# What is a fair amount of tax for the rich to pay? **URL:** \ **Category:** Great Debates\ **Created:** [April 26, 2010, 4:52pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416 "2010-04-26T16:52:59Z")\ **Posts on this page:** 20\ **Page:** 5
**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:** [April 27, 2010, 8:59pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/81 "2010-04-27T20:59:57Z")
> [@Leaffan](#): > > If we can start at the other end, then George Harrison thought [95%](http://en.wikipedia.org/wiki/Taxman) was unfair. > > Let me tell you how it will be; > There’s one for you, nineteen for me. I love George Harrison, but I think 95% is a reasonable rate at very high margins. Perhaps it should not have been the rate the Beatles paid on their income at the time, but it is reasonable in theory, on income some orders of magnitude above the mean. > [@Acid\_Lamp](#): > > I’ll take a stab at this. > > The median income for a family of three in the US is roughly 50k. Bob personally (we have no information on his marital status) makes 200 times the average income for a family. He takes home enough money to fully support 600 people a year at a reasonable standard of living. Obviously it would be unfair to charge bob two hundred times the standard tax rate or have him foot the bill for 400 working adults, but Bob is certainly in a world of his own when it comes to standard of living. > > I suggest that anyone bringing in over a million a year should be considered to be in the highest tier of standard of living allowed. Essentially I’m drawing no difference between Joe well to do company owner, and the Hiltons’ and Gates’ of this country. That may seem a bit unfair to some, but remember that at only a million a year, you are still drawing 20 times the income of the average family, or about enough to fully support 60 people. That said, I propose that additional income over a million be taxed at a standard rate of 66% allowing the earner their exact third share per the average of a family of three. Before anyone starts crying, remember that 330,000 is still enough to fully support 6.6 full average families. The earner may halve the amount that goes to the goverment by making charitable donations in the same amount to an approved list of private, non-religious, non profits of their choice. This is a good answer. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [April 27, 2010, 9:13pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/82 "2010-04-27T21:13:36Z")
> [@Blalron](#): > > Both. You’d be wrong. The total share of wealth held by the richest Americans has been falling for some time. I’ve posted on this numerous times. It was higher than it currently is at points in the 1920’s, the 1960’s, and the 1980’s and 1990’s. The overall trend line from 1929 on is slightly down, but could be said to be essentially flat. It tends to go up in boom times, and down in weak economies. > [@](#): > > Sure, that’s possible. In fact, it’s the case more often than not. No, it’s not. Aggregate wealth increases constantly. When two people trade, they aren’t swapping pieces of the pie. That would imply a winner and a loser in every trade. In fact, people trade when they both feel they are gaining value, which means aggregate wealth is increasing. > [@](#): > > But I have a Utilitarian view on public policy. It’s not of primary importance to me whether or not the rich deserve every penny of what they earn, or whether the poor deserve to be poor because they are lazy. The main question that I ask is: how can we structure society in such a way as to minimize suffering and maximize happiness amongst the populace? And I place particular emphasis on mitigating suffering because the deprivation of poverty is ever so much more painful than the deprivation of having to wait a few extra months to get a second yacht. So would you be happy with a society where the poor has less than they have now, but the rich have much less? It would be more equitable. That’s been the result in most socialized countries. The gap between the rich and poor is smaller, but they sacrifice economic growth for that, and ultimately wind up with lower standards of living. > [@](#): > > Your question is more along the lines of “how do we maximize GDP?” Sure, GDP does play a factor in overall happiness but it’s not the only consideration in play. > > I’m willing to take some hits in GDP growth if they mean that nobody has to go to bed hungry, go without a roof over the head, or languish without a basic level of health care. Are you also willing to go without as much innovation, as many new products, as much scientific research, and fewer opportunities for your children to rise to the heights of the economy? And if two countries start at a GDP level of $30,000 per person, and one of them lags the other by just 1% of GDP growth because of its socialist policies, then in 50 years the first country will have $30,000 per person, but the second will have $49,000 per person. And that’s pretty much what’s happened with the U.S. as compared to Europe and Canada. Less socialism, more growth. ---
