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Some months ago I wrote an article about the value of public healthcare. I mentioned how “it’s the taxes, stupid” that pay for it. That is, for things you – yes, you! – could need one day. It’s too “socialist” to do that, though, yes! And so, since states don’t take care of their people, we have crowdfunding. People feel much better about crowdfunding vs paying taxes, which is baffling, as we will see in this article.

Crowdfunding vs Paying Taxes: The Background

Inspiration for this article came from the story of Johnny Bobbitt Jr., a homeless man who became the intended recipient of a “feel-good” charity crowdfunding campaign. However, as he claims, the vast majority of the money paid by people all over the world subsequently ended up in the pockets of the individuals who organized the crowdfunding campaign.

Update: Apparently, as if the above wasn’t enough, it seems the entire story is fabricated with the express purpose of swindling naive people out of their money

Chatting with my spouse about the case, she put forward some very good points, which I expand in this text. In short:

• Why do people deny paying taxes when they donate on crowdfunding campaigns?
• More importantly, why do they spend more on a campaign that will help one person?
• Why do people distrust the government yet they trust their money to individuals?

Let’s take a look at these issues in more detail.

Crowdfunding vs Paying Taxes: The Charity Factor

Consider the following thought experimentThis is a variation of a similar experiment mentioned by Elliott Sober in his Core Questions in Philosophy book (Prentice Hall, 2004. p.339). You have just won $1000 and I’m giving you four options to choose from. One, you can keep the money. Two, you can donate it to a charity of your choice. Three, you can keep the money and I’m also giving you this blue pill that will override your memory so that you think you earned the money. Four, you will donate the money and also get this red pill which will erase that (and only that) part of your memory involving the whole thing: you won’t remember getting the money, you won’t remember donating it.

Wanna take a guess what’s the least likely outcome?

If you think it’s the last one, I’m with you. Not many people would prefer to donate money when they can keep it, but probably even less would do that if they didn’t remember that they did! The explanation is more than obvious. People need to be aware they have performed what they consider to be a “good deed”. In other words, for most people such acts “count” only if they can remember them.

Paying Taxes Lacks the “Aww” Factor

Now, let’s get back to our topic. The connection is of course that the act of paying taxes has a much higher disconnect factor. That is to say, it doesn’t have the “sexy” appeal of a crowdfund campaign. “Let’s get this poor dude his car back!” “Oh, let’s help this homeless veteran get back on his feet!” “Let’s help this poor African kid release his record!” Each and every one of such campaigns attempts to maximize the pull strength.

In other words, campaigns compete for donors’ money; to achieve supremacy, they need to present themselves in as a melodramatic/cute/heart-breaking/[insert appropriate adjective] way as possible. On their side, donors are easily affected by such strategies, precisely because the latter are predicated on the former’s sense of guilt. When it comes to crowdfunding vs paying taxes, it’s a comparison between accumulating resources for one single goal that is personal vs accumulating resources for a much wider scope that is, however, more impersonal.

Paying More for Crowdfunding is a Trick to Fool One’s Sense of Guilt

The irony of all this is surely found in those people who complain about taxes and spend money on crowdfunding campaigns. Equally ironic must be their professed distrust of the government, while they seem to have no qualms about trusting a complete stranger with their money.

To an extent, it’s about the guilt we mentioned above. Another reason is also the assumption that individuals are by definition better than “the government”. For some people there are legitimate complaints about the things their taxes fund – such as weaponry or wars.

Ultimately, however, all these are mere assumptions. As the story of the homeless man exposes, crowdfunding isn’t as innocent as one naively might believe. Who would’ve thought, everything you read on the internet is not true!