Are you sure about that? According to Gonzomax and Le Jaq the rich control politics.
"When the top 400 richies have more money than the bottom 125 million citizens, it is not irrelevant. Money confers political power. So it is not just money going to the top but the ability to make laws and elect the politicians they want. They can remove themselves from regulators or scrutiny. If is anathema to the so called American democracy. " – Gonzomax, a few post after mine.
And let’s be clear: I’m not advocating we don’t tax the rich, or that we tax the poor into desperation. What I’m suggesting is two fold: stop treating “the rich” like a spigot you turn on and off at will. And start basing your tax policy one what’s fair and practical for the 95% of normal people instead of fixating on the 400 super billionaires.
Then do that. All I ask is that you do it in a sane and responsible manner, that looks at both sides of the equation and strikes a balance. Is that too much to ask?
When the underlying premise is:
The rich are lucky and undeserving
The poor are unlucky and deserving
Right, but as I just proved the slope it is not ALWAYS negative. That 5th toy provided significantly more enjoyment than the 3rd. The 4th toy actually made me less happy because it was a cold and constant reminder of what I was missing and how little my parents truly understood me. The first toy was good, but having the second made me happier because now my first had a friend.
One concert ticket to me is worthless, it would bring me no joy, and may actually make me unhappier. Two tickets allows me to take my wife or mistress which would make me happy. Three tickets is just awkward, and ends up going to waste. Four tickets makes for a great night out with my wife, mistress, and best-friend.
So now that we’ve proven that the slope is not always negative, or even consistent, we can conclude that applying marginal theory to taxes might not work out the way you (general you) think.
In reverse, once I have obtained all 5 toys taking just one of those toys away hurts me way more than if I had only 4. I really only needed two to achieve initial peak happiness, but that was not the absolute peak happiness on the toy/happiness curve.
If you don’t think that’s a very good way to base tax policy, maybe we drop the theory of marginal utility and go with the old stand in, “because we can.”
Or you could realize that when we’re discussing marginal utility with regard to dollars in the real world, we can acknowledge that there are plateaus and reverses while noting the overall average slope is negative.
Y’know, either-or.
Who here, who is sane, is not doing this? Gonz and Le Jaq don’t count.
How about a little middle ground? “Some portion of poverty is caused by pure bad luck; therefore, don’t tax them as hard as you do people who are successful.”
If a person thinks he is entitled to 100% of it he should probably withdraw from society, since there is a cost of living in a society. I’m definitely not saying the person is only entitled to the four hours of labor needed to live, just that he can more easily give some of that four hours to the greater good than the person who has no margin.
That would be fine if each person got from the common good equally, and if each person were able to contribute equally. Since wages are set based on contribution to a company, the person with the 150 IQ is going to be able to contribute a lot more on average than the person with the 75 IQ. That’s fine, since we are all not created equal. Just don’t ask the person with the 75 IQ to give an equal amount to the government.
Because the fair way to determine the contribution is equal pain, which does not scale linearly. 99% taxes are probably greater than equal pain, and don’t work anyway. No proposed tax increases come anywhere close to being confiscatory.
You don’t know that. You think you know that, but you don’t, so I don’t suggest using it as the basis for your tax policy.
As another example: My wife and I love to travel, but we hate flying coach. Problem is that we can’t afford to fly first class, typical prices have a coach seat at $100 and a first class seat at $1000. So for the next few years each increased dollar earned will have your negative slope until we cross the point where we can fly first class. At that point, that extra dollar earned will make us considerably happier than the previous dollar earned. Taking that dollar away hurts us tremendously.
Life is full of demarcations like that, I picked plane tickets because I’m currently looking for flights to NYC. We couldn’t afford a house in the neighbourhood we really wanted, we’ll have to earn considerably more before we can. So up until that point, the slope may be zero, but then when we earn enough we’re considerably higher.
I want a boat but can’t get one until I can afford the slip fees at the marina.
I could go on but I hope you get the point. You don’t know me, you don’t know what marginal benefit I’m getting from my income. You just think that I won’t enjoy my next million as much as the first, but I’m pretty sure you’re wrong.
How about we drop the “luck” component and create a system that allows people to be successful, instead of assuming what people have is from luck and therefor undeserved.
He’s wrong because marginal utility can only be sensibly measured over extras of the same thing - like dollars. Three ice cream cones are different from an ice cream cone, a cup of coffee, and a candy bar. If the item is books, the utility of a second book goes up significantly if the first one is Galaxy 666 by Pel Toro and the second is a new Terry Pratchett.
The utility of a second copy of a toy or game goes down rather drastically. That’s different from the value of a second type of toy or game.
