Our country has laws, rules, and regulations to make sure things stay fair. These laws were created to ensure our government and our citizens are on the "up-and-up." We simply can't ignore our principles just to solve problems. I've said this before, but I will repeat this little example:
Child pornography is a problem, right? I think we can all agree it is. We can easily eliminate this disgusting problem if we simply allow the government to raid suspects' homes or monitor their personal computers and their internet traffic, right? It would be a simple solution, and the problem would be solved.
Wrong! We have laws that are based on equality and fairness. We cannot simply solve a problem by overstepping the concepts of fairness and equality or the Constitution itself. So how is the problem of government over-spending and potential lagging revenues any different? Sure, we can easily solve this problem. We can just make those earning more than $1,000,000 annually pay more and more in taxes (this really wouldn't work, but many on the left think we should employ this as a large-scale solution). Even if we made millionaires pay 100% of their income in taxes, it wouldn't come close to closing the budget deficit. So now what? Hmmm... I know. Tax people making more than $200,000 heavily! Yes, that's it! It would actually make more of a dent in the deficit. It wouldn't solve it, but it would close the gap a lot more than taxing millionaire-dollar earners more.
But let's think about this. While we can't simply go against a major founding principle and invade suspects' homes and violate the Constitution to solve a disgusting problem, how can we go against the founding principle of equality and equal treatment for all by pointing to only a select group in society and forcing them to pay more in taxes while not changing tax rates for anyone else? Thought it might solve the problem, isn't this discrimination? Why is it okay to discriminate for the sake of problem solving? Why is it okay to go against this founding principle of equality and equal treatment for all for the sake of conveniently fixing a budget issue? Would it be okay if the government said, "to solve the budget crisis, we are going to tax only Asian and white Americans?" Would it be okay to say, "we are only going to tax people whose names begin with L, M, and N?" So why is it okay to single out the wealthy?
Ohhhhhh, I know why. Because they are in the minority. It's truly odd. We are against oppression and discrimination in this country, and we are for equal treatment of all citizens (I am 100% for this, of course), unless it involves someone else's money. We despise government discrimination, unless it conveniently doesn't affect us personally. We always want to protect minorities' rights, and we have made great strides over the last 50 years in doing so, but we won't hold those same standards to millionaires. It seems that if the wealthy are in the minority, screw 'em! Many on the left view it this away. They tend to think the wealthy's lives are nice and easy, and they wouldn't even know the difference if they were taxed more. While that might be true, it's still inherently unfair. But no one cares. Though the Westboro Baptist Church acts in a way I truly despise, their acts are protected by the Constitution and the very freedom-loving notions on which our Founding Fathers designed this country. Though millionaires more than likely have an easy life, AND we can solve budget problems by taxing them more, AND they might not feel the sting financially if we do, we should, out of the supposed "American way," treat them equally, even if we despise them or are envious of their lifestyle. But we don't extend to them equal treatment with regards to taxation. The final tax rate (yes, FINAL effective tax rate after all deductions, "loop holes," etc. according to IRS data) for the wealthy is far greater than that of the rest of the population, but recent polls show that 68% of Americans favor raising tax rates on the wealthy more. Does this surprise anyone? As of 2009, there were approximately 140,000,000 middle-class earners in this country compared to 236,000 million-dollar earners. Dollars and cents aside, that's a huge majority-minority ratio. The large middle-class group can vote and affect the minority any way it wants. It doesn't make it right.
This is why I favor flat-rate taxes. It eliminates government-sponsored discrimination, and it ends the trampling of our principles of equality and fair treatment for all. If we all paid the same rate, we would all be devoting the same amount of time worked per hour to the government. Under the current system, one person devotes 10% of their working hour to the government while another devotes 28%. Why should one guy work 6 minutes out of every hour for the government, while another guy works almost 17 minutes per hour for the government? How is that fair? Sadly, most people in this country want to make the person already devoting 17 minutes to the government devote MORE time! Again, this isn't a surprise. Most people want someone else to volunteer, as long as they themselves aren't affected.
Regardless of the revenue-raising proposition of increasing the wealthy's taxes, it's still discriminatory and unfair. The government should not discriminate simply because it's easy and it solves a problem. None of our founding documents contained a wealth clause. None of them claimed we should treat everyone equally, unless they fall into a certain income band. But of course, politicians need to get votes to maintain power... so what easier way to do it than telling the largest voting bloc their taxes won't go up... only the minority's taxes will?
Best article I've read in a long time. Sadly, it won't stop my tax bleeding.
ReplyDeleteNever thought of it this way. Two things:
ReplyDeleteGreat point! I support equality for all.
Never gonna happen. No one would vote to increase taxes on themselves. This includes all the moochers out there.
Hey there LME,
ReplyDeleteAs you know, I'm more of a proponent for a progressive tax system. I definitely do believe our tax system is way past being far too convoluted and complex, and desperately needs to be revamped. And as attractive the simplicity of a straight flat tax system would be, I don’t believe that best fits my idea of fair and equal.
*That said, I think the disagreement on this topic stems from how both sides define 'equal' in different ways.*
Your definition of equal is paying the exact same amount of money. It’s admittedly a more simple, definite, and measureable way of looking at it. Whether you’re in poverty, or a millionaire, you pay 20%. Simple and easy.
My definition of equal is based more on the hardship of paying that amount of money in taxes. If you take someone making $20,000, and ask them to pay 20% in taxes, you’re asking FAR more of that person than you’re asking of the millionaire to pay 20%.
I’ll continue that frame of thought with a hypothetical:
Person A: $20,000 salary, $15,000 in expenses (rent/food/etc), and a 20% tax bill.
Person B: $1,000,000 salary, $300,000 in expenses (rent/food/etc), and a 20% tax bill.
After paying taxes, person A now has $1,000 left to work with for the rest of the year (down from $5,000).
After paying taxes, person B now has $500,000 left to work with for the rest of the year (down from $700,000)
Who has a harder time paying taxes? Could you honestly still call that equal? Sure, they paid equal money, but the hardship on each person to pay that bill is by no means equal. And I feel that is what matters the most.
Additionally, a system like that is more likely to force those in poverty onto government assistance, which doesn’t help anyone.
*Disclaimer*
To clarify:
- I still strongly believe that everyone should pay some taxes (including Person A).
- I’m strongly against the idea of taxing Person B into oblivion.
- I don’t believe there should be a substantial differences in the progression of a progressive tax system (I don’t believe the bracket range should be something silly like 1% to 90%... more like 5-10% to 30-40%).
I admit that a progressive system is much harder to institute, because it does require a broad judgment on instating brackets and determining how to balance them properly. How do you determine where to put the brackets, and what rates? It isn’t easy, and it’s likely impossible to perfectly balance.
That’s the only downside, but I believe it is still the better and more truly fair alternative.
Good afternoon, RKen, and happy Friday!
DeleteOf course… taxes! The one thing I really care about (well, one big thing). I have to say, I couldn’t (respectfully) disagree with you more.
First, semantics. It’s kind of funny, actually. I am for a flat-rate tax system; one where each taxpayer is charged the same rate. That is not the “each tax payer pays the same amount of money” system. Your example actually uses the flat-rate system I like, but saying that everyone would pay the exact same amount of money is incorrect. That’s truly a flat-tax system (in all honesty, to me, is the fairest system... but I think a compromise is a flat-rate system). A flat-rate system is still inherently unfair in the fact that the wealthy still pay more for the same government services and military protection. But alas, I compromise.
I believe that a tax system where the rate taxed is based “more on the hardship of paying that amount of money in taxes”, is incredibly inefficient. It actually doesn’t fall in line with any sense of equality. To me, that is a system where the government says, “We need money… but just go ahead and pay what you can.” In my opinion, that’s a forced donation. It’s not a tax bill. It also doesn’t address three issues:
1. How is it fair to make two different workers work longer amounts of time for the government than for themselves? Why should worker A, in a progressive system, work less per hour for the government than worker B? Why shouldn’t that be the same?
2. How does that not open up the system to political pandering? To use examples, I think it would be safe to say that if I was running for the Senate, or presidency or whatever, I would do pretty well in gathering votes if I simply said, “anyone making $50,000 per year will owe no taxes.” Sure, it’s a hyperbolic example, but it paints the reality that we DO have in this country: ridiculous, tax-based pandering.
3. It’s incredibly discriminatory, and it puts wayyyyy too much power in the government’s hands. How do they determine what tax brackets fall where? It can tweak and adjust to harm or help people however it likes. I don’t think it resonates with the concept of freedom at all to have a government that one year can have group X pay one rate in taxes, and then the next have that same group pay a completely different rate. To me, we are all puppets of the government’s tax system in that case.
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Continued:
DeleteTo go back to paying based on hardship, how is that fair? Taxes pay for government services like military protection, roads, etc. These services are used by everyone, for the most part, equally. To make someone pay more for these is again, unfair. I don’t see how burdening someone with a greater tax rate bill is fair, at all. The main problem, to me, is the fact that with respect to hardship, that can be changed. It’s a matter of cause and effect. The government needs money. The cause is still there. The effect can change. One can climb and fall on the income ladder, but the government still needs money. No matter how hard you climb or how hard you fall shouldn’t affect the rate of the bill you owe the government. There are no other bills or debts due where this is the case for any identical product, good, service, etc. Additionally, progressive taxation (taking a look at the lower end of the income spectrum) kills incentive. Why would you strive to earn more income if it puts you into a higher income band, and you would pay more in taxes at the end of the day?
