# Profits are a tax on labor **URL:** \ **Category:** Great Debates\ **Created:** [July 12, 2013, 3:07am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283 "2013-07-12T03:07:25Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [July 12, 2013, 4:22pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/21 "2013-07-12T16:22:04Z")
As told by Heinlein: A man got a county job, polishing the brass cannon outside the courthouse. It wasn’t difficult work, but it paid the bills. Still, one day he looked around and realized he wasn’t getting ahead in the world, so he quit his job, drew out his savings, bought himself a brass cannon, and went into business for himself. ---
**Author:** ![destineal](https://avatars.discourse-cdn.com/v4/letter/d/5f9b8f/32.png) [@destineal](https://boards.straightdope.com/u/destineal)\ **Post date:** [July 12, 2013, 4:57pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/22 "2013-07-12T16:57:20Z")
Risk is something that the owner contributes. My business went through some rocky times during the economic downturn. There were many times when I didn’t get paid. My employee, however, got paid like clockwork and ended up making quite a bit more money than me. When he found this out later, HE certainly thought I contributed something. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 12, 2013, 6:36pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/23 "2013-07-12T18:36:04Z")
> [@Mijin](#): > > A misleading question in at least two ways: > > 1. Whether something is morally justified or not is not the same thing as whether it’s moral. I don’t know how to morally justify eating the melon chunks I just ate, but I don’t think I did something immoral. > 2. As others have pointed out, the factory-owner is providing something: the factory. Also, she’s risking capital, and that’s the nature of the game. But I mean you agree the factory owner isn’t really providing anything, right? Owning something isn’t the same as building it. The other argument is more interesting. Owners of things (like money, for example) deserve profits because they take risks. Of course, everybody takes risks. I take a risk when I’m walking down the street. If I was poor, I’d probably take a bigger risk, because it’s likely I’d live in a worse neighborhood. But nobody talks about giving money to anybody for taking risks like that. And then there’s the so-called risk-free rate of return, which is just the money you get I guess, just for being rich in the first place. Anyway, I’m not sure risk isn’t so much a justification as a rationalization. It seems like the richer you are the more likely you are to keep everything that’s been given to you, and even to increase it. The poorer you are the more likely what little you have will be taken from you. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 12, 2013, 6:49pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/24 "2013-07-12T18:49:42Z")
> [@Labrador\_Deceiver](#): > > Are you serious with this question? Tools, materials, a place to work, clients? If he owned the air, would say he contributed that ss well? The fact that you own something doesn’t mean you produced it. He might own the tools, the materials, the place to work, but that doesn’t mean he made them. He might even own the clients, if they were slaves, but that doesn’t mean he made them. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [July 12, 2013, 6:52pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/25 "2013-07-12T18:52:15Z")
This has got to be a joke. ---
**Author:** ![Alessan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alessan/32/465_2.png) [@Alessan](https://boards.straightdope.com/u/Alessan)\ **Post date:** [July 12, 2013, 6:52pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/26 "2013-07-12T18:52:33Z")
Bear in mind that for groups of people to work together efficiently, you need someone to organize things - to be blunt, you need someone to give the orders. You may not like the fact that people need someone to tell them what to do, but unfortunately, that’s the way things work. That’s the only way things \*can \*work. That’s what the factory manager does. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [July 12, 2013, 6:52pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/27 "2013-07-12T18:52:46Z")
> [@LinusK](#): > > Consider a simple hypothetical: A man is a corporation. He’s the CEO, CFO, the security guard and everybody else, all rolled into one. At the end of the quarter, he pays himself a salary, and turns the rest of the corporation’s income to someone else - the owner. The owner, in turn, does nothing, except cash the check. > > Or consider a landowner. The landowner owns the land, and everyone who lives there pays him rent. The people enjoy part of the value of their labor, but the rest goes to the landowner. He enjoys part of the value of everyone’s labor, without contributing anything himself. > > Or consider, hypothetically, a place where someone owned the air. The air-owner charges people to breathe his air, and everyone who pays him must work a little harder, or consume a little less, so that he can consume more, without working. > > Is there a justification - a _moral_ justification - for subsisting on the efforts of others, assuming you’re able-bodied yourself? Wait, first of all, why are you calling it a “tax”? A tax is not presumptively an illegitimate thing. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [July 12, 2013, 7:03pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/28 "2013-07-12T19:03:29Z")
> [@LinusK](#): > > What is it you think he contributes? The entire situation by which the specialized worker can make a living. Once you get past very simple examples where a worker can do his or her task without nobody’s help or support, you get into situations where the work has to be collectively organized. Someone who paints parts has to have parts to paint; those parts have to be made by someone, stored by someone, have holes drilled in them by someone, and eventually be assembled into a final production that is then stored, shipped, sold, serviced and supported by someone. The person or entity that provides that platform, cocoon, assemblage or whatever you want to call it provides a service and is entitled to compensation for the capital, time and effort that go into providing it. In most cases, a “worker’s collective” or whatever would be unable to provide this amalgamation without either lousy efficiency (leading to economic failure) or a structure indistinguishable from the first except by title and terminology. ETA: Only if you reduce this to some stupidly 18th-century level of nothing but self-sufficient workers who would do the same tasks to the same end whether they are in their own hovel or a sweatshop factory can your suppositions begin to be in the same room with sense. The minute you have materials, processes and tasks that are in and of themselves economically isolated, you have to have an encompassing entity to make their work worthwhile - and providing that entity is a basis for profit, needing no apology or excuse. No, we won’t give you the factory, the process, the market and the rights to build and sell these items because somewhere back in the chain it came from commonly-owned or “unowned” sources. Build your own factory and away you go. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [July 12, 2013, 7:09pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/29 "2013-07-12T19:09:20Z")
