# Progressive Income Tax **URL:** \ **Category:** Great Debates\ **Created:** [September 12, 2011, 2:30am UTC](https://boards.straightdope.com/t/progressive-income-tax/596012 "2011-09-12T02:30:31Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![hansel](https://avatars.discourse-cdn.com/v4/letter/h/6bbea6/32.png) [@hansel](https://boards.straightdope.com/u/hansel)\ **Post date:** [September 12, 2011, 3:38pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/21 "2011-09-12T15:38:12Z")
> [@Mr.Moto](#): > > My policy preference is for a flat or flatter tax rate, lower rates overall, a vastly expanded personal deduction and the elimination of all or nearly all other deductions. This is progressive in two ways: 1) the poor would pay very little income tax, if any, thanks to the personal deduction, so you still have the rich paying more in relative terms, and 2) the rich pay more in absolute terms as well. Given that a flat tax is actually a progressive tax, what is it about proportionality in regards to income that makes it particularly fair? Why not just a flat amount for everyone? ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [September 12, 2011, 3:40pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/22 "2011-09-12T15:40:16Z")
Life isn’t fair. It never has been and will never be. So I suggest dropping that part and moving on from there. Regardless of one’s income people will complain about taxes. What does it for me is how much of your income goes to the basic necessities of life vs. income that you could literally burn up in a fire, not bat an eye and live comfortably. there is a reason why money and power go hand in hand. Those with both don’t want to give up either. Those with only one, want the other. Those with neither, just do their best to survive until the next day. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 12, 2011, 3:51pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/23 "2011-09-12T15:51:14Z")
Great fortunes are not just accumulations of money but power and influence. The extremely wealthy like the Koch suckers can have a huge influence in politics. They have access to the legislators and their lobbyists and can pound the legislators to get laws passed that will give them more and more breaks.They get laws and regulations managed so they get bigger and richer. Many lobbyists actually write the laws and regulations that are supposed to control them. Then the politician offers it to the legislative body in tact. Great fortunes are antithetical to a government of the people. They fundamentally change the government . You do not have the same access to the pols that they do. Their kids attend the same schools. They eat at the same places. They are members of the same country clubs. They join the same organizations and clubs. ---
**Author:** ![Mr.Moto](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mr.Moto](https://boards.straightdope.com/u/Mr.Moto)\ **Post date:** [September 12, 2011, 5:23pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/24 "2011-09-12T17:23:20Z")
> [@hansel](#): > > This is progressive in two ways: 1) the poor would pay very little income tax, if any, thanks to the personal deduction, so you still have the rich paying more in relative terms, and 2) the rich pay more in absolute terms as well. > > Given that a flat tax is actually a progressive tax, what is it about proportionality in regards to income that makes it particularly fair? Why not just a flat amount for everyone? This approach I have mentioned accomplishes a few things. The tax code becomes more predictable, compliance costs and enforcement costs go way down. Rent seeking is minimized. Costs for welfare programs may be lowered since the personal deduction has been raised so high. It denies politicians a great deal of their personal power - this is why this reform is so unlikely. This certainly would be a feature in my estimation, and by no means a bug. ---
**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:** [September 12, 2011, 5:40pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/25 "2011-09-12T17:40:42Z")
> [@LinusK](#): > > _No one can become rich by the efforts of only their toil, but only by the discovery of some method of taxing the labor of others._ > –John Ruskin > > From The New Republic: > > [link](http://www.tnr.com/blog/jonathan-cohn/78459/moral-argument-soaking-the-rich) > > The bottom line, really, is that Republicans attempt to conflate income and productivity, as if they were the same. They are not. Income is a measure of how much a person gets to consume; not how much he produces. > > The output of goods and services is actually a product of the people who produce it. They do that by nailing boards, writing books, coding software, paving roads, and other kinds of work. The fact that some people get to _consume_ a disproportionate share does not mean they _produce_ a disproportionate share. > > In fact, to the extent that the super-rich get most of their income from owning things, rather than doing work, they produce _less_ than everyone else. The part of the nation’s income that goes to them is a kind of tax on everyone else (the people who do work). It’s only fair that some of that unearned income go to pay to support the system that makes that unearned income possible in the first place. This does not make sense. Where do the things come? Did the factory fairy leave it under their pillow? No, either they or someone in their family earned money through production and then put off consumption to invest that money in something productive. The things they invested the money in increased the productivity of labor and they received a small portion of the increase. The people they hired made most of the increase. By deferring their consumption they have helped society by making more goods and more jobs. For this they should be punished with higher taxes. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [September 12, 2011, 5:47pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/26 "2011-09-12T17:47:56Z")