As far as examples, again, your income can change. I picture a simple scenario:
Worker A: Completes high school. Wants to go out into the workforce. That’s fine, it’s his choice. The government simply says, “that’s fine, worker A… you have the right to do that. You might land a great job, you might land a terrible job… but no matter what, we indiscriminately tax you 20%... so keep in mind, whatever you earn, we will take 20% of it.” Worker A lands a job at McDonalds and makes $19,500 per year. He owes the government $3,900. He had to choice to do other things. The government tax rate stayed the same.
Worker B: Finishes a B.S. in mechanical engineering. Wants to go out into the workforce. That’s fine, it’s his choice. The government simply says, “that’s fine, worker B… you have the right to do that. You might land a great job, you might land a terrible job… but no matter what, we indiscriminately tax you 20%... so keep in mind, whatever you earn, we will take 20% of it.” Worker B lands a job at Boeing and makes $75,000 per year. He owes the government $15,000. He had a choice to do other things. The government tax rate stayed the same.
(continued):
Continued:
DeleteAs an economist, this is fair. As someone who believes firmly that the government should do exactly what it did in this example (treat everyone as fair, and equal… minute details of personal hardships, etc are a wash… the government should be non-bias, not a pusher nor a puller to anyone, just a simple, flat, indiscreet body), this works out. Unfortunately, it’s still semi-unfair that one person must pay $15,000 for military protection, roads, etc, while another only paid $3,900… but again, the time per hour devoted to our government is the same. In this system, both workers worked only 12 minutes per hour for the government and 48 minutes for themselves. Under the progressive system, sure, the rates aren’t crazy (none of this 90% top bracket from the 50s)… but what stops the government from doing that? What stops the government from making some people work 75% of each hour to the government? Again, this is truly fair. People should all work for the same amount of time for their government; anything else is, to me, disgustingly unfair.
Under this example:
Rates/minutes worked per hour for the gov’t were the same
The government did not discriminate. It treated all citizens the same
The higher income earner STILL paid a lot more
The choice of the individual was respected. The government merely took a small amount off income after the fact.
To me, this is a fair compromise. It respects the ideals of freedom of choice and a non-discriminatory government. It doesn’t kill incentive, and it eliminates the potential for political pandering by politicians. All these notions are respected, and the political problems are solved. The one problem that remains is the problem you cite with a difficulty to pay… but again, that can change.
Additionally, countries that have flat tax rates (Estonia, Russia, for example), have large income mobility, steady, high growth, and little do no public debt. That, unfortunately, cannot be said of the U.S., nor can it be said of many other progressive tax-rate nations. To me, your example, while noble and caring for the poor, would ultimately kill incentive (like we have in this country with so many people on government service and entitlement programs), and do the original thing I fear: ignoring the principle that we should all be treated equally.
Sheesh, that was long... but I guess that shows how important taxation and the government power associated with it is to me. :-)
DeleteHappy Friday!
DeleteI actually meant a flat-tax rate, not a flat-tax amount. In that they would pay the exact same percentage (not amount) of money. My mistake in jumbling some of the words.
Regarding your bulleted-points. (long response here we go!)
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1. I could very well counter-argue that with ‘how is it fair to make Worker A’s life so much harder in the tax bill they owe than Worker B’s?’ Because in a flat-rate system, the difficulty that a person has in paying their taxes is drastically harder at the low-ends of pay and drastically easier at high ends of pay.
No millionaire is going to be in danger of struggling to put food on the table if their after tax and after expense income is cut from $700,000 to $500,000… but it surely could be the case for the person whose after tax/expense income is cut from $5,000 to $1,000.
Which again, also increases the likelihood of more people falling on government assistance. No one wins with that.
But both sides of this argument can argue a ‘fairness’ point. You fairness point revolves around numbers; my fairness point revolves around how it effects their lives. I think that considering a person’s livelihood in these decisions is more important than simply numbers.
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Consider this example:
The flat tax argument is kind of ignoring the reality of the situation here, in favor of just looking at the numbers. You might argue that everyone doing X job for the government in America should be paid exactly the same salary, right?
Let’s say, a new rule: all government paralegals in America start at $30k/year. Sounds equal right?
But it isn’t equal. At all. But, the numbers are equal! How could it not be equal?
The answer: the costs of living drastically different across the country. Paying someone to work $30k/y in NYC is not equivalent to paying someone to work for $30k/y in Nebraska.
Likewise, taxing someone making $20k/y at 20% is not the same as taxing someone making $1m/y at 20%.
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2. Political pandering will be present no matter what side we argue here, and I think it’s for the most part irrelevant to this conversation. I’d rather see separate steps to reduce/eliminate the pandering, than to try to base the entire government around fear of it (otherwise we would be no where).
Because let’s be realistic, there isn’t a single thing our government does that effects everyone equally. Some people will always use roads more than others, will use energy more than others, will use education more than others, will benefit from capital gains more than others, will benefit from subsidies more than others, etc.
Likewise it gets a bit silly if we sit here and debase everyone’s ideas with what the government should do with the fact that anything they do can be potentially tied to ‘pandering.’ “You want flat taxes? Pandering to the rich.”
You’re also kind of using reduction ad absurdum here. I specifically said I still believe everyone should pay taxes, and that the progressive system shouldn’t be an extreme progression. I didn’t say I’d support “people earning below $50,000 pay no taxes!”
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3. Discriminatory again depends on how you define equal. Like I said before, you define equality in regards to the monetary percentage of contribution; I define equality more on how it affects the lives of the tax-payer. Both of us are correct in our potential definitions of equality.
DeleteI can’t ever agree with a progressive tax system killing incentive either. Progressive tax systems don’t keep you poor. We’ve had a progressive tax system for the past 70+ years and it hasn’t touched incentive or the need for innovation at all, and we’ve in fact had the biggest growth as a nation in our history (due to many factors). But the fact of the matter is that every extra dollar of income you make (even if you’re rich) is still at the very minimum, 65% yours (if not much higher). You never hit a point where you lose money.
Additionally I have never heard of anyone, ever giving up on innovation just because they didn’t want to pay more taxes. And honestly I’d question whether anyone that did would ever provide much that is useful anyway; because most major innovation in this country does not just revolve around money.
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As far as your example, the flaw in it is that it only applies in a perfect world/a complete vacuum. This is because:
- Not going to college doesn’t mean you can’t be successful.
- Going to college doesn’t guarantee you will be successful.
Likewise:
- Working hard doesn’t guarantee you will be successful.
- Not working hard doesn’t guarantee poverty.
Additionally, examples like this always conveniently ignore the fact that everyone can’t be rich and successful.
Every single last person in this entire country could attain a PhD, but you know what? Someone will still have to clean the toilets. Someone will still have to work the min. wage jobs at McDonalds, etc.
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I also disagree that the poor and the rich necessarily benefit equally from our government.
There are always exceptions, but generally a rich person will benefit more than a poor. Typically the rich will drive more, will take much higher advantage of the FDIC, will have a higher need for protection and far more property (and a higher value of property) to protect, will consume far more resources (energy, water, etc), will consumer far more goods, etc.
And that’s just a fact of the matter.
Who really benefits more from protection of the threat of losing it all (fire/theft/energy/goods/etc)? The guy with three cars and the multi-million $ house, or the guy with a shack, one TV, and a bike to ride to work using 1/10th of the electricity and water? Who’s really consuming and using more from the systems that the government provides directly and indirectly?
This of course can go both ways, with poor more commonly using food stamps/Medicaid/etc, but that’s the point I’m making (that it goes both ways).
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Regarding countries that have flat-tax rates, I’m not really sure I can agree with this point either. There are far too many factors that contribute to a countries success/failure besides the tax rates, and to simplify it that dramatically and try to compare Russia/Estonia/USA on only that basis is a bit too much of a stretch.
RKen – Good morning, and happy Friday.
DeleteFirst, I know that’s what you meant. I pretty much was putting it out there so that anyone reading it would understand, too.
1. I respectfully disagree that the government would be making anything harder. The difficulty of one’s life is primarily defined and determined by that individual. In the example I gave, people are permitted to work as they wish. They have the freedom to choose. No matter what they do, they still have a tax bill to pay. They still must contribute the same amount of minutes worked per hour for their government. We should not be adjusting someone’s tax bill because of the situation THEY chose. Though not a government service, but still a bill, if I went to my gas and electric provider and said, “hey, I didn’t make that much this month, can you reduce my bill,” they would tell me to pound sand. I think taxes should be the same. If someone doesn’t like it, they can work hard to make more money. The percentage would be the same. If the argument is made that they have no control over that (which, of course to me is 100% silliness; people control their lives) then we should absolutely regulate salaries, taxes and control their lives since they can’t do it themselves. Since they can… an flat rate, you owe the government the same percentage tax system is inherently fair.
