There is no magic money tree

In The Conversation earlier this week, Jonathan Barrett (Victoria University) argued that:

...both reputable media and politicians of every stripe invariably use the phrase “taxpayer money” to describe government funds, despite the phrase having no constitutional or legal basis.

On a constitutional or legal basis, that is no doubt true. As Barrett notes, once a taxpayer has paid tax to the government, they have no residual claim on the funds. The taxpayer can't direct how their taxes are spent by the government, except through the pretty coarse means of voting on who is to be in government. In his article, Barrett essentially argues that there is a certain amount of harm in referring to government spending as 'taxpayer money', because it creates the illusion that the taxpayer has a residual claim to it. Essentially it panders to the unhinged 'tax is theft' crowd.

However, the alternative may be just as bad. If the government is just spending 'government money', that gives the impression that the spending comes from a magical money tree that can be harvested any time the public wants money to be spent on whatever is the policy du jour. In every country except Cloud Cuckoo Land (where modern monetary theory works), every dollar that the government spends must come from some taxpayer. Either the government spends money it receives from current taxpayers, or, if the government is spending more than it receives in taxation, then it is future taxpayers that are going to have to repay the deficit. When people ignore that taxpayers are the ultimate source of government funds (and sometimes even when they don't), then we get crazy and unaffordable policy suggestions. 

Referring to government spending taxpayer money doesn't have to lead to an argument for small government (although some people will want to go there). Governments of all sizes have to be funded by taxpayers. A sensible government is one that doesn't radically overspend its ability to tax the public (interestingly, the current pandemic will have certainly tested how far governments can go in terms of spending more than they receive in taxes).

Barrett has overstated the problem here. Referring to governments spending 'taxpayer money' is a useful reminder that there is no magic money tree.