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Monday, November 21, 2011

Progressive Taxes: The Ultimate Conflict of Interest

So let's see if this is correct: We the people get to elect our representatives. We have the privilege of hand selecting who runs our government. The representatives we elect then get to choose how much money we must forfeit to that government..................... On the surface, does anyone see a problem here?

Perhaps this is just a huge case of "duh, that's obvious." Perhaps we choose to just ignore this. Perhaps everyone really knows what's going on and we just choose to to be apathetic. Was it meant to be this way? Are we being callous in badmouthing the democracy we live under by saying "um, hey... progressive taxes are nothing more than a way for the political elite to get and stay elected?" This isn't a revenue versus spending problem. It's an ethical problem. It's a perversion of representative democracy problem.

Scottish lawyer Alexander Tytler is credited with saying (yes, this has circled the internet many times), "a democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury." In short translation: our elected representatives do not directly give the electorate money, but, but promising to take less from them, they will win favor from that electorate and continue to get elected to that position. Tytler went on to say, "after that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then by a monarchy." This goes back to the "duh, that's obvious" quote. We might not be headed for a dictatorship per se, but democracy as it seemed to be intended, under a progressive tax rate system, does not truly exist.

Economics tells us to look at things in models of the simplest form. Here is an example of that (you might notice a little bit of facetiousness in this example, you might not). For this illustration, we quickly look at a model voting area (it could be a country, county, state, etc.). The only things we know about these data are the relative incomes of the voters and the positions of the two candidates campaigning to be this area's representative.

Observe:


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This looks pretty standard. Most citizens do not make over $100,000 annually, and the respective tax policy positions are in line. Now, without possessing a Ph.D. in political science, can you guess how this electorate would vote?

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You guessed it! Why would it turn out any different? Sure, candidates have positions other than tax policy, but, as our current economic situation shows, citizens care more about economics and the tax policy that goes with it. With the power to determine the tax rates of the voters, a representative ultimately has a lot of control. He or she can easily sway the minds of voters (and poorer voters are much easily swayed by the dollar). Democrats argue that the wealthy should pay more in taxes because, according to the left, each dollar a wealthy person makes the less value it has to that person. The same can be said for the poorer voter. Each additional dollar a candidate promises to let the voter keep, the more value it has to that voter. Obviously, this post is not scientific by any stretch of the imagination, but it does highlight how under progressive taxes democracy is lost, and we become a country that is run by the biggest promise maker.

13 comments:

  1. It's dour prediction and reality. Only a leader who people trust can overcome this. When I look at the Republican candidates, the best to me to fulfill this requirement is Herman Cain. The others who are leading in the polls, despite their good points, cannot persuade people if they themselves are tainted with changing convictions or with participation in corrupt (not necessarily illegal) political practices.

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  2. NHHead. Thank you for your post. I do agree; Herman Cain and his 9-9-9 plan is a great way to abide by the rule of fairness. How can anyone dispute this? The government should NOT be, as Herman Cain said, in the business of picking and choosing who supports it financially and who doesn't. By making all individuals and corporations pay the same rate (liberals should like it too, under a flat rate tax the rich STILL pay more), the government removes a discriminatory tax policy and can open the doors to fairness and economic equality.

    We hope to see you back soon. This blog is made to encourage debate, and we hope to see your insightful comments on other posts. Thanks again,k and if we do hear back from you, great! If not, best of luck to you.

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  3. Charles for M. BachmannNovember 30, 2011 at 5:06 PM

    Great post. It's almost a "duh" thing but I totally agree. Will follow on twitter. thanks

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  4. Saw this on Barack Obama's facebook page. You hit the nail on the head. Keep it up!

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  5. Yah, simple example but you are pretty much correct.

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  6. A bit of an older post, but I saw this relinked on your twitter feed.

    I honestly can't agree with the implications made here; there is no irrefutable correlation in poor people voting Democratic and rich people voting Republican. If anything, evidence seems to speak to the opposite being true.

    http://abcnews.go.com/blogs/business/2011/09/u-s-census-richest-and-poorest-states/

    More of the 'richest' states are Democratic states, and more of the 'poorest' states are Republican.

    But even that is still not a big/exact enough sample to illustrate an absolute correlation.

    This topic always just comes across to me as one of those filler arguments people love to debate about, but in the reality don't matter much at all.

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    1. RKen - Good afternoon! Thank you for stopping by with your input.

      First, yep, an older post, but we hope that most of our posts are publishing-time irrelevant and can be discussed at any time.

      I respect your opinion, but disagree with most of it. First, yes, this isn't scientific. I stated this above: "Obviously, this post is not scientific by any stretch of the imagination, but it does highlight how under progressive taxes democracy is lost, and we become a country that is run by the biggest promise maker."

      There are some other things I think are hard to get around: "We the people get to elect our representatives. We have the privilege of hand selecting who runs our government. The representatives we elect then get to choose how much money we must forfeit to that government." To me this is the biggest point to take...

      Going further, this is also true: ' Democrats argue that the wealthy should pay more in taxes because, according to the left, each dollar a wealthy person makes the less value it has to that person."