2. I would never in a million years say all gov’t salaries should be the same. I would never say that all gov’t salaries in the same field should be the same. Salaries are based on the cost of labor and the supply of that labor. If federal gov’t offices in Anchorage had a hard time finding paralegals, they would have to increase the salary to bring them in. In DC, if there were tons of them, the salary would be lower. I’m not sure what the point was in that case. Regardless of their salaries, $100k or $30k, to me, they should both be paying the same tax rate. Why should we make one pay more. They all have control over their lives… why should we allow one to skirt a tax bill? This comes back to the chicken and the egg. Taxes are an after-the-fact thing. Sales tax, income tax, etc, are applied after a base number is determined. The rate should be the same. Incomes are not after the fact. Incomes are the determining value. You go out, you have the freedom to choose your job… and that’s great. Whatever you CHOOSE to earn, you now must pay the same percent everyone else pays. I don’t know what’s more fair than that with respect to coming from a government that is supposed to be impartial and blind.
(continued...)
3. Discriminatory on the “fair” argument you brought up, to me, is also invalid. Take two income earners… one earning $20k and one earning $200k. Tax them both at 10% or 15% or 20%,… let’s say 20%. One pays $4000, the other pays $40,000 (again, this is still unfair, but I will go with it). Now the poorer of the two has $16,000 to work with, the wealthier has $160,000. Will life be “harder” for the poorer person? Who knows? To me, I absolutely do NOT want the government to have the power of determining how “hard” someone’s life is, or how much money is “necessary” for that person to live. Their life and the associated difficulties are up to that person to determine, not the government. If I had only $16,000 of income, I would darn well make sure I adjusted my life to live accordingly. That’s my choice and my responsibility. I would certainly not want to be favored for a lower tax rate simply because I’m not making a larger income. I would know that I only have $16,000 to work with, and it’s up to me and only me to fix that IF I don’t like it. With respect to a difficult life… it might be a wash, it might not… but again, that’s not up to the government. When I say a wash, I mean that hopefully, each earner will make the adjustments. The wealthier guy might buy more expensive things, the poorer guy might buy less expensive ones. If the poorer guy does not, that’s his fault. He created his reality. Again, to argue that he didn’t, to me, is a large fallacy, and is to say that people don’t control what they do.
DeleteProgressive taxes absolutely kill incentive. People most definitely change their behaviors (mainly morale and moral hazard) when they receive something of value without having to pay the cost of that. Perhaps this is one of the reasons the poor keep getting poor… it could be one of the reasons for an ever less productive society, too. I would absolutely argue that progressive tax rate system is failing, here and in many countries. In time, the continual taking from one group, and giving and disincentivizing another has slowly eroded this country. We spend spend spend, kill incentives, and can’t have the poor produce enough to keep up with the demand of taxes that would come from taxing their productions. Instead, we give to them, and further widen the gap.
As far as this: “But the fact of the matter is that every extra dollar of income you make (even if you’re rich) is still at the very minimum, 65% yours (if not much higher). You never hit a point where you lose money” – again, not something I want the government to be tweaking and determining. Leave it to ME to determine my personal financial situation… how I value each dollar I make, etc. There is also the one argument no one seems to address… making one person work more per hour for the government than another. How is that fair?
(continued...)
For these, they are not only applicable in a vacuum: As far as your example, the flaw in it is that it only applies in a perfect world/a complete vacuum. This is because:
Delete- Not going to college doesn’t mean you can’t be successful. (I never said it did… many people are very successful without college… just make sure the government taxes everyone at the same rate regardless of income)
- Going to college doesn’t guarantee you will be successful. (same as above)
Likewise:
- Working hard doesn’t guarantee you will be successful. (it does not… but again, no matter where your income lies, you should still owe the government the same percent as everyone else… why should that be different)
- Not working hard doesn’t guarantee poverty. (never said it didn’t… taxes are an after the fact thing… let the market shake out incomes, let people pay the same tax rate after the fact).
Of course someone will have to clean the toilets… but again, that’s personal choice, and regardless of that choice, they should have the same rate to pay in taxes.
With respect to government services, I 100% disagree… I say the poor NET actually take more. There are two types of people… givers and takers. The poor typically are not givers. The wealthy give and take… the poor, relative to the wealthy, take. Free social programs alone is one aspect where the poor take more. Not only is it a fact that a poor person receiving food stamps or other government assistance more than likely not paying taxes, but they are receiving a benefit from the government. The wealthy person being taxed does not receive that food stamp benefit. From free legal representation, to heating oil, the poor absolutely take more than the wealthy. You said, “There are always exceptions, but generally a rich person will benefit more than a poor. Typically the rich will drive more, will take much higher advantage of the FDIC, will have a higher need for protection and far more property (and a higher value of property) to protect, will consume far more resources (energy, water, etc), will consumer far more goods, etc.” but keep in mind… the rich DO pay more. It’s about the net, and I don’t see how anyone can say the poor contribute as much as they take. Take military protection for instance. How is the wealthy receiving more of a benefit? What about social security and medicare (both programs that were supposed to be emergency supplemental programs, now used as retirement pensions and health plans… further killing the incentive for a worker to save for his own retirement)? The rich rarely utilize these. They paid the lower part of their income to it, and receive virtually no benefit. Someone making $22k all their life receives a HUGE benefit from these programs.
(continued...)
For me, I’m not necessarily against social services. Have all the roads, military, police, etc we want… just make sure we are all taxed the same. If we need more revenue, have the government say, “we are raising income taxes from 11% to 11.5% this year…” If we have too much revenue, let the government drop it across the board. Skewed tax rates create far too many gaps. We can survive if we all paid 70% in taxes… but to have one group pay a far lower percentage than the other creates nothing more than inefficiency and lack of incentive.
DeleteAlways a good, open, respectful debate. I hope I can come back on and debate more, but today is a busy Friday for me. If I don’t hear from you, have a safe and great weekend, RKen
Hate to harp on Rken twice in one day here, but I have to agree with LME on this one. This also has nothing to do with being a conservative. The points he is making stick to the principles of our government, personal responsibility and everything like that.
DeleteHis argument about time worked for the government is pretty much an end all argument. Tying it in to the notion of "yes we need revenue, but making people work for the government at different rates" is pretty tough to beat. Yes, I can see, it would be tough for the poor and yes, I can see, we need government to gain revenue, but skewing the tax rates because it's simple and convenient is not the way to do it. THe issue raised about solving a problem is good, too.
But with regards to acting like pandering is a wash. This argument is sealed. To absolve the left of this is naive. LME is dead right. "Vote for me. You will get lower taxes, and free stuff, paid for by the rich." How can you deny that this is a democratic campaign strategy? Look at current events. The Buffett rule (and yes, LME has correctly pointed out that the amount of time Obama is spending promoting this ruse IS another example of the "vote for me" strategy. Now with the student loan thing. Going to college campuses and saying "vote for me, and you will get this." Yes, the GOP is doing it. But they aren't going to campuses doing it. It's a nice idea, but it's merely another attempt to get votes. I just can't simply sit back and act like the left doesn't push this kind of stuff way more than the right. Overall, I agree, the default should be flat rate taxes for everyone. No picking and choosing, no discrimination, no determinine who has better benefit or hardship. Just a simple, flat, fair rate for all.
And like he said, the rich would STILL pay more. it's a great compromise. Everyone has skin in the game, and if you don't like it, adjust your spending, or work more.
My day is becoming a bit bogged down as well, so this might be my last point (and a bit more brief).
DeleteI do want to say though, that I’m seeing a trend in our viewpoints in that a major theme of your philosophy here is the idea that people ‘choose their lifestyles.’ I think a lot of what our arguments come down to, is the fact that we feel differently about how much choice and control people have in the cards they’re dealt in life.
I simply believe that you only choose and control your lifestyle to a point.
In a lot and maybe even the majority of cases, I do agree with you and would say yes – absolutely – the choices you make are directly related to the success you realize in your life.
But, this does not apply to everyone. No matter how hard you try, you’re not necessarily guaranteed success. The hardest working individuals aren’t always the most successful, and the laziest individuals aren’t always the most unsuccessful. There are elements you can’t control, and revolve more on luck, the environment, or happenstance than purely just the amount of effort.
This being true, my problem is that basing a government model on this basically says ‘too bad’ to the people that are the exceptions.
4.0 student from a prestigious university that couldn’t find a job and is stuck at McDonald’s? Too bad, you chose your life. Hard-working family man diagnosed with cancer and the family falls into bankruptcy? Too bad, you chose your life. Successful worker falls behind on bills after company goes out of business? Too bad, you chose your life.
The idea that everyone chooses their outcome in life completely ignores the reality that people cannot predict the future, cannot prepare for or avoid every possible hazard they encounter in life, and cannot exert absolutely control over their own success.
A system like that is a type of social Darwinism that revolves 100% around money and power, and 0% around humility and empathy for those less fortunate; similar to the monarchies of the dark ages. I think we’re far progressed past that and can show a little more reasonability in assessing how to balance what we ask of different groups of people.
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Mn4Rick:
Keeping it short.
Pandering: How is "Vote for me and you will get lower taxes paid for by the rich" any different a form of pandering than "Vote for me and you will get lower tax rates paid for by the poor." of the GOP? Their staple Paul Ryan budget gives substantial tax breaks to the rich, no tax breaks to the poor/middle class, and helps pay for that by reducing programs that benefit primarily the poor/middle class.
Likewise, I see the same thing regarding military spending. "Vote for me and you'll be safe from the boogieman", hyperbole but still in essence true. Or “vote for me and I’ll keep those slimy Mexicans away.” (a theme more popular in southern states). I mean, if you followed the GOP primaries state-to-state you would see EVERY primary revolved around issues more important to that region (NASA in FL, auto companies in Ohio, etc).