**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:** [April 27, 2010, 9:21pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/83 "2010-04-27T21:21:28Z")
> [@jrodefeld](#): > > We should reestablish the principles of Capitalism and Free Markets (not Corporatism as we have today) where all business plays on an equal footing and the government is impartial and not involved in regulating the marketplace. I don’t believe we should punish people just because they are rich. And the truth is, when you establish a very high tax rate on big business, they simply lay off workers and pass on the cost to the consumer by way of higher prices on products and services. > > **The Free Market generates prosperity for all Americans. It is the only system in the world which generates a healthy vibrant middle class and eliminates poverty.** […] > > We should cut spending then we can afford to cut taxes. Think about this a little. We should reject corporatism and embrace a free economy. If we did, the gap between rich and poor would shrink, our prosperity would shoot through the roof and we would all be a lot happier. (bolding mine) I think you mean well, but I think you are in error here. I recommend reading some of Paul Krugman’s popular works to get a better handle on this, but I’ll just try to hit two points: 1. Politics is often an ideological game of telephone; politicians try to give you what they think they understood you to say you want. Your beliefs can be twisted by politics into robber baron Social Darwinism, which does not spread prosperity around. 2. In the USA, the middle class as defined by income range grew most in the 1946-1960 period, when tax rates were as high as they have ever been in the USA. High taxes can feed high spending, which can grow the economy. Free markets aren’t automatically better than a corporatism or _dirigisme_, provided the corporatism is run with the public interest as top priority. ---
**Author:** ![Clothahump](https://avatars.discourse-cdn.com/v4/letter/c/51bf81/32.png) [@Clothahump](https://boards.straightdope.com/u/Clothahump)\ **Post date:** [April 27, 2010, 9:23pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/84 "2010-04-27T21:23:06Z")
> [@Todderbob](#): > > Go us, let’s fuck the economy up even worse!! Sigh. No, Bob, it won’t fuck the economy up worse. Quite the opposite as a matter of fact. But the chances of it happening are slim because Congress doesn’t want to give up the games they can play with the income tax, where they slip exemptions to their buddies and screw everyone else. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 27, 2010, 9:23pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/85 "2010-04-27T21:23:45Z")
> [@Blalron](#): > > And I place particular emphasis on mitigating suffering because the deprivation of poverty is ever so much more painful than the deprivation of having to wait a few extra months to get a second yacht. > > Your question is more along the lines of “how do we maximize GDP?” Sure, GDP does play a factor in overall happiness but it’s not the only consideration in play. > > I’m willing to take some hits in GDP growth if they mean that nobody has to go to bed hungry, go without a roof over the head, or languish without a basic level of health care. First, I don’t think “allowing people to go hungry” is entirely relevant. That sort of decision has more to do with a government’s priorities. Do you need 11 carrier battle groups, or 12? Do you set your Medicare qualifying age at 65 or 60? Secondly, your comment about “second yacht” is short sighted and needs to be addressed. We _need_ the rich to buy stuff. That second yacht puts a damn lot of money into the economy, right off the bat the government gets sales tax from it. People are employed to build it, materials are purchased to construct it. And staff is required to maintain it. Your tax policy just cut the yachting industry in half! Think about that for a second. You wanted to help the poor, but by taxing the rich more, you effectively destroyed the yacht building and maintaining industry (yes, I’m being overly dramatic to make a point). Now you’ve added to unemployment and poverty (more costs), but also reduced your overall tax revenue. Sounds like you’ll need to raise taxes on the rich again. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [April 27, 2010, 9:25pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/86 "2010-04-27T21:25:54Z")
> [@Acid Lamp](#): > > I suggest that anyone bringing in over a million a year should be considered to be in the highest tier of standard of living allowed. The use of the word “allowed” scares me. Are you suggesting that we cap salaries at $1million? ---
**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:** [April 27, 2010, 9:30pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/87 "2010-04-27T21:30:51Z")
> [@magellan01](#): > > You seem to think that it the metric is what someone _needs_. I find that very objectionable. You may want to read _We the Living._ What would you prefer? What one “deserves”? How does one even define that in the real world? Since “We the Living” is set in the days of the Bolshevik Revolution, I would guess that some of the injustices it describes are due to the peculiar flaws & circumstances of that revolution. (I can admire Bolshevik ideals of egalitarianism while recognizing that the October Revolution had its horrors.) But to try to equate the excesses of Bolsheviks with all social democracy, all redistribution, all progressive taxation everywhere–or with any consideration of public “need” as primary–is as silly as a Bolshevik equating any private property ownership with feudal overlords. Don’t make the mistake of being as uncompromising as a Bolshevik because of the Bolsheviks! > [@magellan01](#): > > But he doesn’t have to justify his millions, he earned it. You have to justify taking the money he earned away from him. A great way to look at the moral component is to look at the percentage of days one has to work for themselves and what percent he has to work for the government.If the tax rate is 33%, one has to work the first four months of the year for the government. Why should Person A have to work a greater portion of their time for an entity other than themselves. Hell, there’s more logic to allowing him to work less time for the government, as long as he paid in more than someone else. What is, “earned”? In a market economy, one makes money according to negotiation, not work itself. That’s what makes it a market economy. Taxes are another negotiation. If you want a production economy, a shop economy, or something, where money is paid according to one’s personal sweat equity, you…well, you should be a Bolshevik. