Why is taxing the rich so terrible?

Great Debates
121

I wish you had.

The pay that all of these people agreed to does not count? If they did not ask for enough, if they mispent it, if they lost it, if they had any number of problems which caused them to not keep enough to live on, you would arrange them all equally and assign blame to the rich man?

Deserve means what to you? How does one deserve something? By taking it by force, or by freely exchanging goods or services for it?

I don’t follow you here at all. Aren’t you saying that people who don’t earn money are entitled to take it by force? Yes, I understand that you would have the force filtered through some governmental process. But this does not seem to change the essential transaction to me.

Yes, I’d say that opening your eyes would be a good idea. Go back and look at the “social interrelationship” again. The mill workers of a steal mill can earn exactly and precicely what they would with a small forge, and perhaps a blacksmith shop. Everything else is a result of the capitalists who were able to build the smelters, trains, and other large equipment necessary for a modern steal mill.

122

Well, putting aside what some claim, I agree that wealth transfer occurs in a very complex way. The essential formula as far as I can tell is the amount of political pull a particular group has. I agree that much of the “social system” benifits the rich. This is one of the reasons why I dislike the social engineering programs administered by the government. They simply don’t do what they were intended to do.

123

Because roads can be used by any of us without regard to our status. In fact, rich people probably use them more when you count how they are used comercially. How do you say that rich people use welfare more than poor people? Especially in the same sense as I say they use roads more than poor people.

Notice I never said I wanted to live in some fictional apocaliptic doomsday scenario. I don’t want to live with more poor people than necessary either. I certainly don’t want to see people starving in the street. Where we differ is in the methods and tools needed to achieve this. I prefer for the economy to be larger. For there to be more opportunity for people to create wealth themselves. You and some others prefer to loot wealth from those who create and simply transfer it to those who do not. Usually, (I cannot be sure, but I suspect you fall into this category) with little regard for why they have not created wealth themselves.

I disagree. Surely we could enact this or not enact that, but a general statement of support for higher taxes seems to me to have to include some amount of support for how the money is spent. I guess if you say something like “I support higher taxes for the purposes of buying more social programs” then this criticism does not apply. But even then, I’d say that you must support the way the government implements social programs.

What I’m saying is that you cannot support higher taxes without supporting higher government spending, and you cannot support lower taxes without supporting lower spending. Supporting higher spending seems to imply support for the way governments spend. And conversely.

124

pervert: The pay that all of these people agreed to does not count? If they did not ask for enough, if they mispent it, if they lost it, if they had any number of problems which caused them to not keep enough to live on

“If they did not ask for enough”? You make it sound as though all that employees have to do in order to obtain good wages is to ask for them. Doesn’t it strike you that the employer has just a tad more control over what wages the employees get paid than the employees themselves do?

The real-life labor market is very far from an ideal free market where supply and demand would automatically provide satisfactory wages for all workers (because if the wages were less than satisfactory, the workers would simply move to higher-paid fields and the resulting labor shortages would force wages upward, do-si-do and swing your partner round). In the real world, there are a whole bunch of factors that contribute to keeping low-wage jobs at a rate of pay that doesn’t provide enough to live on—including employer resistance to unionization, high entry barriers to better-paying fields, and federal economic policies to avoid inflation and promote access to cheap labor.

When you talk as though insufficient wages for the non-rich are merely due to their own “problems”, you’re just tap-dancing past the genuine issues of unequal power and economic coercion in the labor market.

  • The mill workers of a [steel] mill can earn exactly and precicely what they would with a small forge, and perhaps a blacksmith shop. Everything else is a result of the capitalists who were able to build the smelters, trains, and other large equipment necessary for a modern [steel] mill.*

That is, with the help of an adequately educated and healthy workforce to perform the necessary labor, sufficient domestic tranquillity to preserve the safety of persons and property, infrastructure to support the capitalists’ transactions, financial policies and institutions to foster and protect their monetary gains, etc. etc. etc. It is as silly to argue that the capitalists are somehow solely responsible for turning a village forge into a steel mill as it would be to argue that the workers are somehow solely responsible for it. As EC put it, they are all connected in a social and economic web that is necessary for such achievements, even if our legal system assigns the ownership of the results solely to the capitalists.

That said, I don’t have any particular ethical rationale for necessarily taxing the wealthy at a higher rate than anyone else. There may indeed be some basic fairness arguments in favor of progressive taxation on the grounds that the wealthy depend more on social and physical infrastructure or have more to lose from its instability, etc.; but as jshore notes, those cui bono? analyses are very complicated and debatable.

No, I’m quite straightforward about the pragmatic reason for taxing the wealthy at higher rates than the non-wealthy, and it’s the same reason that Willie Sutton robbed banks: because that’s where the money is.