We could go back and forth all day over the pandering each party does, but at the end of the day all we would prove is that just about anything one party promises can be viewed as pandering and they all do it all the time. This is an issue with the system as a whole and is not specific to just taxes.
People making more than $25,000.00 a year should be taxed 50% END OF STORY
ReplyDeleteExcuse me $250,000.00
ReplyDeleteWhoops
I believe that the flat-tax rate system is not fair. I would like to explain why I believe this by elaborating on how the individual has limited control over his or her own life.
ReplyDeleteWe live in a society. This means that we do not function as individuals, no matter how you look at it. The fact that you can read this message is testament to this. With this being said, our ability to take advantage of the synergistic effects of society varies greatly. I will use the process of gaining a college degree in the U.S. as an example to explain my theory. Assume you have 2 kids from the same area (Philadelphia for example) with the same potential. One lives in the suburbs and the other lives in SW Philadelphia. They are of the same ethnicity and want to be successful and work hard. The suburban kid, who I will name Paul, has parents who are college educated. Cam, the inner city kid, has parents who never went to college. Paul is told about all of the opportunities a solid degree can open up at an early age and he begins to work on getting into a good college and getting a good job well before he understands what that actually means. Cam, on the other hand is left in the dark because his parents and people in his community have no experience with the college experience. He does "alright" in school, but nowhere as good as Paul initially. As they get older (in HS), Paul and Cam's dreams both start to converge, they both want to become engineers. Paul has access to a top notch public HS in his area along with the knowledge of his parents and neighbors who have gone through the same process years ago that he hopes to complete. In fact, he is spoon fed tips for success by his neighbors and friends who casually discuss what helped them get to where they are today. Cam looks for guidance and finds it hard to find fellow engineers to ask for advice in his area/life, most people of different classes don't interact with each other as casually as they do among themselves. Cam works on the things he knows he needs to get done to apply for college but misses a lot of the things that Paul picks up from his community. Study habits, leadership experience in HS, contacts of engineers in his neighborhood that all help him shine up his resume for college. Cam works just as hard, if not harder, to reach the status he believe he needs to get into college. Without the background and support he cannot match Paul's resume, but he can come close by working harder. To a college admissions board blind of socio-economic status, Paul's resume and credential advantage would be seen as merit. Even though they both worked hard, because Paul had the superior resources (most of which were not chosen, but given to him) he is able to outshine and outperform Cam.
A college board or employer may blindly say that they take on the best candidates period. But is Paul truly the best candidate? Yes, but not because he is smarter or harder working than Cam. He is more prepared, a result of his socio-economic status not just his individual talents. Cam, with the same potential, will not get the same opportunities that Paul will based on where he started and to assume that it is because of his choices is ignorance with respect to the life of the average working class in it's simplest form. This phenomenon creates a barrier between classes where the upper classes make it harder for lower class people to move up. When people of the lower class (who are the majority) feel that they cannot move up, they disregard the system that is oppressing them and resort to any means necessary to gain what the feel they deserve (crime and drug addiction problems can be tied to this phenomenon easily). Crime and poverty hold down economic and social prosperity (an example: paying for a large police force that could be equally employed making state-of-the-art diesel engines for cleaner coal transportation) and make the quality of life go down for ALL citizens.
Coming back around to my point, both Paul and Cam want a nice home and nice car for their future family. Paul at age 25 is making $80k whereas Cam is making $45k as a result of the opportunities afforded by Paul going to an expensive private school as opposed to Cam's local CC. The house and car cost the same to both men. Who will have the easier time getting the car and house? We must understand that just because Cam makes half of what Paul makes, his cost of living is not and will not be half. A flat tax system would be fair if Cam only had to spend 5% of his income on food as Paul does. But 5% of his income may not feed a family like Paul's 5%. This is the basic theory behind progressive taxation. It shouldn't be a large spread between the lower and upper brackets (nobody should be paying 40-50% in taxes, that is not necessary), but some compensation for the basic costs of living need to be accounted for. Additionally, loopholes that clearly benefit the wealthy need to be eliminated so that they pay the intended tax rate. Taxing capital gains at 15% because it is more risky doesn't take into account that capital investments take...capital. Those with capital to invest know of the risk they take in investing. They must also understand that this income, like all other types of income, is only possible with the support of the government and society and should be taxed accordingly.
ReplyDeleteIf you want to know how these loopholes got in place, observe a simple fact. Congressional members, who are arguably the most powerful competent of the policy making process in the US, have a salary of $175k, more than the highest paid person in the military. Additionally, many of these people are "consultants" with big ties to the industries who employ the individuals these loopholes support. The financial incentive of working as a congressman should not interfere with decision making for what is good for all people. Congress at times only caters to a small group of individuals
Before I wrap up I want to add that not every person that is poor is so because they got the short end of the stick. Some people are lazy as hell and I know people who don't know they are lazy and blame others. I could go into another argument about how people become lazy but I'm assuming your eyes are hurting by now, so I won't. I have also seen lazy privileged people get handed opportunity just because they happen to be at the right place at the right time. Additionally, there are individuals as we all know that ride their class advantage all the way to the top (President Bush Jr. for example, do your research before your respond please. I am not attacking the president, but he had Bush Sr. as a role model and pulling strings for his entire life). It is important that people in our society be able to move up, no doubt. But everyone can't be up which means that some of the haves will become have-nots. The current social structure doesn't allow for much falling out of class (unless it’s by will). In fact, the classes are starting to diverge, which will lead to more poverty and crime, and the increase expenses and social drag that comes with it. The American Dream is not a dream for all. Some people, at the top and at the bottom, will have to trade places. Everyone can't get a deluxe apartment in the sky and the current tenants can't block off the apartment building from the rest of the city. The building needs water, electric, gas and the people need food. Keeping the door open for all people to make it (by discouraging upper-class form hoarding resources and the lower class from civil disruption) is key to our capitalistic-socialist society. Progressive taxation is a tool that opens this door. The programs that keep people off the streets paid for by higher taxes of wealthier individuals is a service that many of these people take advantage of. You want to keep your neighborhood safe? Pay a little higher rate in your taxes so that the people that would rob you will have health care and be able to provide for themselves when things get rough. Want to move up a class? Take advantage of the resources you do have and understand that you aren't guaranteed success but if you don't try, you are choosing to settle and are not entitled to anything more than the basics (food, water, and shelter to keep you from resorting to disrupting society to get the necessities). We must think as a society and understand that it is in all of our interest to support those who don't have (whether it be through progressive taxation or other government/organizational means) while maximizing the productivity of our society so that everyone can have a higher quality of life.
ReplyDeleteThanks for reading, hope to hear what you all think soon :)
Anonymous – welcome (if this is your first time here), and thank you for contributing to our open, civil debates. I hope you contribute again.
DeleteLet me say, as expected, that I respectfully disagree with your assessment :-) but that’s okay. Civil debate and learning from each other is why this blog exists.
First, let me say that I’m in complete understanding of your views about the difference of socio-economic situations. I acknowledge that this exists. But my question is: why should the FEDERAL government discriminately tax to remedy this? Differences in socio-economic situations, as you pointed out, usual revolve around close geographic areas. In short, why should someone in Anchorage, Alaska be taxed to assist someone in Philadelphia, Pennsylvania? The example that you cited does exist, but again, how is it fair to tax someone at a greater rate to remedy it? How is it fair to the person who now has to devote more time per hour worked towards fixing the situation than it is to someone who doesn’t? If the worker in Anchorage, AK is now taxed say at 25% in total, he now works 15 minutes for the government and 45 for himself, while the worker in say Boston making half as much now works 7.5 minutes for the government and 52.5 for himself? I understand there is a problem with a discrepancy in opportunity, but is making people, by force, work more for the government, turning more of their production over to the government really fair at all? The problem you also highlighted is a state-level thing. I’m a firm believer in flat taxes at the federal level because the federal government should only provide services equally and indiscriminately, and it should not be helping people individually. If states want to create higher tax/larger social welfare programs within its borders, that would be fine by me… the residents of that state that don’t agree can leave and they would still get to be Americans. Forcing people, through progressive taxation, to solve the financial ills of the country in this kind of manner, to me, seems grossly unfair. If people in San Jose, for example, have different opportunities than in Philly, why should the people of San Jose be taxed to accommodate those in Philly?
Additionally, taxes are an “after” effect… meaning, they’re applied after an income is earned, after a sale is transacted, etc. Applying a varying-rate tax to someone is inherently discriminatory. Instead of the government saying, “go, work… produce… and just submit 10% off the top…,” this discriminatory progressive rate system gives the government so much power to say, “you, Mr. A… you must submit 25 minutes 41.6%, while you, Mr. B, you must submit 6 minutes (10%), and you, Mr. C… you must submit 15 minutes (25%).” How is this fair to anyone, and most importantly, how can we let the government do this? Isn’t it plausible to assume that Mr. B will vote in a way that ultimately protects his tax situation? And doesn’t that voting-for-a-lower-tax-rate system compromise democracy?
continued...
Of course, the subject of social need and benefits and opportunity are a different subject for a different day, and yes, I understand that some people are born into terrible situations (I was one.) I also agree that we are a society that works together, as you said, but I cannot ever agree with this notion: “This means that we do not function as individuals, no matter how you look at it.”
