a progressive tax system is inherently more fair

[Melchior]

@tim314

As Cecil commented in this column:
That’s one decent argument for why income tax should be progressive. But another argument, which I don’t hear put forth nearly as often, is that it’s inherently more fair for the overall tax structure (income tax + sales tax + property tax + whatever) to be progressive.

That is, even if it were true that everyone pays about the same percentage of their income in total taxes, that wouldn’t be fair, because the marginal utility of a dollar goes down the more dollars you have. If you’re poor, losing, say, 20% of your income might be a crushing blow, with a great affect on your quality of life. But if you’re rich, losing 20% of your income isn’t going to affect your lifestyle nearly as much.

Wouldn’t the most fair tax system be one in which the cost to everyone (in terms of total utility, or affect on their quality of life) is equal? In other words, a tax which is “flat” in terms of utility, but highly progressive in the usual “cents paid per dollar earned” sense.

There should be no income tax at all.

[magellan01]

@Voyager

I’m not within shouting distance of Bill Gates, but my losing $100 is nowhere near as painful as him losing $10 billion. At a certain point it is not putting food on the table, it is what you could do with the money. He’d see it as not being able to do the charity work he has dedicated himself to.
Someone on the brink of starvation on the other hand might find this more painful, but you guys haven’t driven us all there - yet.

Rich people don’t spend nearly as much of their income on buying stuff as poorer people - as you guys admit with your cut taxes on the rich so they’ll invest argument.

In fact the incremental salary a poor person makes working overtime is far more important to them than the incremental salary a better off person would make. We know this, because if it weren’t true there would be a movement by professionals to get overtime.

How do you know? Bill gates might argue that you merely want to feed a family of four. He wants to feed a third-world country.

But the bottom line is, who is entitled to the fruits of one’s labor? The more the answer devotes from “the person who did the work”, the less rationale there is for the idea.

And as far as I know, and what I would support, a Fair Tax would not tax food, while giving an individual to keep his spending—and the taxes he pays via sales tax—to be almost as low as he would like.

[Sterling_Archer]

If there is a way to have a “Fair Tax” and have it not end up being a regressive tax in disguise, I’d be all for it. But as long as low and middle-class people spend the majority of their money and rich people save a high percentage of it, “Fair Tax” is always going to end up with the rich paying lower percentage rates than the poor – thus, the unFair Tax would be a better name for it.

[Sterling_Archer]

@2sense

If the “land of socialism” is just a place where we don’t start taxing income until there is enough to provide for basic necessities then I don’t think that’s a scary place to live at all. Thereafter the marginal differences aren’t so sharp I think.

Very good point. Perhaps it’s not fair to include basic necessities. It’s still tough to compare, given the vast differences in cost of living across different areas of the country though.

[BrainGlutton]

@magellan01

But the bottom line is, who is entitled to the fruits of one’s labor? The more the answer devotes from “the person who did the work”, the less rationale there is for the idea.

Sounds kind of Marxist . . .

[ThisUsernameIsForbidden]

@tim314

As Cecil commented in this column:

Wouldn’t the most fair tax system be one in which the cost to everyone (in terms of total utility, or affect on their quality of life) is equal? In other words, a tax which is “flat” in terms of utility, but highly progressive in the usual “cents paid per dollar earned” sense.

Yes, that would be a fair tax system, as would a system where everyone paid everything or nothing; if what you are going for is ‘equally affecting’. The idea of pegging happiness to some formula based on income seems totally unworkable to me. And if by ‘utility’ you don’t mean happiness, or pleasure, I’m not sure what you mean by it. “Quality of life” is, again, something vague that would need to be fleshed-out.

[Voyager]

@magellan01

How do you know? Bill gates might argue that you merely want to feed a family of four. He wants to feed a third-world country.

In case this went over your head, I was saying that I can feed my family just fine without the $100. Are you claiming that Gates or anyone else would say that we should take our food money to send overseas, because for the money it costs to feed m people here you could feed n > m people there? Because that appears to be what you are implying.

But the bottom line is, who is entitled to the fruits of one’s labor? The more the answer devotes from “the person who did the work”, the less rationale there is for the idea.

And as far as I know, and what I would support, a Fair Tax would not tax food, while giving an individual to keep his spending—and the taxes he pays via sales tax—to be almost as low as he would like.

If your an absolutist about keeping the fruits of ones labors, you must want no tax at all. Since you haven’t gone that far, the comment is irrelevant. We’re talking about how to let each person keep an equal portion of the fruits of their labors by some measure.
How very nice of you to tell the poor person that if he wants to reduce his tax burden he just doesn’t have to buy anything but food. I’m sure they will appreciate that, as well as the people whose jobs depend on them buying stuff.
Since the rich will definitely pay less in a “fair” tax, if it is revenue neutral, who pays more?

[Voyager]

@ThisUsernameIsForbidden

Yes, that would be a fair tax system, as would a system where everyone paid everything or nothing; if what you are going for is ‘equally affecting’. The idea of pegging happiness to some formula based on income seems totally unworkable to me. And if by ‘utility’ you don’t mean happiness, or pleasure, I’m not sure what you mean by it. “Quality of life” is, again, something vague that would need to be fleshed-out.

What is meant by utility has been well studied. See this for example.