Got your citation right here.
Here is an interesting proposal from Miles Kimball:
My proposal is to raise marginal tax rates above about $75,000 per person—or $150,000 per couple—by 10% (a dime on every extra dollar), but offer a 100% tax credit for public contributions up to the entire amount of the tax surcharge.
At first it looks like a tax increase, but for people who would prefer to donate money to charity than pay more in taxes, it’s more like a forced but very flexible tithe. It’s saying, “you can either give the government 10% of every dollar beyond the 75,000th, or you can give that money to the non-profit sector.”
Under a certain set of assumptions, it has the potential to make government smaller and more efficient — it can reduce government spending, without compromising any services. That should appeal to both small-government types and progressives alike. Hence Miles calls it “an alternative to austerity versus spending.”
But the key assumption is that the non-profit sector actually can administer public services more efficiently than the government.
I haven’t written much about this here (though I intend to), but I have over a year of experience working for and managing a 501(c)3 non-profit, at all levels. I had a lot of responsibility and learned an enormous amount about the sector. Later I developed a model for how the non-profit sector functions, as a market. That model is still in beta, but the friends and coworkers I’ve discussed it with generally think it’s pretty good.
And I will tell you, just based on my own experience and my understanding of how the non-profit sector works as a market, that I do not think the non-profit sector could administer services any better than the government, and it could do much worse.
That’s not because I think the government is especially good at administering services — it’s because the non-profit sector as a whole might not be, and certain individual non-profits definitely aren’t, yet they are still very good at raising money.
The reasons why all come down to feedback loops, and what those feedback loops suggest about whether inefficiencies are going to be corrected.
The feedback loops in the non-profit sector mostly run between the donors and the non-profit organizations, leaving the beneficiaries in a third-party position, so the services are like an externality. In the non-profit model, beneficiaries hardly factor into the feedback loop. The government’s feedback loops, on the other hand, imperfect as they are, do at least include the beneficiaries of public services via the democratic process.
I will write more about this in future, and I’m sure a lot of people will disagree with me, but suffice to say for now I’m very sceptical of Miles’ plan, and for more reasons than I’ve suggested here.