DeleteWe absolutely do function as individuals. I went to college, earn my income, started and sold a company, now work for a private employer for one entity: me and my family. I do not do it for anyone else. It’s not selfish; it’s the way things are. Now, as someone who wants to have the biggest and best things, I earn my keep, and as a residue byproduct, society benefits. I work as a market economist for a private company to earn my keep, but the products of my labor, namely my research, reports, etc. go on to contribute to the company’s products, which makes it money, when enables it to employ other people, etc. When I owned a small business, I wanted to succeed and I wanted nice things. I helped produce websites because I wanted income. Because of this, I gave to society a product that they needed which enabled construction companies to expand, make more money, and hire more people. I did this all for me, but again, as a residual side effect, society benefited. Yes, we are all mixed in as a society, but I can never stand for the concept that we don’t function as individuals. In a free country, the thing that pushes us forward in the best, most efficient manner, is that the citizens of that country pursue their own desires, and through that, society benefits.
In closing, welcome to the blog, and I hope to hear your response. As stated, we’re a civil blog where disagreement is always okay. Of course, on this issue, I respectfully disagree. In fact, non-discriminatory taxation, aka a flat rate tax, is probably the #1 thing I care about. I will never see how it is fair to have someone, against their will, and by force, contribute to the government at a rate different from that of their neighbor. If people want to help their communities, that’s fine. But government should not exist to force charity.
Anon: Incredibly well-said, and well-exemplified and explained.
DeleteThis is exactly part why I feel that a progressive tax system is the most fair choice here. It simply isn't just a matter of who works hardest; there are countless other facts that come into play (socioeconomic factors, as you mentioned, being a big one).
Needless to say, we agree fully.
LME: I hate to butt-in here, but I can’t resist this topic. We’ve always disagreed here, and though I think we tend to understand each other’s points of view I can’t help but expand upon the topic again. :)
**"The example that you cited does exist, but again, how is it fair to tax someone at a greater rate to remedy it? How is it fair to the person who now has to devote more time per hour worked towards fixing the situation than it is to someone who doesn’t? If the worker in Anchorage, AK is now taxed say at 25% in total, he now works 15 minutes for the government and 45 for himself, while the worker in say Boston making half as much now works 7.5 minutes for the government and 52.5 for himself? "**
The problem of ‘fairness’ can go both ways, as potential counters to your questions could easily be: “How is it fair that the government takes equally from the citizen that spends 90% of their income on the absolute necessesities (food, shelter, etc), versus a citizen that spends 1% of their income on it? How is it fair to ignore the incredible and undeniable difference in the economic impact of a 20% tax on a citizen in poverty that can’t afford to eat regular meals, compared to a millionaire? How is it fair to measure hard work by nothing other than the income you make?”
** “If people in San Jose, for example, have different opportunities than in Philly, why should the people of San Jose be taxed to accommodate those in Philly?” **
Taxes don’t work on a volunteer or case-by-case basis. This would be akin to asking only the people whose houses catch on fire to pay taxes to the fire department. It’s the same principle of insurance; a small risk pool is not sustainable and just plain does not work. You can’t insure only the people that make claims; you also have to insure people that do not.
Likewise, with the government, you can’t tax only the people that directly benefit from what the program pays for. Imagine trying to run our navy, the strongest oceanic force in the world (and the second strongest aeronautical force in the world [ironically, only second to our actual Airforce]) on *purely* the taxes collected from coastal residents. The math simply doesn’t apply; to just about any government program.
** “We absolutely do function as individuals. I went to college, earn my income, started and sold a company, now work for a private employer for one entity: me and my family. I do not do it for anyone else. It’s not selfish; it’s the way things are.” **
I might be misinterpreting, but my understanding of Anon’s point isn’t that you don’t work for yourself… it’s that, whether anyone likes it or not, you’re a product of more than your own ambitions. The societal structure of America revolves around the concept of “we”, not the concept of “I”. I can work hard, I can attain a great education, and I can work in a great career and make something of myself… but at the end of the day it didn’t come down to purely “I”, it came down to many, many people/factors/plans/programs/etc outside of my control that came together to help me along.
RKen – nothing wrong with butting in… that’s the whole purpose of all this. Anon’s and your writing is well said, but I still wholeheartedly believe, however, that this way of thinking is 100% incorrect. :-) (no surprises here). As usual, it’s nothing personal, and to me, it seems there is a fundamental disconnect with the concept of fairness… It seems choice is always removed from the situation when discussing progressive versus fair tax rates.
DeleteOf course, I could simply start with the rhetorical, “how do we have a system other than the one where a government says, ‘earn your income, in whatever way you want, and we’ll simply take X% off the top.’” Again, that seems to be the most fair form of taxation from a government standpoint, and the whole discussion of whom was raised when and where, though tragic in some cases, maybe considered “unfair,” is completely irrelevant. But aside from all that, yes the issue is more complicated, and flat rate taxes seem to be the only true, fair, incentive-pushing way to pay for the government.
You start with, “The problem of ‘fairness’ can go both way...” – To me, this is where my aforementioned “choice” comes in. Yes, some citizens spend 90% of their income on necessities, and yes… someone spends 1% of their income on it. The government is supposed to be blind and indiscriminant… it should simply say “so what.” The “taxation is after the fact” argument supersedes here, in my opinion. If Mr. Big Income makes $1,000,000 and requires $10,000 in necessities to live while the Mr. Little income makes $11,111 and spends $10,000 in necessities” what business is it of the government? Why should the government be granted so much power that it assists one but not the other? Why should it be given so much power that it can choose between two people as it currently does? The government should not be the assessor, via power delegated to it through elected representation, especially since it is a monopoly, of the financial viability of its citizens. And, as I previously mentioned, why should any progressive taxation/social help be on the federal level? I can never stand for ancillary examples of financial situations of varying success/hardship with people paying more and more for people as described in these examples. If Mr. Little income is upset with his financial situation, has the choice change it. He has the choice to spend less on necessities if need be. He has the choice to change his financial situation. All these choices are done after the fact. Forcing (as stated, never asking) someone to basically pay more via, “hey… we’re taking more from you so Mr. Little lives a little easier” is silly to me. Taxation should be a flat rate irrespective of one’s financial situation. What it seems like you advocate is a system whereas people can simply skirt their financial obligation to the government as a result of their bad choices. If I made some bad choices, say I gambled some paychecks away, (and yes, I don’t care how hard the “hard times” get, it is my responsibility to plan, prepare, and insure against them) would it be sound for my mortgage company to say, “well, since you have fallen on hard times, we will only make you pay 25% of your mortgage this month?” Why should it be different for taxation? Why should some people be forced to pay more because some people pay less?
continued...
All these examples of “some people have it more difficult and have rougher financial times, and taking 10% in total might mean a lot to them” in all honesty, mean nothing to me, and it shouldn’t mean anything in the eyes of the government. The holder of American power should not be left with the power to determine, in a discriminating fashion, who pays for it. In all honesty, it appears that when discussing this issue, the #1 focus is on how to make sure people who “need to” pay less do pay less… but no one ever looks at how making some guy in, as I said, Anchorage Alaska work more of his time for the government to cover the problems of some people in Philly. Again, government power comes to mind here. If you want to install social programs and higher taxes on a state level… fine… But to me, this concept of progressive taxes is absolutely absurd.
DeleteYou then answered, “If people in San Jose, for example, …” with - Taxes don’t work on a volunteer or… I’m not sure I understand the relationship. If you’re talking about insurance, which is the precise field I work in (and taxation and the payment of social services are by no means insurance), then you need to address the concept of moral, and to some extent, morale hazard. Insurance can and should never be given away for free, but with progressive rate taxation, this is what happens. Sure, that wasn’t the intent, but that’s the way it tends to move in society. The poor and advocates for the poor say, “I can’t afford to pay more” and the majority say “well, the rich can.” As time goes, we keep squeezing the rich a little more, and progressive rate taxation does what it does: gets more progressive. In the end, we have the current situation: many not paying, or even paying at a negative rate, and a few that do. The USA is now structured like this.
Additionally, to liken taxation and associated social services to insurance means that some people have absolutely no reason to behave in a financially sound and savvy way when they do not pay, via “insurance,” as you describe, for the indemnification benefits they receive from insurance. This brings up one of the many, many issues with progressive taxation: disincentivization.
As far as they Navy example, you’re precisely right. National defense is a national issue… and yes… this is how we should tax people. Everyone should pay the same rate for a federal protection. It does not work, and it is never fair, however, to tax the people of Alaska for the issues (whether intentional, unintentional, bad luck, poor habits, whatever), of Philadelphia.
With this, the “I can work hard, I can attain a great education, and I can work… “ point is completely independent from the point I made when describing this. Frankly it’s silly, in my opinion, to not believe that individual incentive drives individuals AND benefits the country. I feel I’ve addressed this, and it doesn’t appear to be shot down. Any decision I make comes down 100% to one pure thing. ME. My choices. Environments, civilizations, etc,. are all exogenous. My preparation for hard times, no matter how hard, falls on me (and yes, I am prepared). How I, me, as a participant in the environment I choose to participate in, determines what benefits or costs I extract from that environment. No federal government should ever be so powerful that it can determine to take that from me simply because of the illusion of “society.” I have NO problem taxing me to take some of that reward if everyone else gets taxed at the same rate. Tax me at 90%, 10%, whatever. We all have the opportunity to make the choices we do, and taxation should be an after-the-fact (it is) thing that is applied equally. For additional social services, charity is wonderful. Forced charity, no matter no laundered the funds and means become, is not.