It would be very nice if we could run a successful society by taxing everybody only an amount that they didn’t mind contributing and that everybody thought was perfectly fair. However, governments of all ideological persuasions have been trying for centuries (millennia, more likely) to run their national business and manage their national budget, and nobody has yet succeeded in doing it solely on the revenue from the Universally Satisfactory NanoTax. Moreover, the cost of living is not perfectly scalable. There are many important goods and services whose prices are relatively inelastic; your basic cost of living is not necessarily half that of someone who makes twice as much money as you. Therefore, those with high incomes can absorb higher tax rates without being economically crippled by them than low-income earners can absorb.

Honestly, folks, I say this with no malice or glee. I do not claim that rich people in general don’t “deserve” their money at least as much as anyone else “deserves” theirs, and I don’t advocate progressive taxation as a form of punishment for making money. However, as long as society needs more revenue than the Universally Satisfactory NanoTax can provide—and AFAIK no libertarian or anarcho-capitalist has yet made a genuinely convincing real-world case that it doesn’t—it will always make sense to tax most heavily where the most money is.

Considering how extraordinarily well the wealthy in the US have been doing financially over the last 20 years or so, I really can’t put much confidence in claims that they’re being especially screwed by the tax system. I’m going to worry more about poor people getting poorer, or getting stuck in a pattern of small income increases and greater financial insecurity, than I am about a few extra percentage points of income tax for wealthy people who are nonetheless continuing to grow steadily wealthier.

125

Yes, that is precisely what I’m saying.

Amendment 16 to the Constitution:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

126

Good roads help America prosper. The publicly-educated workforce helps America prosper. The social stablity bought by the social safety net helps America prosper. This is how they are the same. They all promote the financial well being of our society. Who benefits more? Obviously those who have more. Rich people.

I never said you did. The fantasies were mine. I was a big Mad Max fan back in the day. Remember, I’m not the one in the habit of jumping to conclusions about your beliefs. Which brings us to…

I am all for opportunity, creativity, and wealth. I’m all for a larger economy. ( So long as the growth is sustainable. ) What I thought we were discussing here is not a larger or smaller pie but how to divide it. I have said nothing about taxing those who create wealth. Rather my point is that we should tax those who have wealth, however they gained it. We should look there because that’s where the money is. It seems to me that the more money you have the more extra money you have. “Extra” as in “not needed for survival”. It seems we agree we shouldn’t tax anyone so that it takes food out of their mouths or puts them out on the street.

127

I completely understand the legal means by which this happens. I was asking you for your moral justification.

128

Forgive me if I ignore something you think needs a response. I am going to ignore all the stuff about making it seem as if workers are completely free as I did not really mean what I said that way. I agree that I oversimplified my example.

I have no problem with this justification.

Surprised?

Really. If you are going to support a policy which I characterize as looting (I understand you would not use that term) that’s fine. It is a point we can debate. My problem is limited to those who wish to claim that a person’s money was not earned by him because he created it with the cooperation of others.

129

[QUOTE=2sense]
Good roads help America prosper. The publicly-educated workforce helps America prosper. The social stablity bought by the social safety net helps America prosper. This is how they are the same. They all promote the financial well being of our society. Who benefits more? Obviously those who have more. Rich people.
I never said you did. The fantasies were mine. I was a big Mad Max fan back in the day.

I’m not sure where I jumped to conclusions about your beleifs. I think I said the same thing as you. Specifically the part where I talked about methods and tools and you talked about pies. I think that since we are talking about the ownership of property it is quite logical to suggest that the more property is confiscated the less property is available. I certainly seem to have added that step to our discussion.

I’m not at all sure this is true. I think you and I have been talking for several posts in this thread about what it means to own property and what it means to create wealth. I’m not sure until now that you have said you (or your policies) are indifferent to how wealth is created. I think you have said a couple times that complex social interactions prove that individuals do not create the wealth they earn.

As I said to Kimstu, this is fair enough. If you are willing to say that the fairness of taking money from those who create it and giving it to those who did not is irrelvent than fine. I’ll disagree that this is moral, but I’ll agree to disagree.

But this simply changes the focus from how the money was created to how it will be used. Certainly it is possible that you are the primary judge of moral creation and use of wealth, ;), but I’m not convinced. ;):wink:

130

The very concept of money is an artificial social construct. As such, if intolerable imbalances in this construct arise where a minority of people get an amount of money disproportionate to how much they actually contribute, society can use the democratic process to rectify the situation.

131

Right… Just like the other completely artificial social constructs that money represents Labor, Property, etc.