      In my opinion, a regressive system distorts representative democracy, and in fact, democrats are more of the party of "tax the rich" than the GOP.

      (Continued...)

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    2. In reality, I think it does matter. I can't stand seeing an election going to the biggest promiser of favorable treatment. I can't stand government discrimination of any kind, and to me, the taking of money from someone at a greater rate than from another is the worst form, and yes, to me, is how people win votes. The "vote for me and I will give you a tax break while raising someone else's taxes" notion is dangerous.

      In response the comment about state's wealth, I also respectfully disagree. Take a look at this post about cities that continuously elect a mayor of one political party: http://loudmouthelephant.blogspot.com/2011/11/whats-definition-of-insanity-just-ask.html

      Someone posed the same question you did, but, to me, it's not factually correct. To say that the poorest states are republican is not true. Our post was about cities that did not change their leaders, but, unlike these cities, states have. The comment I wrote stated:

      Anonymous - Thanks for your comment. And I must thank you for what you pointed out in your post: the political orientation of these states with regards to governors... DEMOCRATIC! I did some research, and I am happy to share it with you:

      MS: Democrats from 1876-1988, Republicans 1992-2000 Dem 2000-2004, Rep since 2004. Total count:(55 D, 5 R)
      LA: Democrats from 1877-1996 (skipped 1 term, 1980-1984), Republicans 1996-2004, Dem 2004-2008, Rep since 2008. Total count: (40 D, 10 R)

      After these two alone, I started to realize the trend and started to merely count the party of the governors (since the beginning of the state, or since 1900, depending on how old the state was). I continue:

      NM - Total count: (19 D 12 R)
      AL – Democrats every year from 1872 to 1987 Total count:(52 D, 6 R)
      TX: Total count: (39 D, 6 R)
      AR: Total Count: (48 D, 7 R)
      OK: Total Count: (22 D, 5 R)
      WV: Total Count: (20 D, 15 R)
      AZ: Total Count: (16 D, 10 R)
      SC: 5 republicans total
      TN: Total Count: (20 D, 6 R) since 1900

      And, just to take some more evidence from the U.S. Census report, New Hampshire, the state with the lowest percentage of citizens below the poverty level... Total count: (50 REPUBLICANS, 21 DEMOCRATS).

      So yes, I do believe your statement is correct about the fact that there are both good and bad governors and mayors, but, looking at the governors of these states as well actually put more substance behind my case. I will that the position again, however, that this still does not show provable causation. I will merely repeat what my post said... "come on, man!"
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      To imply that the poorest states are GOP states, to me, is a fallacy. These states have overwhelmingly been "blue" and, perhaps after being tired of failed policies only went "red" recently. This even lasted through the alleged "Southern Strategy" so to say that democrats became republicans due to the strategy would also be incorrect. These "poorest" states have been blue states throughout most of their history and it seems that only recently they have changed their voting ways. It does take years to turn around an economy on the state level, and I'm sure it will happen.

      Thank you again. I'm always interested in what you have to say. Hopefully, you respond; your input is always valued no matter how much I/we disagree.

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    3. Boy i think you spent way too much time on this.

      I would have answered this with a question. Since you didn't, I will.

      Rken - The first paragraph is true

      We the people get to elect our representatives. We have the privilege of hand selecting who runs our government. The representatives we elect then get to choose how much money we must forfeit to that government

      My question to you is - do YOU THINK this creates a conflict of interest?

      Good day

      - foddermatch

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    4. Hi again LME, appreciate your input.

      Good analysis on the governors; good points.

      I still ultimately side more with the conclusion that there's just no real way to prove this either way, which in the end makes it more of a filler discussion (at least in my opinion). It's a tough topic. I'd like to point out that originally your point was that the poor would be more in favor of electing officials that can promise them money/safety/security, but you also mentioned that some of the poorest states have swung from blue to red. Doesn’t that seem contradictory to the original argument?

      I understand your point though, and I just feel that it’s a tough thing to prove either way.

      Regarding the anon question:

      I do think there’s a conflict of interest, but I also think that conflict of interest extends far past just that. The middle/lower class and poor may control the overwhelming majority of the votes, but on the other hand the higher middle class and wealthy control the overwhelming majority of the campaign money.

      What truly has the biggest influence and creates the biggest conflict of interest between the two, I couldn’t accurately say. I don’t think anyone can.

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    5. RKen - Good evening!

      I do believe you that there is no way to prove this. With some opinions you can prove your point, with some others, you can't. To me, the difference is, I know this isn't a scientific position, but at least I give my reasons for what I believe. I use facts such as the democrats' favor of progressive taxes to make my point, though again, it's tough to scientifically prove. :-)

      Also, I'm not sure how the fact that some states have shifted from blue to red contradicts my point. Regardless of the policy, perhaps the now formerly blue states just got tired of being poor regardless of what happened. I'm not a resident of those states, but perhaps the GOP candidates promised progressive tax rates as well (I hope not)... who knows?

      I hope all is well. Thank you again for your input.

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  7. Well put everyone that voted for Obama should be forced to read this. Obama supporters are some of the most misinformed voters I have ever seen in my life

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