The rich should be taxed more, because they benefit more from the expenditure of taxes.
They do not exist in a vacuum. They exist in a country that has many opportunities for one to become wealthy through a bit of hard work, and a lot of luck. They have a workforce provided to them educated largely by the govt. They are provided with not just local police, but also state and federal LEO that will protect their interests.
They exist in a country that is stable economically, politically, and militarily.
They don’t have to pay for the workforce that makes them money, they don’t have to pay mercenaries to protect their homes, their selves, or their investments, and they don’t need to worry about the whole thing collapsing, or being invaded by a foreign power. They have public services to put out any fires, to take away any injured employees, to investigate crimes against them.
The wealthy simply would not exist without the structures that are in place to benefit them.
This argument is not compelling. All the public services listed are generally equally available to all residents. In fact you could make the opposite argument, that in a society with a dearth of government services, the rich would have the enormous advantage of being able to privately procure their security, health services, and education.
There are rich people in every economic and political system.
And they would pay far more for the armed security and mercenaries required to secure their compound, not to mention securing their golf courses or other places they own or visit than they pay in taxes right now.
Removing oil families for a second, are there more rich people in western style democracies with progressive taxation, or in third world countries with weak central govts and low taxes?
Do you really think that one could gain the kind of wealth of bill gates or warren buffet, or even of your hedge fund managers, in a third world country with no taxes?
Your entire argument seems to hinge on people becoming rich because they don’t have to pay for their own security. When you’re worth billions, security is chump change. You are also looking at correlation between wealthy people and the economic and political environment they live in and concluding that there must be a cause and effect relationship with how much taxes they pay. There is just no basis for that conclusion.
Except history has shown over and over again examples of very rich people who abruptly stopped being rich when their private security who provided armed violence in exchange for gold wondered why they couldn’t just skip a step and use armed violence to get the gold directly.
In cases where there is no such thing as the rule of law, only what you can enforce by armed violence, “the rich” are never those who have the money to purchase the very best in security, it is always those who are best at organizing armed violence. And so throughout the Feudal era merchants and tradesmen could never achieve real power, because the professional warrior nobility wouldn’t stand for it. Of course this doesn’t exactly mean that the best swordsman becomes king, although there are plenty of examples of that happening. It means the guy who’s best at organizing swordsmen becomes king, and organizing professional fighters is the principal task of every king.
What happened eventually is that the merchants and tradesmen really did get the upper hand and replaced the professional warriors as the elite. Except they did that by the whole “rule of law” thing. The “rule of law” what it looks like when the merchants take over, they make all these laws that say that guys with swords can’t just take a merchant’s profits.
If we abolish all this, we will never have the cyberpunk fantasy of corporations ruling over everyone. Bill Gates has billions of dollars from selling Windows. And we can imagine a Bill Gates who takes those billions and sets up his private security forces and protected compound, while Mark Zuckerberg sets up another private security force and protected compound, while the Walton family does the same thing, and so on. Except then these people are no longer capitalists and industrialists and corporate entrepreneurs, but Feudal overlords. Their most important task is no longer selling software and running the business, it’s overseeing the security forces. And what’s the point of trying to sell another copy of Windows for $50 to the peasants outside the walls of the compound, when you can just send out your “private security” to collect $50 from every peasant in exchange for not getting shot in the face?
Or ask how all the Russian Oligarchs who made billions during the collapse of the Soviet Union are doing now? Doing great, yes, some of them are. And they are firmly under the control of the Russian Autocrat now. Having billions of dollars doesn’t do much good when the Autocrat can send his cops and soldiers to drag you off to jail. Oh, you just pay enough bribes and the Autocrat leaves you alone? Yes, that happens. But who is controlling who?
This response along with BPC’s and Lemur’s I responded to I believe miss the point of the post of mine they are responding to in two respects.
First and mainly, my point there was to not to ask if the ‘rich’ should ‘pay more’. It was to dig down to the issue that comes up with progressive consumption tax. Is the problem the rich consuming too much, or having too much, including investments even in a system where liquidating the investments to spend on consumption would always eventually run into the consumption tax.
Secondly while missing the first point, each post has then gone on to what would be killer arguments if the question was whether everyone should pay the same amount of taxes or people with more money should pay more 's, not strong arguments as to why people with more should pay a higher % of what they have. Even though again that’s not actually the issue I was raising.
But for example, ‘rich benefit more from the rule of law (property rights etc)’. In absolute terms, yes. Proportionally, not as clear. What almost all countries that are so poor they might be called ‘fourth world’ instead of third world have in common is poorly defined property rights and a weak rule of law. It’s highly debatable if that hurts their elites proportionally more than it hurts their poor. One of the biggest obstacles along the bottom rungs of development is where small farmers in such countries don’t have clear title to land which is effectively theirs, so they can’t borrow against it to make proportionally large efficiency improvements, viewed as ‘basic’ to agriculture elsewhere, which they could much more easily do in a strong system of property rights.
Anyway I guess this exchange proves it would take time for the actually relevant argument to get into gear if a progressive consumption tax made progress toward implementation because you guys aren’t answering the point I raised.