Ah, but now you are introducing the idea of contribution. What exactly do you think people contribute? If money is a completely false measure of contribution, what is not?

Look. Money is simply an exchange medium. It is exchanged freely by individual actors in exchange for resources valued more highly. You are attempting to impose a value judgement on a voluntary interaction which may not be agreed to by both actors. If I think men do not get enough sex, can I pass a law which imposes a fidelity tax on married females? I understand the political difficulties, but do you see any moral ones?

132

OK first let’s clear up one of the greatest triumphs of liberal semantics in history. The phrase “tax the rich” is deiberately misleading. Obviously when you talk about taxing “the rich” the image that comes to mind is of the wealthy fatcats on their yachts. Trouble is, these are not “the rich”. For tax purposes, they are the “wealthy”.

When we talk about socking it to people in the top tax brackets we are talking about taxing the “productive”, or “high earners.” Most people making over 200k make it for a few years at the peak of their career. For many this is the money that pays off their house, funds their retirement, sends their kids to school, whatever. Unless they are athletes or rappers (hell, even if they are athletes or rappers) they have probably put in years of hard work to get where they are, and have a relatively short window of high earnings to stockpile for their later years. Taxing them out of a punitive sense of class warfare is misguided and unfair. Moreover, it discourages extra effort and achievement during our most productive citizens’ most productive years.

The wealthy, on the other hand, skip a lot of taxes entirely. I’d mention Theresa Kerry’s tax return here, but she hasn’t released it. The Wall Street Journal, though, estimated that based on her stated income (much of which was legitimately parked in tax-free investments, by the way) her ROI on her net worth was about 0.5% annually. Another great example is the estate tax. Jackie Onassis died the same year as a great uncle of mine. She left behind an apartment and $250k in cash. The rest of her (considerable) fortune had been shuffled into trusts or otherwise pushed through holes in the tax code, and to the best of my knowledge she paid ZERO estate tax. The same year, my great uncle, a self-made millionaire from the farm belt, got raped for over 50% of his net worth upon his death. Point is, the wealthy, or old rich, have been playing this game for years and know how to avoid paying the taxes they advocate.

Many of the wealthy liberals preaching about “Two Americas” are right, but not in the way you think they are. The two Americas are 1) the old rich and their lackeys and 2) the rest of us. In order to deflect any resentment, and even garner praise, from the lower and middle classes the old rich have created a bogeyman of “the rich” – by which they in fact mean the “new rich” – and have enlisted the aid of the gullible in setting up a tax structure to prevent these people from acquiring or passing on too much wealth. It’s really pretty brilliant - satisfy the masses’ grievances for “social justice” while at the same time cementing your own position at the top of the heap. Think about it…

133

Hate to take issue again here, but a democratic society that loses all respect for the rights of property owners is a step away from anarchy. I’d suggest you read F.A. Hayek on this. Suffice to say that in a society where one’s property is subject to arbitrary confication anytime the government decides you have “too much”, you have socialism regardless of whether you allow people to vote. And in a socialist sytem there is, of course, no incentive to work hard and acquire wealth. Much easier to just vote ourselves rich… if only it worked.

Money is more than an artificial social construct. The fact that money originated in Mesopotamia at the very same time that human civilization exploded is no coincidence. There is good anthropological evidence that the invention of money as a medium of exchange was the trigger that allowed the great civilizations to arise.

Property rights are the bedrock foundation of capitalism, and capitalism is the single most productive and dynamic system ever seen on earth. Our current system of property rights and capitalism has evolved over millenia. It is the highest order of hubris that has caused philosophers of “social justice” to believe that they can, from whole cloth, create an economic system that will work better than the one that hundreds of generations have combined to produce.

Basically, Blalron, what you are proposing is not “social justice” or redistribution. It is mob rule in which (to quote Kipling) we are “robbing selective Peter to pay for collective Paul.” This is a childish and naive approach, and would destroy the very fabric that allows our civilization to thrive.

134

When people think about inheritance tax, they’re usually thinking about some rich person dying and willing millions of dollars to some kid who never worked.

What about this scenario, and should I be paying tax in it?

My mother’s name is on my checking account so that in case of an emergency or when I am not in the area because I am traveling, she can write checks on my account which contains only deposits made by me and of my earnings. Should my mother die while her name is still on that account, I will ‘inherit’ 50% of the balance of the account and have to pay an inheritance tax on it.

Is that fair to me?

These taxes that people say are just ‘on the rich’ aren’t necessarily just ‘on the rich.’

135

Welcome to the SDMB, TheRight. I do hope you decide to pony up and stay. But in the mean time, many of your arguments demand response.

