Thursday, August 18, 2005

Progressive Taxation [Pedantic Politics 3D --- Too Hot To Handle]

Taxes in general are antithetical to liberty. One works or is wise with one's money, obtaining wealth in the process, and then this entity called "government" comes in and takes a significant portion of the fruits of your labors. You cannot resist without endangering your life or property. Quite often, as in my case, much of your money goes to things that you do not like. For example, I don't like thinking about my money going to

(1) Public schools, which seem more like secularist indoctrination centers today,

(2) Old folks, many of whom act like they are owed by the rest of society on the mere basis of being old,

(3) Various pork projects designed to garner votes for both Republican and Democratic legislators,

and

(4) The subsidization of industries that can't compete in the marketplace,

to list just a few things.

But some sort of taxation is necessary, alas. Armies, for example, can be a nice thing to have when an enemy attacks.

I disagree with the idea of a federal income tax, an idea that became enshrined in the 16th Amendment in 1913 [if I recall the date correctly]. I don't mind local or State taxes so much, but even then I see (1)-(4) instantiated at the state level, and thus the blood pressure rises.

So, taxes are inevitable.

In our present system, on paper at least, people who make more pay a higher tax rate than those who make less. Somebody who makes, say, $120,000 per annum pays more than double the taxes that somebody making $60,000 pays. The very fortunate person who made $1,200,000 last year pays more than ten times the taxes that the $120,000 fellow makes. This is progressive taxation in action.

[I've heard the mantra that the wealthy people know how to avoid taxes through tax loopholes and clever lawyering, so many of them pay much less than what one would think on paper. I'm aware of this, but am dealing with the idea in the abstract.]

My question concerns itself with just why it is morally permissible to allow a greater percentage of high income earners' incomes to be taxed.

Why do people who make a lot of money have to pay higher rates --- what is the moral basis for taking more from more economically productive people?

The answers that I've received follow [with a variant or two] these general lines, possibly mixed-and-matched.

(1) The people making more money don't care, since at their level of wealth they still have plenty left over anyway. In more technical terms, the extra $100,000 that a high income pays in taxes has little marginal utility relative to that person, whereas to somebody like myself, $100,000 would have great utility.

(2) The people making more money are taking greater advantage of the structure and the order that government provides in order to make their money.

(3) It isn't fair for lower-income people to pay the same percentage as higher-income people.

(4) Wealthier people have a duty to take care of less wealthier people.

By way of reply to each of these objections, heard over-and-over, especially since more than 50% of my years have been spent on a university campus as an undergrad, grad student, lecturer, and assistant professor, I respond as follows:

(1) Who are you to tell somebody what to do with their property and wealth? To act as if you can run somebody's life or dictate the doings regarding the property merely because you've decided upon a criterion by which "they don't need" it reeks of gentle totalitarianism.

The point of private property, I thought, was that an individual could do with his private property as he pleases for whatever reason, provided that such usage doesn't hurt or injure the property/lives of others.

Certainly, nobody is injured if, say, a Bill Gates holds onto a few extra mil.

A sociological observation of an anecdotal nature: the people who advocate (1) that I've experienced seem to view themselves as this great annointed intellectual elite, so perhaps they really believe their own delusions of grandeur.

Point (3), when advanced, carries a great deal of unstated baggage. When one says that it isn't fair for rich people to pay the same percentage as a middle class Joe Blow such as yours truly, the question to ask again is "Why?"

Fair relative to what?

As a corollary question: Fair relative to whose sense of fairness?

It sounds like an overstatement, but I honestly as of yet to see any meaningful answer to these questions advanced in my 17 years of university life. I've seen a great deal of emoting and posturing for "the working men and women," but I haven't seen an answer that comes close to commanding my assent.

Good questions, eh?

Point (4) is where I'll ruffle some feathers, possibly. In our secular society, why do wealthy people have this moral imperative to hand over their wealth to others?

The idea that rich folks should hand over portions of their wealth to others carries with it the implication that poor people are somehow deserving or worthy of the property of others by virtue of being poor.

They're not.

My contention [and nothing more than that] is that a great percentage of poor people in our country are poor because of consciously poor decisions, laziness, sloth, and a victim mentality. Note that I do not say all people. But I will contend that a great percentage of poor people fall under this categorization.

For the percentage that doesn't, I still don't see a plausible argument as to why this unfortunate class under discussion still has some sort of moral right to the Du Pont family fortune, say. Life does not promise us anything. I'm poor relative to Mr Gates. I don't think he owes me anything, and I don't think he should pay a higher tax rate than I do, and, trust me, when I say I'm merely middle class, I mean it. No false modesty here.

I've usually turned this point around on the collectivist who advances it. If a wealthy man has to pay substantially more "for the poor" and "the less-privileged," then I suggest that the person voluntarily pay, say, double their taxes, to help those who are less privileged relative to them. Maybe some leftists do that, but in my own little sphere I haven't seen that. I see a lot of talk and posturing; very little in the way of action. And I don't consider "action" to be spending the money of others so that you can feel good about yourself either!

I personally think that (2) is the strongest possible objection. It has a prima facie plausibility to it.

The problem with advancing (2) as an argument for progressive taxation is that, while it is quite easy to say that somebody is taking "greater advantage" of what government supposedly provides, it is quite another thing to argue that this is in fact taking place. And what do we precisely mean by "greater advantage" ?

I'd also note that the structures and such that exist for peaceable business to take place don't exist merely for the productive and successful, but they also exist for the unproductive and unsuccessful --- it is merely that these latter folks don't take advantage of the structure.

Those are my brief written-on-a-cocktail-napkin thoughts on progressive taxation and the arguments I've heard on its behalf. This post's length could be expanded a hundredfold, but my goal here has been quite humble --- to set out my opposition to progressive taxation and to briefly discuss some points raised by its proponents, briefly citing my objections and such.

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