What happens when good intentions, the urge to have government redistribute wealth*, and government inefficiency collide? Read Mike Lindbloom’s story about a City of Seattle program designed to help poor people with $20 reduction on their $60 car tabs.

To give low-income drivers $20 rebates on their car-tab fees, Seattle’s city government intends to spend as much as $17 each in overhead costs this summer.

The rebates, in the form of Wells Fargo debit cards, are meant to offset the pain of the $60 car-tab fee that voters approved last fall. That measure will increase bus service citywide for the next six years.

You read that right. To give poor people a break on their car registration it’s going to cost the City roughly 85 cents on the dollar to give that dollar away.  And this week the City Council found out how much it costs to take money from one place and redistribute it to poor people. Don’t make any mistake about what I’m saying: the idea of giving poorer people some relief from higher prices on car registration fees is one I like.

But the gross inefficiency of the program illustrates that while it feels good to pass out subsidies it takes money and time to do it. Nothing is really free, even free money.

Expenses include processing costs from Wells Fargo, the debit cards themselves, verification of low-income users, enrollment workers, marketing and informational mailings, staffers said.

What does this have to do with Councilmember O’Brien’s linkage tax? Everything. O’Brien’s efforts to be Robin Hood, taking money from supposedly wealthy developers and giving it to poorer people for housing will have a similar outcome. That’s because building subsidized housing is very expensive. There is broad agreement on this point, and the costs to build a new unit of subsidized housing can be anywhere from $250,000 to $300,000. An analysis of the higher costs conducted by the Washington State Commerce Department several years ago found that,

On average, affordable housing requires an average of five financing sources and takes twice as long to complete. Because local, state and federal subsidy sources often require leveraging and are awarded through separate competitive funding processes, it generally takes twice as long to assemble the financing as market-rate projects, and contributes to increased legal and other transaction costs.

Builders who creating affordable housing “often take out bridge loans to get interim financing while they are trying to secure pennanent funds.” And local government and non-profits generally have less working capital to help move the process along. So they have to wait longer and pay more for financing, which add to costs and, like the car tabs program, consumes the subsidy; that means fewer units of housing.

The impulse to redistribute wealth is as old as the story of Robin Hood, which seems to inform the thinking of Mike O’Brien and his progressive followers as much as the socialist fable inspires the followers of Councilmember Sawant. The problem is that once Robin Hood pays his band of merry men, covers the cost of arrows, food for his band, and shelter there isn’t much left for the poor. Councilmember O’Brien’s adventure of taxing every square foot of of new development in the city may sound good, even kind of romantic (The Urbanist seems to think so).

But the truth is, even after all the strained arguments in favor of the new tax, by the time all that money passes through the City’s bureaucracy, it will add costs to market rate housing and produce fewer units than more efficient programs like the levy, the Multifamily Tax Exemption, and other ideas like using bonding authority to build housing on City land and a smart voucher program. Let’s leave the fantasy to Hollywood and the internet and work together to make decent polices that really will help the poor.

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* I admit I have a lot of fun writing in this space and elsewhere on the internet. I often sound strident. Maybe I am. But to be absolutely crystal clear for the record I am not a libertarian and I do think that government has a big and useful role to play in making life better for poorer people and giving them opportunities to not be poor. Taxation is part of that. I’ve been on the record for a long time here and elsewhere, saying

I think taxes should do three things, in no order, generate revenue for good government, redistribute wealth, and tax things we want less of.

The problem isn’t just that linkage is an illegal tax, it’s a very unfair and inefficient one. In spite of amateur efforts to “prove” that the costs of linkage taxes won’t be passed on to renters that is exactly what will happen. And, once the City gets a hold of all that cash, they have no plan whatsoever for what they intend to do with it, except to pour it in to housing built by non-profit agencies for people who earn 60 to 80 percent of Area Median Income (AMI).

However, there is no urgent need for more production there. However, the non-profits can’t get subsidies for housing at that level of income; now they can, once the Robin Hood linkage tax kicks in. So we’ll be subsidizing costly new construction to compete with market rate housing already producing lots of housing for those income levels. Oh, and Councilmember O’Brien worked to eliminate the one product that reliably produced housing priced at 60 to 80 percent AMI, microhousing. So, with linkage, the monopolization of affordable workforce housing by government and non-profit agencies is complete. The merry men are making out, well, like bandits.

Historical Note: Finally, I would be remiss if I didn’t point out that Robin Hood was operating, in the legend, during the reign of King John in  13th century England. The reign of John is noted both for the legend of Robin Hood but more importantly for the fact of Magna Carta, the document that is regarded as the font of our constitutional tradition. But 13th century England is also the period of the reign of Henry III and the rebellion of Simon de Monfort. De Monfort is considered the first leader of a legislature against a strong executive, leading a rebellion of the barons against Henry III. Next month will mark the 800th anniversary of Magna Carta, and if you dig into it, I’m sure you’ll agree that while it seems awfully distant in time, the period is very relevant and interesting. And for extra credit you can describe the similarities and differences between Simon de Montfort and Magna Carta in the 13th century with Oliver Cromwell and the Glorious Revolution in the 17th. A liberal arts education is a terrible thing to waste.