> [@LinusK](#): > > But I mean you agree the factory owner isn’t really providing anything, right? Owning something isn’t the same as building it. > > The other argument is more interesting. Owners of things (like money, for example) deserve profits because they take risks. Of course, everybody takes risks. I take a risk when I’m walking down the street. If I was poor, I’d probably take a bigger risk, because it’s likely I’d live in a worse neighborhood. But nobody talks about giving money to anybody for taking risks like that. > > And then there’s the so-called risk-free rate of return, which is just the money you get I guess, just for being rich in the first place. > > Anyway, I’m not sure risk isn’t so much a justification as a rationalization. It seems like the richer you are the more likely you are to keep everything that’s been given to you, and even to increase it. The poorer you are the more likely what little you have will be taken from you. Factories are not naturally occurring, the only way to get one is to build one or acquire one from someone who did. When you risk something by walking down the street you are rewarded by getting where you want to go. When you risk some money you are rewarded by being payed. Not all rewards are monetary. Risk free rate of return is the return you get for letting someone use your money. There is really no such thing as completely risk free, but some things are close enough. Three month treasury bills are the usual way of computing the return and are available for anyone to buy wealthy or poor. What are the rich given? You are conflating given with earned. Who is taking from the poor? You sound like the one engaging in rationalization, if the rich are doing nothing to create wealth then they should not mind giving it to you. The reality is the way to get rich is to create value, not bemoaning those who have more than you. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [July 12, 2013, 7:10pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/30 "2013-07-12T19:10:12Z")
> [@BrainGlutton](#): > > Wait, first of all, why are you calling it a “tax”? Because it’s a dirty four-letter word meant to make your hackles rise and immediately be against it. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 12, 2013, 7:13pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/31 "2013-07-12T19:13:22Z")
> [@puddleglum](#): > > Your first analogy is totally different than your second and third analogies. As a semi Georgist I agree with the land and air problem. However, that is not profit, that is rent. Rents are totally different than profits. > Corporations are not natural resources, they have to be created. If the owner created the corporation, that is work. Any benefits accrued,such as profits, are a result of that work. > Profits are what make possible economic growth, and economic growth is what makes possible a rise in the standard of living. The earth has fewer resources then it did a thousand years ago, yet the average person in the West lives like a king did then. This is because of the economic growth caused by profits. That profits caused economic growth is sort of a conclusory statement. You could say, instead, that it was the economic growth that caused the profits. I’d argue that what caused both of them, the profits and the growth, was work: building factories, researching cures for diseases, reforming land tenure laws, getting rid of kings, etc. The owner of a corporation may or may not have created it. The point, though, is that whether he’s entitled to profits has nothing to do with whether he created it. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 12, 2013, 7:20pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/32 "2013-07-12T19:20:22Z")
> [@LinusK](#): > > The point, though, is that whether he’s entitled to profits has nothing to do with whether he created it. It has everything to do with it. He put up the capital that enabled it. You seem to be allocating credit for economic growth to everyone except the owner/investor. Workers are entitled to their wages. Owners are entitled to their profits. Regards, Shodan ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [July 12, 2013, 7:25pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/33 "2013-07-12T19:25:33Z")
> [@LinusK](#): > > That profits caused economic growth is sort of a conclusory statement. You could say, instead, that it was the economic growth that caused the profits. > > I’d argue that what caused both of them, the profits and the growth, was work: building factories, researching cures for diseases, reforming land tenure laws, getting rid of kings, etc. > > The owner of a corporation may or may not have created it. The point, though, is that whether he’s entitled to profits has nothing to do with whether he created it. Using this logic, only the printers and the binders are the ones who create books. The author created nothing. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 12, 2013, 7:33pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/34 "2013-07-12T19:33:55Z")
Yes, it is true that the factory owner didn’t build the factory. I replaced the deck at my house last month. I didn’t rebuild the deck myself, I hired a builder to do it and bought materials based on his recommendations. At the end of the project, who owned the deck, me or the builder? I owned it even though I didn’t build it myself, because I paid for the materials and I paid for the skilled labor. Likewise, the builder didn’t make the beams and nails himself, they were made at a factory. But the builder didn’t get the nails from a factory, he got them from a store. So somebody mined the ore, but didn’t own the ore. Somebody smelted the ore, but didn’t own the metal. Somebody shaped the metal into screws but didn’t own the screws. Somebody shipped the screws to the store but didn’t own the screws. Someone sold the screws to the builder, but didn’t own the store or the screws. The builder brought the screws to my house, but didn’t own the screws. The builder used the screws to assemble the deck, but didn’t own the deck. Are you beginning to see a pattern? If the builder or maker of an object is the only legitimate owner of the object, then how could someone make a living by creating objects and selling them? ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [July 12, 2013, 7:36pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/35 "2013-07-12T19:36:04Z")