DeleteHow hard I work or do not work does have an effect on my income, but yes, it’s not everything. Progressive rate taxation actually taxes based on this. Flat rate taxation does not. Flat rate taxation simply says, “I don’t care how hard you work… if you make whatever you make, we take xxx off the top. You must pay your bill…”
In all honesty, I’ve never heard one argument for progressive rate taxation (I’m not referring to you here… just in general). I’ve heard more side examples of the value of money among people of different economic situations, and on Facebook, I’ve even heard that progressive rate taxation should exist because of similar issues here: failing schools, difference in socio-economic upbringing, etc. But I have never heard how it is okay to require more work from someone to atone for this. I’ve never heard how it is possibly okay to take from someone at a different rate relative to someone else. The ends, in taxation, do not justify the means, just as using these examples, which I disagree with, don’t justify the need to force people to pay more. Again, why should Bill Gates (or a small group of people) be taxed at a much greater rate to fix the problems of inner city Philly or Chicago, or any city? If that was the case, why not just tax anyone making over $1,000,000 per year (there are 236,000 of them) at 85%. $150,000 per year is great to live on… and if that money can be used to assuage the issue of lack of opportunity, poor schools, etc… don’t the ends justify the means? An easy response is, “well, that’s silly,” but in actuality, it’s not. To claim that it goes both ways and that we should simply tax people more because some people have a more unfortunate situation where they can spend 1% on necessities versus those that spend 90% applies here. Why not just tax the rich to 80 or 90%? Why stop if that’s the platform on which progressive rate taxation is promoted?
As I've said, I've still never seen a single justification for a system of government sponsored discrimination. I’m always open to hearing it (I really am), but, again, no offense to you RKen, anon, or anyone… I’ve just never seen the case for it. All these examples are noted, and no matter how dire the economic situations are that these taxes cover, I can’t see a reason to unfairly force people to be taxed at different rates. I’ve also never seen anyone shoot down my “look at taxation as a measure of time worked per hour” position.
Taxation is probably the most important issue to me, and in all honesty, if the country installed a flat rate tax (which, I think, would solve a lot of problems – especially in the realm of incentivization/disincentivization and keeping democracy safe), I would probably stop blogging lol. I would have nothing more to care about.
DeleteAs always, a good debate. Please take nothing personal… it’s never the intent. One day we need to get on this chat thing so we can have a back-and-forth fluid convo lol :)
And I gotta ask... for logistic purposes... did you happen to see this convo come up because of the "recent comments" thing on the side? If so, that's awesome! :)
DeleteAnd one last thing... going back and reading through this thread... wow... this could be put into a book. Great writing, great debate! I hope to keep it going... maybe I can put it on Facebook to get some more participants.
DeleteNo time to continue it today; so busy. :(
DeleteI actually read through most of this post and the comments yesterday after my post (and realized I repeated myself quite a bit lol), there are some very good debates and points made here. Big variety of perspectives too.
I'm subscribed to the RSS feed in my work Outlook account, so I get a stream of the comments made on any of the blog posts. I saw Anon's and yours pop into my feed, and thought I might've missed a discussion on taxes! Turned out to link to a post from earlier in the year. :)
RKen - Oh... RSS feeds update on comments? Is it on every comment posted? And can you please clarify on this: Turned out to link to a post from earlier in the year. :)
DeleteTurns out, Anon (Kevin Williams below) and I had a great comment and then chat (using the chat program at the bottom of the page) about most of this last night. It's great to know people care, regardless of what side they're on. This has been a great debate, and I hope it keeps going. I'd really like to get more "likes" on Facebook to do that. I think that with a larger social media connection, people would be more interested in debating. Who knows... but that's the "business model" so far :-)
Sadly, I'm super busy today, too.
Yep, I receive an e-mail in my RSS feed for every comment posted regardless of how old the post they comment on may be (it seems, at least).
DeleteThe e-mail also includes a generic link to where it was posted, which I don't know until I click and find out! Pointed me back to this post, for Anon's comments.
Oh no! I hope that's not a nuisance. Anon and I wrote a LOT below lol.
DeleteNope, not at all, the RSS feed is separate from my actual inbox.
DeleteI am anon...
ReplyDeleteI wanted to see if this site was open minded before I posted my views. You guys are, so I have no problem showing myself.
LME you do have a valid point, it is not fair to tax one to support another in an ideal word where everyone is given the same choices. But please understand that this is not the case and no matter how difficult it may be to accept, we all get help. My background isn't shiny at all, but I got help along the way from people and programs that made me able to become the professional I am today (Exploration Engineer in Petro Industry). People who do well are only able to because this country allows for it, unless they do it through illegal means which is another subject. You and I got help from our government directly and indirectly. You may not have accepted food stamps, but the woman that cleaned your dorm rooms in college had no choice but to so she could feed her kids. You may think it is a waste of your money to support programs for students 2000 miles away from you in a city you have never visited, but remember that innovation in this country is shared. If a new drug is discovered at UPenn, will it not be available to those in California? I went to a school in the NE, I had a roommate from Cali and the Midwest. Would the school be there if the government didn't try to make sure that opportunity is uniform in the nation? Pittsburgh was a money Pitt (LOL) if it weren't for the government and its social net there it wouldn't be a college down. Many of innovations you take granted for today (such as Google (ask where the majority of the software engineers come from, its Carnegie Mellon), aluminum research Alcoa, and health care information management UPMC) all come from a city with a negative balance sheet. This country prospered when this concept was unselfishly accepted by our society.
Additionally, I think it is acceptable to make those who make more, pay more. Our currency is backed by the entire countries ability to produce, not just you or a select few. The fact that you have more means also means you have a greater responsibility to society to support the system that helped you get to where you are today. I am not saying that you should be taxed double the rate of someone else, I am saying that it is fair to say that you have benefited more from the society that the government has established and that you have a responsibility to ensure that you can maintain the lifestyle you hold so dearly. This may mean helping others that can't help themselves so that they don't disrupt the society as a whole. Many of my upper class friends have a hard time wrapping their head around why they pay more taxes because they only look at the first degree effect of taxes, such as food stamps and public housing. You have to be able to analyze to the 4th or even 5th degree of taxation to truly understand it's purpose (kind of like analyzing the Libor Scandal if any of you have tried).
Lastly, I have to address the comment on social nets and insurance, disincentivization. Please answer this for me. If you want to buy a $35k car (those 2013 Mustang GTs are hot...) but you can only afford a $25k car with your current work hours, would your first thought be to pick up more hours/new job or would you second guess it because you are going to enter a higher tax bracket? Let me add a spicier example, do you think someone making $35k a year would refuse a 20k raise through overtime because they would pay a higher rate of taxes? The incentive of making more money only deteriorates when the value of that money to a person does so. So for an individual to be disincentivized, they would have to be at a point where they are comfortable with the resources they currently have. With the same example, do you think someone making $200k would be more likely to turn down more hours than someone making 35k? Disincentivization was a concept created by the same class it supports, please look deeper into what it means.
Thanks for reading. Can't wait to hear back from you all :)
Kevin Williams - First and foremost, thank you for coming back, and welcome to our blog! We are an open and civil blog, and no matter how much everyone here, including me, agrees or disagrees, this blog promotes respectful, civil debate.
DeleteAs expected, I respectfully disagree with pretty much all of this :-) but that's okay. With over 4,000 comments, this blog is full of agreement and disagreement alike. You make great points, don't get me wrong... but I'm still not seeing how it's fair to force someone to pay taxes at a greater rate than someone else. I also don't see how it's fair to force a sense of "social responsibility" in anyone. Now sure, that should exist, but the government can't force this.
Now also let me say that a lot of my "rebuttal" has been addressed, so I don't want to disrespect you, but some of this might be copied and pasted from my reply to RKen.
From your first paragraph, you say, "But please understand that this is not the case and no matter how difficult it may be to accept, we all get help..." You're right, we all do. And yes, some people are born into inequitable situations. But do we truly have "freedom" in this country if we force someone, by the government singling them out, to pay for this... to compensate and indemnify for this? Where is that person's freedom, and most importantly, where is their freedom to live in a country where the government does not discriminate?
You then said, " People who do well are only able to because this country allows for it..." yes... you're absolutely correct it this... they're allowed to do so. If they don't, why should someone who DID do well be forced to cover for the failure's shortcomings? This is one of my top 10 reasons (out of probably 50 million :-P) that I'm against progressive rate taxation. The fact that we now shift reward from earning to failing is beyond me.
As I said to RKen, progressive taxation proponents tend to eliminate choice from the equation. While this may seem heartless to some, it's not. You said, "but the woman that cleaned your dorm rooms in college had no choice but to so she could feed her kids..." but to me, that's 100% false. No one forces her to do this... but most importantly, no one forces her to live irresponsibly. No one forces her to have children she might not be able to afford... no one forces her to have low skills or a lack of a marketable education. No one forces her to have the job she does. Where she is in life is HER responsibility; it's a summation of every choice she made. This is freedom, and, with respect to progressive rate taxation, why should someone who made far better choices be FORCED to subsidize her choices? Again, this isn't really a debate about social programs (I'm 100% against them, and I think it's disgusting that we, as a society, use government to supply sustenance, housing, etc. - it's not the roll of government, but that's a debate for a different day), but this is a debate about how it should be paid. IF we must have social programs (which, I know, is not the sole reason for taxation), we should all be taxed at the same RATE to pay for it.