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:31pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/88 "2010-04-27T21:31:09Z")
> [@emacknight](#): > > I haven’t finished reading the thread yet, but I’d like to propose a radical alternative: bell curve. Let me try to flesh this out: (in reference predominately to income tax)… > …Also drops off at the upper income level: this sounds really weird at first, but I was thinking about Bill Gates, the guy is rich because he took the risk and founded a massive company… So you don’t think having 40 billion dollars is enough of an incentive to become rich, we need to throw tax breaks on top of that? > [@](#): > > Encourage the rich so seek super-richdom. Right because being super-rich is something you have to create incentives for. > [@](#): > > It just doesn’t seem right that we say 20% across the board, such that a person making $100,000 might pay $20,000 and billionaire might pay $200million dollars. A single billionaire will pay more than 10,000 people combined! I once thought you had a problem with progressive taxation, now I see you even have a problem with proportional taxation. Why not just propose a head tax with generous exclusion for the poor? > [@](#): > > Obviously there aren’t as many golden eggs, but that is where you redefine your federal budget and lower it to match the money available. You are basically talking about eliminating our revenue from the top 1% (which accounts for about 20% of our revenue. Assuming we don’t have stimulus packages every year, our regular annual budget is about 3.2 trillion dollars, our reciepts are about 2.7 trillion. IOW we are running a deficit or about 500 billion/year. You propose to reduce our revenue be an additional 500 billion to make our deficit a round trillion/year and to cut costs to balance out the budget. Social security, medicaid/medicare, military/national security and the interest on the national debt account for between 80 and 90% of the budget. You are looking to cut about 30% of the budget. Please explain to me exactly where you think you are going to be able to cut a trillion dollars so that we can give the ultra-rich the tax cut you are talking about? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:33pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/89 "2010-04-27T21:33:10Z")
> [@emacknight](#): > > I still think historically we’ve used two different systems: tax the shit out of the poor for the benefit for the rich. Tax the shit out of the rich for the benefit of the poor. > > Let’s try a third way: tax the middle class in proportion to what the want, can afford, and need. Don’t decide dinner based on the richest person at the table (which I think at some point becomes unfair) and obviously there is no point having the poorest person pick up the tab. > > Look at that 75% of the population between the lowest 20% and the richest 5%. It’s the most populated group, and the ones contributing and benefiting from society. Let the policies be based for, of, around them. I don’t know how to break this to you buddy but the middle largely carries the tax burden in this country right now. the top 1% may carry 40% of the income tax buerden but the next 49% carries the other 60% and they also carry a lion’s share of other taxes. ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [April 27, 2010, 9:45pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/90 "2010-04-27T21:45:51Z")
> [@emacknight](#): > > Secondly, your comment about “second yacht” is short sighted and needs to be addressed. We _need_ the rich to buy stuff. That second yacht puts a damn lot of money into the economy, right off the bat the government gets sales tax from it. People are employed to build it, materials are purchased to construct it. And staff is required to maintain it. The money that would have gone towards that second yacht doesn’t just disappear, instead it’s spent on what society considers as having a higher priority. Yacht dollars become health care dollars instead. In theory, if the CEO wants that second yacht so badly a higher marginal tax rate could give him incentive to work _even harder_ so that he can afford it. Who’s to say it won’t increase productivity? 🆒 ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:45pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/91 "2010-04-27T21:45:53Z")