> [@Mr.Moto](#): > > It denies politicians a great deal of their personal power - this is why this reform is so unlikely. In practice, I think it might be quite the reverse. Get rid of all the deductions in the current tax code, and the lobbying by the rich to get them back will have to start all over again. The contributions will roll in. Has anyone proposed a free-enterprise explanation to justify our current tax code? The U.S. offers a product, citizenship and residency, in competition with other countries around the world. Every government wishes to maximize its influence, and must attract or maintain the citizenry to make that happen. Now, lots of people don’t have the resources to move to another country, but the rich do. If they don’t like progressive taxes, they’re free to look for some other country that will offer them something better (or, they could choose to not make so much money). The fact that they don’t means they find something attractive about the value proposition of living in the U.S, including its taxes. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [September 12, 2011, 5:51pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/27 "2011-09-12T17:51:28Z")
> [@puddleglum](#): > > The things they invested the money in increased the productivity of labor and they received a small portion of the increase. The people they hired made most of the increase. Recent history suggests otherwise. While productivity has been going up, incomes for most people have stagnated for a couple decades. The rewards from the increase have gone almost exclusively to the rich (who are presumably doing most of the investing). ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [September 12, 2011, 6:04pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/28 "2011-09-12T18:04:16Z")
Since Robot Arm has discussed productivity vs. real income disparity I will take this. > [@puddleglum](#): > > This does not make sense. Where do the things come? Did the factory fairy leave it under their pillow? Where do they go? Is there a consumer fairy taking the goods from under the pillow and leaving money behind? I suspect that these “job creators” need to have a customer base that isn’t scraping up change at the end of every month to pay their rent. A robust middle class with disposable income is going to create a hell of a lot more jobs than a few Richie Richs who have money to invest, but no viable market for the product/service they want to provide. The economic engine isn’t driven by investment, it’s driven by demand. ---
**Author:** ![Stately\_Greek\_Automaton](https://avatars.discourse-cdn.com/v4/letter/s/aca169/32.png) [@Stately\_Greek\_Automaton](https://boards.straightdope.com/u/Stately_Greek_Automaton)\ **Post date:** [September 12, 2011, 6:07pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/29 "2011-09-12T18:07:18Z")
I haven’t read all of the replies, but if you’re looking for a one line rebuttal, it can be summed up as expenses aren’t a flat amount of your income for other mandatory expenses. ---
**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:** [September 12, 2011, 6:19pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/30 "2011-09-12T18:19:38Z")
> [@Stately\_Greek\_Automaton](#): > > I haven’t read all of the replies, but if you’re looking for a one line rebuttal, it can be summed up as expenses aren’t a flat amount of your income for other mandatory expenses. If I understand you correctly, the problem is that incremental expenses give incremental value, and at the higher end income grows faster than any reasonable incremental expense. Let’s take food. At the lowest end, you have food stamps. Up from that, you can afford food, but it is pasta. Then you can afford decent food and go to fast food as a treat every so often. Then you can afford good food, and can get to a Denny’s. Then you can afford everything in your normal grocery, can go to cheap places as often as you like, and even go to nice places once in a while. Above that you can go anywhere you want that your arteries can take as often as you want. At this level incremental income doesn’t affect your food purchases at all. In fact, other things, like time, probably affect it at much lower income levels. You can repeat this exercise for all sorts of items. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [September 12, 2011, 6:49pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/31 "2011-09-12T18:49:21Z")
> [@magellan01](#): > > Second, your: “much is given, so much is expected” make an assumption that all rich have been “given” their wealth. Now if you mean that they’ve been the recipients of good fortune and they should help the less fortunate, I’m with you. But that particular moral argument is one for charity—voluntary giving—not for the government putting its hand in your pocket. No such assumption is necessary. Neither that wealth is “given” nor that voluntary giving is better than redistributive taxation. When you speak of private wealth, what you refer to is property, power, opportunity, and personal advantage. All property is, is territoriality. Personal advantage for one is personal disadvantage for another. Is your territoriality more morally important than opportunity for all? Is someone else’s relative lack of power a moral good? Property is an invention of human society. We have manmade laws that govern it, and agencies to create and revise those laws. If the state decides to confiscate all property for some greater good, it is within its natural rights. Simply taxing away income above a certain threshold is far less than that. You and Steve Wynn can suck it up. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [September 12, 2011, 7:09pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/32 "2011-09-12T19:09:53Z")