In a flat tax society... the rich would still pay more, but no one works more of their time for the government than another person (I've noticed this part of it goes unanswered by all progressive tax proponents :-) )
continued...
You then said, "You may think it is a waste of your money to support programs for students 2000 miles away from you in a city you have never visited, but remember that innovation in this country is shared. If a new drug is discovered at UPenn, will it not be available to those in California?"
DeleteInnovation is shared, yes! However, it is not shared by the government. I'm not sure how an argument is made for progressive rate taxation that claims it's the government's role to shift innovation across the country. Innovation, through the magic of supply and demand, would make its way across the country if the market exists. Free markets spread innovation and desired products and services. It has never been the government. In fact, most things the government seem to support fail.
You then mention, "Would the school be there if the government didn't try to make sure that opportunity is uniform in the nation?" But this is completely false. The government does promote opportunity through the protection of society-granted rights, the protection of property, etc. It does NOT protect outcome. The opportunity always exists,... results are up to the people via a free society.
With respect to this, " Many of innovations you take granted for today (such as Google (ask where the majority of the software engineers come from, its Carnegie Mellon), aluminum research Alcoa, and health care information management UPMC) all come from a city with a negative balance sheet. This country prospered when this concept was unselfishly accepted by our society" I'm not sure what you mean. All of the companies are private companies... and the desire to progressively tax the citizens seems like an unrelated notion.
continued...
You then say, "Additionally, I think it is acceptable to make those who make more, pay more." Under flat rate taxes, they would. Everyone would pay the same rate, and naturally, the more you have, the more you pay. But the best part is, if the rate is say 10%... that means every citizen, regardless of sex, creed, economic status, race, heritage, etc., works 6 minutes for the government and 54 for themselves. How is this not the most fair way? Of course, we're all happy with someone ELSE paying more in taxes, but how many are willing to say, "sure, tax me more?" I don't want anyone to be taxed at a greater rate, I want our government to NOT discriminate by taxing us the same rate.
DeleteWith this, "Our currency is backed by the entire countries ability to produce, not just you or a select few" I'm not sure how the government's ability to back its currency relates to taxation. If we had an ultra progressive tax or a flat one, the country's currency would remain what it is irrespective of the method of taxation.
This sentence" "The fact that you have more means also means you have a greater responsibility to society to support the system that helped you get to where you are today" I don't think I could disagree with more. You might be right, you might not be... but how do you MAKE someone be responsible to society without restricting their freedom to choose if they want to be responsible or not? I can never promote a society where we restrict the freedom of someone because we think they SHOULD be doing something to give back to society. If a person wants to be a jerk, that's his right. If you tax him at a higher rate via progressive rate taxation, how is that fair, and how is that not punishing him for not contributing as you see fit? Where is his right to be treated as an equal in the eyes of the government?
You say, " I am not saying that you should be taxed double the rate of someone else, I am saying that it is fair to say that you have benefited more from the society that the government has established and that you have a responsibility to ensure that you can maintain the lifestyle you hold so dearly." - Why not tax at a double-than-normal rate. I addressed this in my comments to RKen:
" The ends, in taxation, do not justify the means, just as using these examples, which I disagree with, don’t justify the need to force people to pay more. Again, why should Bill Gates (or a small group of people) be taxed at a much greater rate to fix the problems of inner city Philly or Chicago, or any city? If that was the case, why not just tax anyone making over $1,000,000 per year (there are 236,000 of them) at 85%. $150,000 per year is great to live on… and if that money can be used to assuage the issue of lack of opportunity, poor schools, etc… don’t the ends justify the means?... Why not just tax the rich to 80 or 90%? Why stop if that’s the platform on which progressive rate taxation is promoted?"
If it's simply Okay to tax people to serve society, what is the threshold and at what rate? What do you think is the right rate? I'm an economist and I couldn't tell you what that number is and where the threshold lies...
continued...
With respect to disincentivization, which is a specialty study I researched, I'm not looking at it on the top end; I'm looking at it on the lower end. Yes, it's very unlikely that a wealthy person would say, "eh, I'm not taxed at a higher rate... I'll produce less" (now yes, as a business, if that business is taxed more, they might lay off people... but many wealthy will not slow down working because of a higher tax rate). But the poor most definitely have a lack of incentive to produce. First, with respect to social programs, if you give something of value away at little to no cost, the receiver of that asset has no incentive to obtain it (or produce for it) on their own. With respect to taxes, if you permit someone to live under a negative tax liability (35% of Americans take in more in tax money than they pay), you give them no incentive to do better. Why would they? Any further income means they pay more. But yes, this economic concept, disincentivization, is something I've explicitly studied, and in spite of what the MSM tells people, it's a very real concept :-)
DeleteWith respect to your new car model (I used to sell Mustangs :-) ) the individual model is true; the government is not a person, however. If a person wants something, they can do something to earn it. But by your premise, it implies that the government can simply spend at will and then tax after the fact to catch up. This never works for a society as the government, once it learns it can do this, rarely will step away from the brink of "spend then tax."
I hope that I've answered ever individual issue I respectfully disagree with... and regardless of agreement or not, I'm glad you came here to express your views.
This is where Kevin Williams' argument falls apart, and it's right off the bat:
Delete"LME you do have a valid point, it is not fair to tax one to support another in an ideal word where everyone is given the same choices."
What do you mean "in an ideal world where everyone is given the same choices?" Just as you and Rken incorrectly keep saying, we DO make our own choices. If your platform of origin was a rich one or a poor one, you STILL MAKE YOUR OWN CHOICES. A rich kid can CHOOSE to not go to school, take drugs, and be poor. A poor kid can CHOOSE to work hard, get an education, and earn a sizable income. This ridiculous notion that your lot in life is not the result of your decisions is exactly the problem with this country today. Your after the fact "equation of results" junk is detrimental to society. It shouldn't be the government's nor the wealthy's job to ensure we all start from the same place, nor should it be, in a free society, the job of both those entities to ensure our actions and different choices yield the same results. We are free to live successfully or poorly, regardless of your starting point. Why do you want the government do balance this out? And, as we have now seen since this BS war on poverty started, the PROOF that it IS A MATTER OF CHOICE: the government has been attempting to balance all this out via progressive taxation for 60 years, and guess what? People are STILL POOR. Know why? Because no matter how much help you give someone, no matter how slanted the redistributive taxation policies this country are, people are STILL RESPONSIBLE FOR THEIR LIVES. It IS about their choices, and not about the random circumstances of their environment.
Proof. Thank you.
Anon: I think you're misreading our arguments.
DeleteNeither of us said that your lot in life isn't affected by your choices. The point is that, no matter what choices you make or how hard you work towards them, you cannot control every aspect of your life through choice. People don't choose to get cancer, kids don't choose the environment they're brought up in, people don't choose to inherit genetic deficiencies or predispositions to certain chronic or debilitating ailments, people don’t choose for accidents to happen, people don’t choose to be robbed or victims of other crimes, people don’t choose to get laid off, or to purposefully work for a company that goes into bankruptcy.
The idea that life is nothing but a set of definite and fixed choices and results, where making X choice and putting Y amount of effort towards it will result in the exact same circumstances for every single person in the America, is nothing short of a wild fantasy. Outside factors out of your own control will always come into play.
That being the case, I can’t accept that a system ignoring those facts is completely fair either.
But your lot in life IS affected by your choices no matter what "conditions" you claim exist. People yes have cancer. People yes have genetic deficiencies. People yes are brought up in troubled homes. The fact that many people that are born into these things and many do succeed completely destroys the case for government assistance through progressive rate taxation. I'm not going to say that these conditions don't exist. They do. What I'm saying is that with 300 million people in this country, we are ALL going to be born of different conditions. If the government isn't going to smooth them all out, it should smooth none out. Plus, like I said, many many many many people who are born to these conditions become very successful. The fact that some do while others don't shows that the variable, primarily, is the decisions made by the individual. On top of that, why is it "fair" to make one group of people, through the government, compensate for this? It has been described many times as I've read through this blog that the rich would STILL pay more under a flat rate system. You want them to be taxed at a double/exponential rate? Why is it the job of the government to encompass a group of citizens and make them responsible, through proxy, for equalizing all these sad, unfortunate "imbalances of life and environment" they had nothing to do with? How is that fair? Where is that (the wealthy) person's freedom. If a rich guy is cornered and FORCED to pay a greater rate of his taxes, you're violating his economic rights and his economic existence. There is NOTHING fair about progressive rate taxation. There is NOTHING fair, I don't care about all 300 million individual circumstances, about the all powerful government FORCEFULLY taking from one person at a greater rate than it takes from another. You cannot, through all the feeble attempts you describe ("That being the case, I can’t accept that a system ignoring those facts is completely fair either. - seriously? this "well, some people have harder situations" junk??? THAT'S your case for the government strangling some while not strangling others????) possibly make the case that a system where the government forcefully takes from one at a different rate that it takes from another is fair. Again, the operative word is the GOVERNMENT. If we want to address that people are born into unfortunately, inequitable situations, fine. Charity works great. But charity doesn't hold power or make laws. The fact that the government not only does both but FORCES people to do so is what makes progressive taxation an inherently and awfully corrupt, dangerous, inequitable and UNFAIR system.