> [@emacknight](#): > > But you said, “share of the pie.” Why is their share ever increasing? Is there no upper limit to what one individual is expected to contribute? We have a system where there is no upper limit to what one individual may earn so there is no upper limit to what they are expected to pay. > [@](#): > > If you have 10 people at the table, 1 poor, 8 middle income, 1 super rich. The problem is that the income distribution is shifting. More than 10% of Americans are on food stamps, another 5% receive other forms of government assistance, the majority of babies born in this contry receive some form of government aid (it is frequently to pay for medical costs and stops shortly after birth but that is how many people are living so close to the edge that they need the government to help when they have a baby). > [@](#): > > There is no reason to spread the bill out proportionally to wealth, it seems petty to ask the poor guy for $1, and it seems rude to ask the rich guy for $100, when everyone else is paying $10. The rich guy can leave the table any time he wants. > [@](#): > > It might be time to stop expecting wealthier people to improve our lot in life. You seem to be under the impression that the middle 75% is living better than they earn on the backs of the top 1%. Once again, the income tax is not even half the federal revenue. ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [April 27, 2010, 9:51pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/92 "2010-04-27T21:51:32Z")
> [@Damuri\_Ajashi](#): > > Social security, medicaid/medicare, military/national security and the interest on the national debt account for between 80 and 90% of the budget. > > You are looking to cut about 30% of the budget. Please explain to me exactly where you think you are going to be able to cut a trillion dollars so that we can give the ultra-rich the tax cut you are talking about? I’d like to point out that Social Security is [already](http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29) payed for in the way that **emacknight** envisions (income after $106,800 is exempt). Medicare [used to](http://en.wikipedia.org/wiki/Medicare_%28United_States%29) have a similar exemption until 1994. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 9:55pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/93 "2010-04-27T21:55:17Z")
> [@Sam\_Stone](#): > > And are you of the opinion that there’s a pie of fixed size, and if my income is bigger it must be at the expense of someone else? What if I have a higher income because I’m creating more value than you are? Does that not affect the calculation? Of course it does, are you under the impression taht the labor markets allocate income equitably? > [@](#): > > As for the appropriate tax rate, there are a number of factors to consider: Yeah, yeah, we get it, taxes distort behaviour. So? I don’t think anyone is arguing that high taxes are a good thing. The question is how the tax burden should be distributed. > [@](#): > > This is not the 1950’s. The world is now global. Markets are intertwined. Capital flows freely. That sounds like we should eb warming up for a race to the bottom. > [@](#): > > But you guys go ahead and raise the top rate on the rich to 70% or more, and increase the tax burden on businesses. Dude, we’re talking about raising the top marginal tax rate from 35% to 39.6%. We might even raise the capital gains and dividend rates from 15% to 20%. ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [April 27, 2010, 10:01pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/94 "2010-04-27T22:01:00Z")
> [@Sam\_Stone](#): > > And if two countries start at a GDP level of $30,000 per person, and one of them lags the other by just 1% of GDP growth because of its socialist policies, then in 50 years the first country will have $30,000 per person, but the second will have $49,000 per person. And that’s pretty much what’s happened with the U.S. as compared to Europe and Canada. Less socialism, more growth. Do you believe there will ever be a point where growth isn’t important? Or is growth expected to continue onwards to infinity? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 10:04pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/95 "2010-04-27T22:04:36Z")
> [@Sam\_Stone](#): > > Actually, I alluded to that. I said that you guys don’t understand how destructive high taxes can be because you’ve consistently been the recipient of the benefits from other country’s high taxes. You mean like how our top marginal income tax rates exceeded 70% for most of the last century? Or how we once had marginal income tax rates as high as 92% but still experienced robust growth? Its all a bit more complicated than tax=bad. > [@](#): > > My other point is … economic competitors. Yeah, yeah, low taxes\>high taxes. We are talking about how that tax burden gets distributed. > [@](#): > > Then you wonder why you’re losing manufacturing jobs and business investment. Is it possible that we are losing manufacturing because a Chinese laborer will work for $10 a day while a US worker needs that much per hour? Is it possible that it isn’t taxes that drove just about every manufacturing job in the world to China? In order to maintain our position going forward, we need a large robust middle class that can develop enough human capital to jsutify our standard of living relative tot he rest of the world. Noone wants to throttle productivity but the amrket seems to be allocating income from productive activity to fewer and fewer people. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 10:06pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/96 "2010-04-27T22:06:13Z")
> [@foolsguinea](#): > > And I think wealth taxes really should be progressive, with a large personal exemption. Its called the esatte tax and you only pay it once. ---