Except that money turns into those things; $5 can be a toy or a book. If we have a situation where the slope is positive (any situation), we have a situation where marginally more money can provide marginally more utils.
All this is predicated on the notion that if I buy one book the second book makes me slightly less happy, or the second $10 I earn isn’t as rewarding as the first. But as you’ve shown if the second book is different it can provide more happiness, you are proving that slightly higher income can actually make me slightly happier.
You are trying to shoehorn a definition to fit your agenda. The theory is fine in the aggregate but falls apart when you realize that you can’t compare two people as if they’re the same thing. What hurts a person making $40k may not be the same thing as what hurts a person making $40million.
As originally designed, no one who paid income tax was spending* any* days working for the government. It was marginal, & taxed very high incomes, which were substantially income from ownership of capital. J.P. Morgan wasn’t exactly slaving away for his dollars.
You can be contrary all you want about it, that’s fine. You admitted as much in the other thread that you deliberately try to be the universal devil’s advocate. Nonetheless, if you have a million dollars of discretionary income, and you drop a hundred dollar bill somewhere, that is going to hurt you less than if a person with a hundred bucks of discretionary income loses a dollar. I don’t care where your specific breakpoints are for regions of positive slope on your demand curve.
Luck exists. It’s why I’m opposed to a tax policy that essentially disallows any luxuries to people at the margins of poverty. Skill and drive exist. It’s why I’m opposed to a tax policy that exclusively hits the ultra-rich.
I don’t know why you think you’re disagreeing with me, aside from the fact I thought that the response you chose for Euphonious’ scenario was shitty (note: I thought all his choices of response were equally bullshit). As far as I can tell we’re basically on the same page with vaguely different rationales, and you’re just devil’s advocating every damn post you see.
No, you don’t get to decide how much it hurts to lose a hundred bucks. This same problem happened in the Understanding Risk thread, people have an inherent disregard for rich people, and use that to disregard their earnings. It’s how you rationalize taking someone elses money. You don’t know the millionaire or the pauper, you don’t know what causes them pain. You simply project what you think in either direction based on your own perception.
The few times I gamble I feel every single dollar to the point that I can’t keep betting. Afterwords I feel shame at the loss, even if it’s just $10. Yet, I know people poorer than me who have no problem pissing away money. It’s almost as if losing $10 to them doesn’t hurt at all.
It’s entirely possible, although hard to prove, that the millionaire is rich BECAUSE it hurts him to lose that $100. While the other guy only has $100 because he didn’t give a shit about the thousands he blew at the Pay Day Loan store or furniture rental shop.
What you are describing is not fact, it is your projection. And you use that to justify your tax position.
And at the end of the day it doesn’t matter. You don’t need to justify or rationalize progressive taxes, the reason we do it is “we can.”
If you feel like sifting through this threads it’s pretty much the conclusion
I went on vacation before I could finish replying.
What you’ll see is a lot of rationalizing, none of it means anything. We tax people as much as the *free market *allows. Any higher and you create too many incentives to hide, divert, or avoid taxes. Too low and you get distortions like with mortgage interest deductions pushing up home ownership.
Sure, but to what end? Read Malcom Gladwell’s Outliers. Luck alone isn’t nearly enough. It might get you one jackpot, but won’t help you keep it.
His scenario was contrived and designed to force you to choose [a]. It’s the fallacy of the excluded middle. It also represents how a lot of [liberal] people view US society.
As to the rest of your points, I challenge them to challenge myself. I have no desire to hold a position I can’t defend. If I want a progressive tax structure I need to be able to explain why. It’s not enough to *believe *in evolution, lots of people do, but few are actually able to explain what Darwin was doing. I fucking hate those people, it’s not enough to be on the right side, you have to know why.
I play devil’s advocate to challenge my own beliefs, otherwise how would I know if I’m an angel?
We tax the rich because theya re the ones that can bear the burden, not because they are evil.
Then advocate for reasonable policies rather than defend arguments that ultimately lead to tax cuts for the rich. In your quest to counter some of the more emotionally based liberal posters on this board, you end up defending rationales that lead to tax cuts for the rich at the expense of our fiscal health.
We’ve done nothing of the sort. We’ve proven that the marginal utility curve is not neagtively sloped SITUATIONALLY. Its the EXCEPTION that proves the rule.
When you are talking about taxes, you are talking about money which represents ALL goods and MONEY has a negatively sloped marginal utility curve. Its really not a question… purchasing power ALWAYS has a negatively sloped marginal utility curve.
How about we don’t and instead deal with real economic thought rather than letting you overturn centuries of economic theory based on exceptions to the rule that economics ALREADY acknowledges.
He knows that to as close to a certainty as you can get in economics. There is not a credible economist in the world that believes otherwise.