The implicit assumption here is that a democratic society that loses all respect for our current scheme of property rights is a step away from anarchy. This is analytically and dare I say historically false. For example, consider the Coase Theorem. Suppose, for sake of argument, the transaction costs are zero. Coase was interested in controlling externalities by assigning property rights. He demonstrated than under any scheme of property rights assignment, the Pareto-efficient outcome can be reached.

There is nothing sacred about our current configuration of property rights. As long as they are consistently enforced, the Pareto-efficient outcome is just around the corner. We as a democracy can reassign them at our leisure with respect to taxation and still expect efficient bargaining outcomes.

Of course, efficiency says nothing about distribution. This inevitably leads to issues of social justice, to which you have only to say:

This is typical conservative intellectual laziness. Hundreds of generations combined to produce such great ideas and magnificent social institutions as slavery and astrology. Furthermore, our current economic “system” is hardly the product of the consistent effort of individuals over time; rather, our economic history is punctuated by accidents, discontinuities, wrong turns, and violent revolutions. “Philosophers of social justice” like, say, John Rawls, care very deeply about the consent of everyone living in the democratic state, not merely those to whom hundreds of generations fortuitously bequeathed their market power. Our economy is fabricated of the same whole cloth that philosophers and economists spin with, save that their products are much more theoretically consistent. The underpinnings of our economy are not the finely polished brass banisters at the Metropolitan Museum, worn and shiny from the grease of thousands of hands, but the worms under an old, infrequently examined rock.

Moving right along.

This reasoning is very weak. Whether money is a prerequisite for civilization or the reverse is semantic and irrelevant. Furthermore, if this were actually the case, why was there in fact so much barter in the world’s greatest post-Mesopotamian civilizations?

If money is in fact more than an artificial social construct, then what exactly is it?

Civilizations have thrived under all sorts of wacky circumstances. What exactly is so special about ours? Why should our dynamic civilization be so much more sensitive to change, when others changed drastically yet endured for centuries or milennia?

136

It occurs to me that my above post is not altogether clear. I am not trying to argue that the Coase theorem supports any taxation scheme, merely any assignment of property rights with respect to externalities. The point is that there is nothing sacrosanct about our current conception of property rights. Therefore, altering the tax structure is not tantamount to slouching towards anarchy by eroding some holy economic foundation.

Hope this clears it up.

137

Most of the folks trying to live on $8 or $9 an hour would probably disagree with you. It is preposterous for someone on that income level to have to pay any income tax at all. (It may be reasonable to expect them to pay other taxes.)

138

A means of exchanging value.

If men were only able to exchange one direct value for another, that is, if the only way I could pay for your apple was to offer you something I made or some service I could provide and you have no need of that good or service than the exchange would not be possible. All such exchanges for mutual benefit would be drastically reduced and the wealth of the world- that which provides the fuel for our high standard of living- would plummet.

Money enables me to trade the value of what I can provide, rather than the item itself. In effect, when I hand over $10 for a book, what I have actually handed over is $10 of my talent and time that someone else had found of value. When the seller accepts money in payment for their good or service they do so only on the premise that they can exchange it for the product or effort of another.

There is nothing artificial about it as long as at some point actual value is provided (i.e. I put in 60 hours a week providing a service) and that I am free to exchange that value as I see fit. For money to be “artificial” start introducing means of limiting or arbitrarily setting what should be of value and of how I am allowed to exchange it (hmmm…I think this has been tried…).

139

Unless her account has something more than $1.5 million bucks in it, you will not have to pay any inheritance tax. There is an exclusion amount and you only start paying the tax on only the amount above that exclusion. That exclusion is rising, having been $1 million in 2003 and going up to $3.5 million in 2009. (See here.) Admittedly, this exclusion is rising as a result of Bush’s tax cut plan with eventual repeal of the estate tax, but I believe the exclusion was already up at like $600,000 before his plan and there was bipartisan support to raising it or making other fixes to be sure it didn’t hit on family farms and the like.

By the way, the fact that you had no idea that you would not be subject to this tax unless your mom was quite wealthy shows how successful the Republicans have been with their message.

140

There is actually a strong correlation between income and wealth because when you have wealth, you earn income on that wealth. But, yes, the correlation isn’t perfect so if you and the Republicans want to propose a wealth tax, I’ll endorse it in a nanosecond. I think it is a wonderful idea…And, yet the silence on this from the Republicans has been deafening. (Admittedly, I haven’t heard many Democrats endorse it either but at least they haven’t been trying to cut or eliminate the taxes that hit the most on those with wealth, such as the estate tax and the taxes on dividend and capital gains income.)

If this was the Republicans real objection to taxes on high income earners, the solution is very simple, is it not?