One area of “fairness” that should be addressed when talking about the progressive income tax is the implication of people voting for taxes that they will never have to pay themselves. A flat tax addresses that issue a lot better. You cannot increase the tax on just one part of the populace, although you will still have lots of people who pay no income tax. Not perfect, but more “fair” in that sense than what you get with a progressive tax system. A flat tax has just two variables: the tax rate, and the exemption point. You pay X% of all income above Y amount. ---
**Author:** ![Blaster\_Master](https://avatars.discourse-cdn.com/v4/letter/b/cab0a1/32.png) [@Blaster\_Master](https://boards.straightdope.com/u/Blaster_Master)\ **Post date:** [September 12, 2011, 7:10pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/33 "2011-09-12T19:10:26Z")
> [@Algorithm](#): > > The marginal utility of an additional dollar earned decreases as income increases. > > A 10% raise could have a significant effect on the living conditions of somebody making $20,000/year, while that “same” 10% raise for an individual making $200,000/year will not change their overall quality of life nearly as much. A 10% raise for someone making 2 million a year - even less so. I’m not necessarily in favor of a progressive tax system, but this is the best argument for it. Logically it would seem that the the utility function of money is linear, but it’s not and it’s fairly easy to demonstrate. In theory, betting $500 to win $1001 on a 50% chance seems to be a good bet, but not many people would actually take it. People probably wouldn’t start taking that bet consistently until it got to at least $1100 or more. And as you get into higher and higher amounts the disparity grows larger. Anyway, one could argue that in theory one doesn’t owe an equal amount of taxes in terms of money but in terms of utility because that’s the actual value. As such, I’m curious if there’s been any serious contentions to achieve a real-life model for the utility of money and then basing a tax code on that. IIRC, from when I we talked about it when I was studying utility functions, that the utility function for money like grows logarythmically. ---
**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:** [September 12, 2011, 7:22pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/34 "2011-09-12T19:22:33Z")
> [@John\_Mace](#): > > One area of “fairness” that should be addressed when talking about the progressive income tax is the implication of people voting for taxes that they will never have to pay themselves. A flat tax addresses that issue a lot better. You cannot increase the tax on just one part of the populace, although you will still have lots of people who pay no income tax. Not perfect, but more “fair” in that sense than what you get with a progressive tax system. If this were true there would be such overwhelming support for soaking the rich that not even the Pauls could stand in its way. As the Joe the Plumber experiment indicated, people vote not only based on their present situation but based on a fantasy of their future. If conservatives could make a good argument that not taxing the rich trickled down, and especially if it ever actually happened, then those in lower brackets would have rational self interest in not setting the upper levels too high. > [@](#): > > A flat tax has just two variables: the tax rate, and the exemption point. You pay X% of all income above Y amount. This would be fair if marginal utility were nonlinear below this point and linear above it. It isn’t. ---
**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:** [September 12, 2011, 7:28pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/35 "2011-09-12T19:28:09Z")
> [@Blaster\_Master](#): > > I’m not necessarily in favor of a progressive tax system, but this is the best argument for it. Logically it would seem that the the utility function of money is linear, but it’s not and it’s fairly easy to demonstrate. In theory, betting $500 to win $1001 on a 50% chance seems to be a good bet, but not many people would actually take it. People probably wouldn’t start taking that bet consistently until it got to at least $1100 or more. And as you get into higher and higher amounts the disparity grows larger. Did you study loss aversion and the endowment effect? While it might seem logical that a loss of $10 is equivalent to a gain of $10, it turns out this is not the way we see it. A loss hurts more than a gain, which explains the effect you mention. And utility, at low levels anyhow, is definitely non-linear. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [September 12, 2011, 7:31pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/36 "2011-09-12T19:31:42Z")
