The term "bane of my existence" would be hyperbolic, but I will admit, to me, our progressive rate tax system is the cause of many of our country's problems. I'm sure as this blog advances I will tackle the economic faults of this system, but for now I want to discuss the one major aspect I believe most Americans conveniently turn a carelessly apathetic cheek to: fairness.
I saw this article today: http://finance.yahoo.com/blogs/daily-ticker/bill-clinton-q-taxing-rich-not-anti-wealth-222914518.html
As you can read in the link, this would bother me. I think it should bother anyone. I wonder just how many people it does bother. The issue of "pro-fairness" Clinton champions is, well, a wonderful sounding phrase to get people to realize a simple truth: it's just not fair at all. Period.
I'd like to look at this in a simple way. Economics teaches us to look at things using simple models with most factors remaining constant. So, to go along with this, let's build a neighborhood in a progressive tax rate country.
There are two neighbors: Mr. Bigrate and Mr. Lowrate. They are the both 34 years old. They are both married, and they each have two kids. They both came from the same background. They both had an equal opportunity to make the choices they did to get where they were in life. Their parents were middle class, and in this example, they are about as similar as they get. They even live next door to each other. Mr. Bigrate is a patent attorney, and Mr. Lowrate is an electrical technician's assistant.
Marginal tax rates aside, Mr. Bigrate's overall tax rate works out to be about 30% in total. Mr. Lowrate's overall tax rate works out to be about 10%. My issue: how is this fair? America is a country that prides itself on equality. It's a country that fights tooth and nail to ensure the government maintains that equality. How is this form of tax discrimination fair? How is it fair for the government to look at Mr. Bigrate and make him pay 30% of his income while it looks at Mr. Lowrate and says he only has to pay 10%? How is this fair to Mr. Bigrate, that he knows he pays a much greater percent than Mr. Lowrate, especially when he knows he receives the same military and police protection, the same bridges, roads, etc?
Another way I look at this is with time. It's that simple. With the example above, for every hour Mr. Bigrate works 18 minutes goes to the government and he works 42 minutes for himself. Mr. Lowrate works 6 minutes for the government and 54 minutes for himself. Now again. How is that fair?
I have asked this question to numerous friends on the left. None seem to be able to answer. I would like to see how it is fair. I don't think it is, and I think it's one of the many disgusting aspects of this discriminatory, government-backed system.