DeleteI like that this particular comment thread repeatedly comes up from time to time on the recent comments section on the right. It seems like every other time I stop by here someone has posted something new in this thread.
DeleteTo Rken - you cite the fact that people, naturally, are brought into this world with uncontrollable circumstances (Anon agreed with you). Don't you think it's completely unfair for the government, as Anon beat me to, the arbiter and delegate of power, to, in monopolizing fashion, hold that power AND act as an insurance agency, AND mitigate these instances of "different upbringings?" Do you honestly think that's the intent of government. To look across 300 million people and say "I'm going to do this and that and A, B, and C, to try to account for some unfortunate things?" I don't. I think it's terrible. I think it destroys our concept of freedom. I think that it's a sad state of affairs that people like you sit back and say "sure, let the other guy pay a whole lot more, so long as it's not me."
Anon: Conditions that I "claim exist"? You’ll have to clarify, what are you implying by that?
DeleteAnd whether or not people can or do still succeed in the worst of scenarios does not prove anything by itself; particularly when those cases are statistical outliers to the trend. The fact of the matter is that, statistically, people who are affected by the worst of the uncontrollable factors that I 'claim exist' are far more likely to fall into difficult economic times than those who are not. People who develop cancer are more likely to go into bankruptcy, people who are born in certain areas are more likely to stay in poverty, people who have certain ethnic backgrounds are more likely to be in poverty, etc . Whether or not there are rare exceptions to the trend, does not debunk the existence of the trend.
I don't see how you can take statistical outliers, and logically conclude that they’re concrete evidence of anything other than the fact there are always outliers. But they’re outliers for a reason; they’re very few and far between.
If they weren’t statistical outliers, poverty rates wouldn’t be growing more among a certain class than any other, healthcare costs wouldn’t be one of the leading causes of bankruptcy and cancer one of the leading causes of astronomical healthcare costs, demographics/gender/community/education/etc wouldn’t all be easily statistically correlated to major differences in average income, etc.
As far as what is really fair, both of these scenarios are arguably unfair. I acknowledge that. But to me this is about choosing between the lesser of two evils.
Creating a system of government that essentially says “no matter what, you’re on your own” will unfairly benefit the people who are fortunate enough to never fall into hard times (and yes, mostly through the choices they make… but not completely, is my point). Creating a system of government that essentially says “if you succeed, you have a slightly higher financial obligation to help those less fortunate” will of course unfairly put additional burden on those that succeed.
Given the two choices, I will always prefer the second.
The worst case scenario with the second is that the successful have pay more money, which may or may not have various economic effects (most theoretical, none absolute or proven). The worst case scenario with the first is that more people would potentially be left to starve/die (*proven*); which not only is unfortunate in itself, but typically leads to an increase in crime/theft/etc as desperation rises (*also proven*).
I’d much rather have situation #2.
And again, it’s relevant to disclaim that I say all of this as a maker and not a taker. No self-serving motivations about my philosophy on this.
So that "evil" is okay as long as it's not you who has to feel it, right? How dare you sit there and say "I'm okay with someone else being violated and abused by the government (and don't even try to de-quantify or dequalify a level of abuse - anything in the realm of progressive taxes, where one is forced to pay more than another IS abuse by the government) as long as it's not me." A flat RATE (yes the rich still pay more) is the only fair way, and it's not the lesser of two evils. The only thing that is evil here is the fact that people sit back and promote an unfair government. As Texas said, the government should not be in a position to be the manager of risk. As far as an obligation, 100% false. You should have the same obligation as everyone else. Anything above and beyond is CHARITY and CHOICE. How in the world are you okay with this forcing of help by the government???? And maybe, just maybe, if we actually had a system where people are left to their own in a survival of the fittest world, they'd buckle up and actually do something instead of being so damn dependent. The thing that proves me right: look at the astronomical amount of people that are now dependent on the government, and what's more important than the amount, look at the RATE of growth of that number. Americans are dumber and less industrious because the government coddles them. Good job progressive taxes. Keep becoming MORE progressive as fewer and fewer of those able to pay exist.
DeleteHey Texas:
DeleteI do like that this conversation continually reemerges too. I think it's probably one of the biggest discussions and differences of thought between the various sides.
I can acknowledge and even understand your view and belief that it shouldn’t be a natural role of a basic government. But we simply have different ideas of how a government can evolve and benefit a society, beyond simply providing rules to govern us by.
At its most basic definition, a government really shouldn’t be anymore than the body of laws/legislations that a society abides by. The basic concept of government doesn’t even include a responsibility to provide enforcement of those rules, or a military, or protection of the people, or anything else.
But, I think we can all accept that these are necessary functions of how our current government works, right? We all need/want/accept military protection, we all need/want/accept a federal justice and court system, we all need/want/accept a set of world trading policies, etc.
99% of us accept some level of evolution to the role of government beyond simply a body of rules, but the main thing is that we accept it in various amounts and in different areas. We simply differ on that concept.
And also, keep in mind that everyone is just about always subsidizing everyone, whether or not we have progressive taxation. Otherwise, why should inland states have to pay for a Navy? Why should states with lower crime/capita pay equal or more in federal dollars towards reducing crime in states that have higher crime/capita? Etcetc. That’s just simply how our system works; and it is impossible to eliminate in entirety (for the same reason an insurance company will go out of business if they only insure people that make claims).
You also said:
“I think that it's a sad state of affairs that people like you sit back and say "sure, let the other guy pay a whole lot more, so long as it's not me."”
I’m hoping that you were saying that in a general sense, and not aiming it at me. I’m no where near that ‘stereotype’; I expect to have an overall effective tax rate of 22.82% for 2012. As a single male without a home, I pay just about the absolute most possible in taxes for my income bracket. I have no extra deductions, no extra credits, no extra benefits. I’m just about as far from a “make the other guy pay” situation as it can possibly get under the current tax situation, short of making 7+ figures.
Additionally, that whole statement tends to be an unsubstantiated and meaningless ad hominem attack.
There are no major discrepancies between Democrats and Republicans in the areas of education and wealth. The idea that all Democrats or those with progressive philosophies are takers, and all Republicans or those with conservative philosophies are makers, is nothing more than a empty talking point that does not accurately reflect the actual numbers. It's a pointless distraction.
Anon: As much as I’d like to continue a discussion on this topic, you left me with very little new to say here.
DeleteYour last post effectively ignored most of everything I said, and instead attempted to attack and label me as a ‘taker’ because of my difference of philosophy. Which again, is not only completely untrue, but is also irrelevant to the discussion of these principles.
And once more, the government is already a manager of risk. By providing anything more past simply a body of laws that govern the land, we’re allowing it to step in and manage risks. They manage the risk of a terrorist attack, or invasion from another country. They manage the risk of people breaking the laws that we set, or attempting to overthrow them or the country. Etc.
What you really mean to say here, is that you don’t believe that this is a risk worth managing, or just outside the roles of government risks you’d like managed? Correct? And I simply disagree.
Your idea of what a progressive system does also fails to be as strong of a point as you seem to think it is, ironically enough. You try to exemplify the failure of a progressive tax system by the growing poverty rates, but you seem to completely ignore the fact that the growth in poverty is INVERSELY related to how progressive our tax system actually is. Our tax rates have only been cut substantially (with the majority of the cuts going to the top brackets) over the past 100 years, making them far less progressive than when they were at the height of the middle class. Countless other factors come into play here as well, that both of us and everyone else could and do argue about.
Ultimately though it’s just not as simple as you would like to make it. If it was, we wouldn’t even be having this debate.
You should probably look up the definition of "ad hominem" before trying to impress us with your use of a latin phrase. There was no personal attacks by Texas or me. Please stick to the actual debate and not ridiculous side notions and accusations.
DeleteAnon: Really?
DeleteTexas said: "I think that it's a sad state of affairs that ****people like you**** sit back and say "sure, let the other guy pay a whole lot more, so long as it's not me."
You said: So that "evil" is okay as long as it's not ****you**** who has to feel it, right? How dare *****you**** sit there and say "I'm okay with someone else being violated and abused by the government (and don't even try to de-quantify or dequalify a level of abuse - anything in the realm of progressive taxes, where one is forced to pay more than another IS abuse by the government) as long as it's not ****me****."
Either you two are mixing up your pronouns, or you’re mixing up the definition of ad hominem.
The fact of the matter is that my financial position has nothing to do with a debate in the role of an evolving government, or do you think that only certain people of a certain financial position are allowed to discuss this topic?
And not only that but your assumptions are completely untrue. Which despite making clear in my first post, you still sought to try to attack me on.
So, how about you stick to the debate and address the several different sets of points I made now, rather than ignore them twice in a row?
Hello sirs.
ReplyDeleteFascinating debate, and though a moderate with liberal leanings, I will say that I think LME has the stronger and more correct points. I find the following statement to be one of the best, well-said, philosophical and accurate assessments of how things should be.
"The government should not be the assessor, via power delegated to it through elected representation, especially since it is a monopoly, of the financial viability of its citizens."
It's truly akin to something our founding fathers would have said. I literally got goosebumps when I read that very quote. Thank you for these contributions, not just the writer here, but everyone that has contributed. I'll be sure to read more of all this.
- Max