Will Paying Higher Taxes Make You Happier?

This is a partial transcript from "Hannity & Colmes ," Feb. 7, 2005, that has been edited for clarity.

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SEAN HANNITY, CO-HOST: Money can’t always buy us happiness, but is it possible that higher taxes can buy you happiness?

Well, our next guest seems to think so. Joining us now is the author of the book, "Happiness: Lessons from a New Science". Professor Richard Layard is with us.

How are you?

PROFESSOR RICHARD LAYARD, AUTHOR, "HAPPINESS": I’m fine. Let me explain what I’m saying.

HANNITY: All right.

LAYARD: I’m starting from the fact that over the last 50 years people haven’t gotten happier, although they’ve had a hell of a lot more money to take home.

And I’m explaining that by the fact that they’re comparing their incomes with other people’s incomes. So everybody is engaged in the scramble to try and raise their income compared with other people, and that is not possible for everybody to do.

HANNITY: It’s predicated on a belief — there’s so many other factors to happiness. Your spiritual life.

LAYARD: Of course.

HANNITY: Your cultural life, your family life.

LAYARD: I’m just talking about the financial side.

HANNITY: Financial happiness.

LAYARD: Which we were also talking about. So they’re comparing to it other people. They’re engaged in a rat race in which they’re all trying to clamber up above each other which is not possible for everybody as a whole.

So why don’t we stop putting quite that effort into that rat race, which involves less time with our family, with our children, with our friends and all this?

HANNITY: And give the money to the government?

LAYARD: And have some sort of a damper on the rat race. Now, then, of course, the money comes back to us again. The money comes back to us again. Of course, nobody wants to pay taxes, that doesn’t make anybody happy, unless the money is then coming back in some other form.

HANNITY: You know what’s missing? We don’t need you to figure this out for us. With all due respect, you know what I believe in? Freedom. Let — let people decide.

I believe that if I work really hard, that if I want to keep my money, fine. If I want to give it to Al’s liberal friends, fine. If you want to give it to the government, fine. Let people decide.

The freedom makes us happy or at least gives us the chance to become happy. Why do we need people to figure all of this stuff out for us?

LAYARD: What other people do affects us. And I can tell you five really good studies by the U.S. in which you can — you find out that, if somebody else works harder and earns more, it makes other people feel worse off.

HANNITY: Too bad. Get over it.

LAYARD: And the same is working — the same is working in the opposite direction. So why not have a kind of arms race?

HANNITY: To each according to his needs, from each according to his ability. We can give everybody the same amount of money.

LAYARD: Let me answer. You’re saying, everybody should do their own thing and there’s no gains from people cooperating to their mutual advantage. This is a form of cooperation.

HANNITY: It’s called communism, socialism.

LAYARD: Facilitated by the — it’s not communism.

HANNITY: If I have — let’s say I have millions of dollars. How much do you want, a percentage? Because I just got a check just today, as a matter of fact, for over 40 percent of the money I got was taken out and that will go to the government. It’s not mine anymore. That’s what I pay in taxes. I don’t even see it anymore.

At what point is enough, enough, in terms of government taking people’s hard-earned money? Because I would argue that your system would — would decrease the incentive people have. I think if I want to work 90 hours a week that’s my choice, and I should have the benefits of that hard work.

LAYARD: That’s precisely the point. I want to ask you a question, if I may.

HANNITY: You go be the host, and I’ll be the guest.

LAYARD: You would probably agree that if we cut taxes people would work harder. They’d spend less time with their families, their children and their friends. Do you think that’s a good thing?

HANNITY: Well, first I don’t necessarily believe it.

LAYARD: You just used the word "incentive."

HANNITY: I believe in the freedom. Let people decide how to live their lives and government get out of the way. I believe in the principles of limited government and greater freedom.

ALAN COLMES, CO-HOST: Professor, is it your contention, just lay it out, the more you pay in taxes, the happier you are?

LAYARD: I’m saying in a country, which has reasonably high taxes, there would tend to be less of a rat race.

COLMES: So if I pay more taxes?

LAYARD: You can see it if you look around the place in Scandinavia or even in other — some European countries. There is less of a rat race and where there is a lower tax rate.

COLMES: But am I going to be happy if I pay more taxes?

HANNITY: Take his money.

LAYARD: Sorry, you’re not being serious actually.

COLMES: I want to understand.

LAYARD: If you pay more taxes and you get nothing back in return, of course you’re unhappy.

COLMES: But you’re saying if we pay the money and we get better roads and better schools?

LAYARD: Exactly.

COLMES: You’re saying that makes us happy?

LAYARD: Thank you. You made my point.

COLMES: But are — you also say the total sum of happiness among the greatest number of people is what you strive for. Does mean if you have wealth distribution, that we’re happier as a nation, where there is a greater wealth distribution?

LAYARD: What do you mean by greater wealth distribution?

COLMES: Socialism? Is a happier society than a capitalist society?

LAYARD: No. One of the basic findings, and we’re trying to talk about evidence, about what makes people happy.

COLMES: Right.

LAYARD: One of the clearest pieces of evidence is that communists made people more miserable than almost any other system. So we’re talking about something in between.

COLMES: But then communism makes you more miserable?

LAYARD: And communism at the opposite extreme.

COLMES: Doesn’t that go against your thesis?

LAYARD: The question is where to strike the balance. The happiest countries in the world, according to the surveys, are the Scandinavian countries.

HANNITY: They take 70 percent of your income. Seventy percent.

LAYARD: Fairly high. Fairly high. They take it but they give it back.

HANNITY: I don’t want it back. I want my own money.

COLMES: Is capitalism less moral than socialism?

LAYARD: Well, I don’t think it’s fruitful to trade these words. We’re talking about where is the problem in balance.

HANNITY: I’ve got to run. But you and Alan can pay any percentage you want. Just leave my money alone.

COLMES: But they make all the money, those guys on that side.

HANNITY: Because we work harder.

COLMES: Yes, we work harder.

HANNITY: I’ve run out of time — we have to — I’ll have you back.

LAYARD: I think that if a person judges their own life and whether they’re successful, they shouldn’t judge it by that. No matter how much...

HANNITY: I agree. I’m a happy person but I’d like more of my money back. Good to see you.

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