> [@Labrador\_Deceiver](#): > > This has got to be a joke. Why? It’s a perfectly valid question. It’s a bit Socratic, but valid. Why is there private property? How can a man “own” land, or a building, or a nationwide chain of auto-parts stores? And, if so, how come no one owns the air? The reasons are manifold. It’s traditional. Private ownership has been around since the earliest times. Tribal peoples held much of their property in common, but also had certain small items – often decorative – as personal private property. It works. Most of us here live in industrialized democracies and are rich enough, at least, to be able to devote time to arguing with strangers on the internet. The system has produced a First World. Alternatives have been tried. They didn’t work out so well. This could be argued as a “No True Communism” (or Scotsman) problem (actually, this is the origin of the No True Scotsman idea.) Communism might have failed because of the susceptibility to corruption of a one-party system. Reformed communism, with political safeguards, such as divided government and a loyal opposition, might have worked. There are still a lot of people who believe so. The OP might have been thinking of this. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 12, 2013, 7:41pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/36 "2013-07-12T19:41:02Z")
> [@LinusK](#): > > If he owned the air, would say he contributed that ss well? If you are in space, and he generated the air, yes. > [@](#): > > The fact that you own something doesn’t mean you produced it. He might own the tools, the materials, the place to work, but that doesn’t mean he made them. He might even own the clients, if they were slaves, but that doesn’t mean he made them. Turning a random person or business into a client is absolutely making a client. It requires skill and it requires money. Do you have any interest bearing bank accounts? If so, is your return any different from the stuff you are objecting to? The money in your account is money you didn’t spend on stuff you could have consumed and enjoyed, and is money that someone else is able to use for something they can consume and enjoy, or money to allow a factory owner to hire people. Do you think it is immoral for you to get something in return for giving up immediate consumption? It is immoral in the NT and the Koran, but that didn’t work out all that well. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [July 12, 2013, 7:43pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/37 "2013-07-12T19:43:52Z")
> [@Trinopus](#): > > Why? It’s a perfectly valid question. It’s a bit Socratic, but valid. Not really. His question isn’t the same as “why is there private property”. He’s asking why organization and ideas are worth anything. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [July 12, 2013, 7:53pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/38 "2013-07-12T19:53:23Z")
> [@Labrador\_Deceiver](#): > > Using this logic, only the printers and the binders are the ones who create books. The author created nothing. Not a very good analogy, I think. Factory owners may not create any kind of “content” or upstream value related to the end production. I’m not sure there is any simple analogy other than the one I’ve already put forth: without the “publishing company,” printers, binders, book-packers and the rest would starve, as their individual labors are highly dependent on collective effort with others. The person who provides the “company” pulling the entire economic package together is entitled to his or her share for that service and efforts. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 12, 2013, 7:57pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/39 "2013-07-12T19:57:44Z")
> [@TheSeaOtter](#): > > Suppose you’re planning to start a business. Depending on the nature of the business, you might need to purchase or rent land. You might need raw materials, or equipment, or goods to sell. You might well also need to pay someone (construction companies, contractors, lawyers, etc.) to set up these things before anyone can start work. You need to hire employees, some or all of whom may be highly skilled, and thus demand hiring bonuses. You need to pay your workers, even before you ever sell anything. And you need still more workers, to administrate all of this (or you need to do that work yourself). All of this requires resources. Mostly money, but also effort and time. The bigger the business, the more of these resources are required. Owners of businesses contribute these resources, and are taking the risk of losing them if the business fails. > > I fail to see anything immoral about this. You look at a successful business and ask “What is the owner contributing?”, but you should look at a business that does not yet exist and ask “What will the owner contribute?”. In that light, it should be obvious: the owner will contribute everything except the labor of the employees. The things you’re describing - organizing, planning, contracting, hiring: they all sound like work to me. In fact, if somebody’s doing all that stuff, and it’s taking time and effort, what I’d argue is that they’re performing labor. Nobody’s arguing that labor and ownership are mutually exclusive. Many people own and work at the same business. It sounds like you’re saying the owner deserves compensation for the labor he performed starting the company. OK. But what I’m asking about is compensation for owning the company (or the land, or the water, or the air) not for starting it. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [July 12, 2013, 7:57pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/40 "2013-07-12T19:57:47Z")
I used to build houses, but didn’t spend much time swinging hammers. They were all my vision, and I spent a lot of time making them come together. The OP seems to think I did nothing in my old job that added value. That’s pretty similar to writing a book, then giving none of the credit to the author. [Previous page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=1) [Next page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=3)