer from benefactor.
It's even worse for gifts (which are part of estate taxes aka the final gift tax). Any annual gifts over 19,000 in total need to be reported. A rich parent supporting a mid 20s kid in Brooklyn absolutely does not report this in any way.
For an example of how bad it is now, there is a multi million dollar piece of art that contains a bald eagle feather, making it illegal to sell. Is it worth millions or 0? Who knows????
https://web.archive.org/web/20120722121718/https://www.nytimes.com/2012/07/22/arts/design/a-catch-22-of-art-and-taxes-starring-a-stuffed-eagle.html
Good column; per Joseph's comment I think it should frame itself as a question (”Why do laws make liars of us?”). Democracy is a mashup of incommensurable views. Euphemism, arbitrariness and unenforceability are duck tape we apply to sort of hold the system together, as hypocrisy is the tribute vice pays to virtue. Many of Patrick McKenzie’s essays on banking sound this theme.
You might also acknowledge the classic **Liberal** maxim that government should be minimal because governing actively and well is extremely difficult. Or the many accounts of how a normal person going about a mundane life breaks many laws a day. Or the many accounts of how speeding cameras are intolerable to voters because they work—voters want laws against speeding, and they don't want those laws to be enforced against themselves. Which leads us to Wilhoit’s “There must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”
The government wants us to lie because we lie to ourselves to maintain our self-image and to each other to smother conflict before it can roar into conflagration.
Speed limits in general are a "great" example here. Nobody wants to actually enforce the limits we have, so it becomes an "unwritten rule" that going less than 10 mph over won't get you a ticket, and even speed cameras often don't ticket for less than 10 over. The one and only class of vehicles that actually follows the limits exactly is self-driving cars. (There is a legitimate measurement error issue both with the camera/radar and the driver's speedometer that probably means the right enforcement threshold is not the exact limit-- but 10 mph is way bigger than the relevant error bar).
Interestingly, self-driving cars don’t actually do the stupid thing of following the laws as written. In Los Angeles, everyone knows that to make a left turn, you nose out into the intersection during the green, and then actually complete the turn at the beginning of the red if you didn’t get a chance during the green. The Waymo I rode a few months ago did it perfectly, even though it’s a violation of official law (which says you’re not allowed to enter the intersection unless you can already clear it, and which I followed for my first few days in Los Angeles and made a lot of people very angry because I was waiting for three light cycles to do a left turn with other turners backing up behind me.)
AFAICT this is legal. At least according to my legal expert, ChatGPT:
California law allows drivers to enter an intersection on a green (or yellow) light, even if they cannot complete a turn immediately. If the light turns red while you're inside, you may legally finish your turn once it's safe to do so—this is commonly referred to as "completing a movement lawfully begun on green".
The key is entering the intersection before the red signal. You must not enter after it turns red.
Oh, that's right! The illegal thing that is standardly tolerated in Los Angeles is the second (and sometimes even third) car doing a left turn after the red. I can't remember what my Waymo did.
Both aspects of this are important: they do formalize some _de jure_ illegalities that are _de facto_ legal such as the one you call out, but they also stick to the unpopular letter of the law in other ways, notably maximum speed as Nicholas observes.
Love the self-driving car observation, which extends to automation generally. San Francisco liberals (as distinct from their local opposition, the progressives) are rolling out traffic cameras across much of the city. I got a warning during the trial period (I was doing ... 37 in a 25 zone?)—if I recall correctly, the language of the warning implied that even after the trial period ended, the usual 5+ MPH grace would be extended. Baumol's cost dynamic and general we-are-smarter-and-more-decent-progress means that we can no longer maintain public order with cheap undertrained skull-breakers. Police are much more expensive, more law-abiding, and better trained than they used to be, which means that 80mph chases past schools must be replaced with drone tracking, rousting “undesirables” from streets in “good” neighborhoods must be replaced by coordination with social services, etc. Policy becomes more _explicit_ and _legible_, which replaces old failure modes (the speeding suspect kills a kid in the crosswalk, benefits are for the right ethnic groups in the right neighborhoods) with new ones (everyone is on government cameras, you have to lie to get food stamps you clearly deserve).
I agree with your description of what's the case now, and that changing it would be IMMENSELY hard, and yet I am glad Kelsey's complaining about it! 🙃
Thanks for the kind words, but it sounds like I failed to express myself clearly. My point is that dishonesty is a necessary cost of maintaining consensus, not that it is a big mess that we can clean up if we work “immensely hard”. If we want less dishonesty, we need less governance. Sometimes that’s a good trade; other times it isn’t.
I'm pretty all in on "less governance" – it's hard to be competent when one's responsibilities are so unfocused.
But you expressed yourself just fine – my point was NOT that you're wrong that "dishonesty is a necessary cost of maintaining consensus", but that I hate that that's the case!
I think there's quite a lot that COULD be done, on the margins, even if the core necessity can't be ENTIRELY quashed.
the political sustainability for welfare programs is that they are relatively cheap and are perceived to go to the deserving poor. trying to convince people that free loaders don’t exist is not only inaccurate but a political loser. This is why welfare income cliffs exist where benefits quickly disappear as you move up income brackets. If you made the benefits either universal or at a higher income threshold, then you’ll massively increase fiscal costs and have people benefiting from programs they don’t need.
so do you want to pay higher taxes to fund bobs meth drug habit? if you feel like that’s a loaded, unfair question, keep in mind that’s how a lot of voters and tax payers think. people think there are deserving and undeserving poor and they want to torch programs that they perceive going to the undeserving poor. progressives ignore these political problems at their peril.
and so that leads to government trying to figure out the income people have and then take away benefits once income hits the threshold. people respond by trying to game the system and hide their income. the government responds with more regulations. and the dance continues. this is in fact exactly what rich people do but it’s not like progressives are suggesting we get rid of the income tax.
I think that people who you'd hope would be eligible for programs not being eligible due to a stupid technicality is also damaging to the case for them, in purely practical terms. I know people who can't get food stamps because they live with roommates and it makes me mad! I pay my taxes so that my friends who hit a really rough patch or make minimum wage won't go hungry. I understand that it'd be unpopular if food stamps are literally for everyone but is there a massive constituency for the degree of testing we impose? I think only because most people don't realize how much there is.
There's probably some truth to that, but also I think the reality is "people taking advantage of the system" is always going to trigger a stronger response from voters than "the system is overly restrictive/complex and denies some deserving people".
Imagine we loosen the rules so that people with roommates can get food stamps. Inevitably some TikTok of someone who is living with their middle class boyfriend and using food stamps to buy expensive meat will go viral. Then it's on Fox News and angry constituents are calling into their representatives telling them how outraged they are that their tax dollars are funding food stamps for these people. Protestations that making the policy more restrictive might hurt some "deserving recipients" won't have the same weight. If you're a politician, you're very wary of this scenario.
These "honesty taxes" are everywhere. Two commonplace examples are speed limits and open container laws.
Everybody, including the cops, know that the real speed limit is around 5 MPH above the posted limit. The only people who don't know this are new or inexperienced drivers. This creates problems: one slow driver has more potential for causing accidents than everyone traveling at a faster, but uniform speed.
For a discourse on open container laws and the brown paper bag, there's no better than The Wire: https://www.youtube.com/watch?v=F2fV-_eiKxE
So is it like Bunny Colby said, that these honesty taxes are enforcement gaps created by overly-ambitious laws?
Driving slower is basically always safer. Speed limits should be observed.
These days, people place a great premium on honesty as soon as immigrants are involved.