**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:** [April 27, 2010, 10:07pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/97 "2010-04-27T22:07:58Z")
> [@emacknight](#): > > But you said, “share of the pie.” Why is their share ever increasing? Is there no upper limit to what one individual is expected to contribute? Where do the rich get their wealth? Do they sweat platinum? No. They make money from the rest of the economy. And a stock dividend paid from the productivity of a company is as good as a tax, though “private.” Let me turn it around, then. Is there no upper limit to how much of the economy one individual is expected to direct through his accounts? > [@Damuri\_Ajashi](#): > > Its called the esatte tax and you only pay it once. I think that’s a mistake. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 10:11pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/98 "2010-04-27T22:11:11Z")
> [@Sam\_Stone](#): > > No, it’s not. Aggregate wealth increases constantly. When two people trade, they aren’t swapping pieces of the pie. That would imply a winner and a loser in every trade. In fact, people trade when they both feel they are gaining value, which means aggregate wealth is increasing. Not to pick nits but wealth does not increase, utility does. Welath increases when someone produces something or collects natural resources. > [@](#): > > So would you be happy with a society where the poor has less than they have now, but the rich have much less? It would be more equitable. Of course not but you seem to think the options are “status quo” or “everybody is worse off”. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [April 27, 2010, 10:16pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/99 "2010-04-27T22:16:02Z")
> [@Blalron](#): > > I’d like to point out that Social Security is [already](http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29) payed for in the way that **emacknight** envisions (income after $106,800 is exempt). Medicare [used to](http://en.wikipedia.org/wiki/Medicare_%28United_States%29) have a similar exemption until 1994. I’d like to point out “so what?” social security funds have been part of the general revenue since LBJ. ---
**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:** [April 27, 2010, 10:21pm UTC](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416/100 "2010-04-27T22:21:23Z")
> [@Sam\_Stone](#): > > 1. The higher the rate, the more tax avoidance behavior you get. This is inefficient, because it causes private capital to move based on tax implications rather than on where it would otherwise do the most good. Is this predictable? Is it even a direct function? I reckon Yanks break the law to avoid lower taxes at a higher incidence than Europeans break the law to avoid higher taxes. (Granted, Europe has Sark & Monaco; we just have Delaware.) > [@](#): > > 1. Capital flight. The higher the taxes, the more likely it is that Americans and others will move their income-earning activities to other countries. But if capital is allowed to move at all, there will ALWAYS be capital flight & race to the bottom. This is an argument either for international cooperation (collusion?) on tax rates or for protectionist policies against moving capital. It is not remotely an argument for unilaterally lowering tax rates, unless one wishes to sabotage other countries (a little) & one’s own (a lot). > [@](#): > > 1. Work disincentive. The higher the marginal rate gradient, the less incentive there is for people to take risks or work harder to earn more money. This doesn’t mean what you think, you’re conflating psychological “incentive” with the economic use of the term. A man who makes less money _per annum_ has less incentive (economic) to show up for work, but more incentive (psychological)–because he has less cushion to fall back on without the job. > [@](#): > > 1. Brain drain. Make your taxes too high, and the people who can be expected to earn the most money will move elsewhere. Americans don’t have a good sense of this, because they’ve largely been the beneficiaries of brain drains from other countries. But ask a resident of the UK or Canada about it. It’s incredibly destructive to a country to have its best and brightest leave because others are trying to milk them too hard. This is an incredibly strong argument for global norms in taxation if not world government itself. > [@](#): > > 1. Private sector capital accumulation. Small businesses drive job creation. And just how are small businesses created? With private sector capital. You go to your rich uncle and ask him to invest. Or you save your own money and build a business with your savings. Or you take out a small business loan and the bank gives you money deposited by other private savers. Raise the marginal rate to 90%, and you’ll kill small business growth, and with it innovation and job creation. Or the government could fund entrepreneurs with grants. 😃 > [@](#): > > Look at the rates of business investment growth in California and New York, where taxes and regulations are high, and compare that to the rate of business growth in Texas, North Carolina, Florida, Georgia, and Tennessee, which are the five most business-friendly states in the U.S. Look at internal migration statistics. It’s been easier for the South to grow, inasmuch as it’s just catching up. If Haiti were to be straightened out & join the First World, it would have enormous economic growth while still being poor & sick in comparison to Europe. [Previous page](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416.md?page=4) [Next page](https://boards.straightdope.com/t/what-is-a-fair-amount-of-tax-for-the-rich-to-pay/537416.md?page=6)