I agree the whole luck thing has me a bit baffled. We don’t tax people to punish or reward income, we do it to raise money for the common good and we should do it in the most equitable manner possible and we do it progressively because that is the most equitable method we have come up with.
No, it was to show what the scenario would look like when the middle is gone. To show what things would look like if income inequity continues along it’s current trajectory.
It’s now how I view US society, it’s a warning of what US society might look like if things continue along as they are.
Point of order: By my own standards I AM a rich person. I figure being pretty close to double the average income in the US is as good a threshold as any. I have every plan of being a multimillionaire before I retire, and only bad luck or deliberate sabotage is going to stop me. I definitely do not disregard my own earnings–I just think, having had the combination of luck and skill to exist at multiple socioeconomic levels (I’ve supported myself on $14k, during college, with no outside help aside from donated used furniture my parents were going to haul to the dump anyway) that you’re very overstating the possibility of a positive marginal utility curve. (it might help at this point to note that I’m generally of the Chicago school when it comes to value, although I refuse to rule out the efficacy of Keynesian solutions in certain kinds of crises) Related: Do you mind if I ask if you have a preferred school of economic theory? It’s probably very relevant to your feelings on the question under discussion.
You’re describing a different “pain” of losing that money than I am, I think. Naturally, many rich people are rich because they are smart about husbanding their dollars, and many poor people are poor because they are not. That’s addressing a different thing than to utility theory, but I’m not in a position (at 1:30AM) to remember enough of the leadup to go into it any more. Consult your local business college.
I read that thread, I generally tend to follow this type of thread.
And honestly, while what you say is true, I think you’re far too hasty to throw out an established and long-running economic theory (marginal utility) that’s the foundation for an entire branch of economics.
Naturally, again. Another place we’re talking past each other, though–I base my concept of tax policy at the poverty margin on the assumption that some percentage of them are simply facing a run of bad luck and would be able to pull out of it even easier and return to productivity if they have a little bit of breathing room to keep money for non-essentials, and in my mind that includes both self-augmentation and basic luxuries for morale-building–never mind the fact that they overlap to a great degree in this computers-and-TV age.
I agree, which is why my response ignored his options and proposed two others based on differing notions of “fair”.
I think that’s unfair–Certainly it’s true of some people, but I think most people in the US have a more accurate concept than that.
Let’s examine this in depth a bit anyway, just to create a theoretical US we can play with a bit. I’m going to normalize the current US numbers to Euphonistan ones–that is, if the US had a GDP of $300,000,000 and 150,000 citizens, it’d break down something like (based on 2006 percentage of income numbers from a UCSC paper and a Williams paper that’re near the top of google because I’m lazy):
150 people have an average income of $160,000
1350 people have an average income of $29,555
28,500 people have an average income of $4,221
120,000 people have an average income of $965
The other piece of information we need is this: In the United States, the per-capita GDP is 47,284 and the poverty line for a single person (HHS, 2006) is $9,800. In Modified Euphonistan, keeping the ratios constant, the per-capita GDP is $2000 and therefore the poverty line is around $415. Interestingly, if we use the US numbers, that means that 18,750 people are living on less than $415 in Modified Euphonistan.
I use the HHS figures because they are described as: “The “absolute poverty line” is the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs for healthy living; having insufficient income to provide the food, shelter and clothing needed to preserve health.”
It’s an interesting theory but it makes it really irritating to debate you sometimes–but it explains why you often come across as vaguely insincere, at least.
I use the luck thing as an example of why we cannot assume that the poor are simply not hard enough workers and thus don’t deserve breaks or luxuries. emacknight said something vaguely along those lines in his response to Euphonious’ scenario.
I don’t think that’s all that fair, to be honest. The current trajectory will get there unmodified, true, but it’s a LONG way off. See my preceding post where I normalized current US numbers to your country (it might be interesting to play with, anyway).
– Not “paying” taxes. This is why tax policy is secondary to spending policy. The big push to tax or not as the case may be all the while wringing their hands about budget woes is because government does not and cannot truly appreciate the tax revenue money they piss away needlessly.
I definitely do not disregard my own earnings–I just think, having had the combination of luck and skill to exist at multiple socioeconomic levels (I’ve supported myself on $14k, during college, with no outside help aside from donated used furniture my parents were going to haul to the dump anyway) that you’re very overstating the possibility of a positive marginal utility curve. (it might help at this point to note that I’m generally of the Chicago school when it comes to value, although I refuse to rule out the efficacy of Keynesian solutions in certain kinds of crises) Related: Do you mind if I ask if you have a preferred school of economic theory? It’s probably very relevant to your feelings on the question under discussion.