> [@John\_Mace](#): > > One area of “fairness” that should be addressed when talking about the progressive income tax is the implication of people voting for taxes that they will never have to pay themselves. We don’t vote for taxes, we vote for Senators, Representatives, and (electors pledged to) a President. Those people take into account the needs of all their constituents when deciding what taxes to enact. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [September 12, 2011, 7:37pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/37 "2011-09-12T19:37:16Z")
> [@John\_Mace](#): > > You cannot increase the tax on just one part of the populace, > > A flat tax has just two variables: the tax rate, and the exemption point. You pay X% of all income above Y amount. Increase both the rate and the exemption point, and you can pretty effectively target “the rich” with a tax increase, while leaving others mostly untouched, or with reduced taxes. ---
**Author:** ![Blaster\_Master](https://avatars.discourse-cdn.com/v4/letter/b/cab0a1/32.png) [@Blaster\_Master](https://boards.straightdope.com/u/Blaster_Master)\ **Post date:** [September 12, 2011, 7:43pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/38 "2011-09-12T19:43:51Z")
> [@John\_Mace](#): > > One area of “fairness” that should be addressed when talking about the progressive income tax is the implication of people voting for taxes that they will never have to pay themselves. A flat tax addresses that issue a lot better. You cannot increase the tax on just one part of the populace, although you will still have lots of people who pay no income tax. Not perfect, but more “fair” in that sense than what you get with a progressive tax system. > > A flat tax has just two variables: the tax rate, and the exemption point. You pay X% of all income above Y amount. Picking up and running with my utility value, one could maintain the same properties of raising and lowering taxes for everyone. Moreso, you wouldn’t need any sort of exception point, you can built it all into the utility function then all you do is plug your income into the formula and out pops your amount due. And though it may sound complicated, none of the math would be something that you couldn’t do with a $2 calculator. Let’s take an example, let’s use some easy numbers, so let’s go with a 10% tax rate. If we say that $20,000 is the minimum you need to live then we can set that as the point of 1:1 for utility and the zero crossing point so that. As such, people making just over $20k would pay roughly 10% on anything over that 20k. So someone making, say $25k would pay a little over $500 in taxes. Now let’s assume the utility at $100k is 0.8 (I’m too lazy to work up a meaningful utility function, but it’s really not necessary for the example), then they would pay 10% \* 1/0.8 or 12.5% on everything over $20k, so their total taxes due would be $10k. And if it’s 0.6 at $500k, then that effective rate is 16.67%, their total taxes would be $80k. Now let’s say they raise the tax rate to 15%, then the 25k guy would pay close to 15%, the 100k guy 16.875% and the 500k guy 19.167%. As such, raising taxes would still affect everyone, but the way it would affect everyone would be different based upon how useful that money actually is to you. The idea would be that it’s still fair because then you’re more closely taxing the true value of the money. I think that the current system sort of approximates this result, except it still focuses on absolute tax rates and it does it in a step-function with all kinds of exceptions rather than continuously. With a continuous utility function you could effectively “fairly” raise or lower taxes for everyone. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [September 12, 2011, 7:51pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/39 "2011-09-12T19:51:43Z")
> [@cckerberos](#): > > Yes, this is why the rich should pay more than the rest of society, but it doesn’t follow that they should disproportionately pay more. It seems more straightforward to argue “the rich use ten times the government services because they have ten times the stuff; therefore they should pay ten times more in tax” than to argue “the rich use ten times the government services because they have ten times the stuff; therefore they should pay thirty times more in tax”. Realistically, the government’s snap-to-itude in response to the rich guy’s complaint is more likely to be thirty times, not merely ten times, that accorded to the poor guy’s complaint. ---
**Author:** ![2sense](https://avatars.discourse-cdn.com/v4/letter/2/e47774/32.png) [@2sense](https://boards.straightdope.com/u/2sense)\ **Post date:** [September 12, 2011, 7:56pm UTC](https://boards.straightdope.com/t/progressive-income-tax/596012/40 "2011-09-12T19:56:41Z")
> [@Little\_Nemo](#): > > I won’t argue that the rich were given their wealth. But it’s pretty undeniable that the rich have wealth - it’s pretty much right there in the definition. I will. They earned their wealth within our society. They didn’t invent their own language, tools, food, clothing, shelter, transportation, et cetera. They used those provided by our society. Our government protects their wealth. In fact, the very fact that the wealth **is** theirs is solely because society says so. Certainly some have worked harder than others and deserve to be rewarded both morally and because it encourages productivity. But for people do deny their debt to society is repugnant. Every bite they eat, every word they utter is impossible without it. Go naked into the wilderness after lobotomizing yourself and see how well the myth of the rugged individualist sustains you. [Previous page](https://boards.straightdope.com/t/progressive-income-tax/596012.md?page=1) [Next page](https://boards.straightdope.com/t/progressive-income-tax/596012.md?page=3)