Don quotes Steve Landsburg against progressive taxation: "Whenever a politician proposes to make the tax code more progressive, we hear rhetoric about how the rich have too much, the poor have too little, it’s only fair to spread the wealth more equally, and so forth. To me, the interesting thing about that rhetoric is that nobody believes it. Of this I’m certain, because in all the years I took my daughter to the playground, I never once heard another parent tell a child that if some kids have more toys than you do, that makes it okay to take some of them away…. [T]axation for the sole purpose of redistributing income is closely parallel to behavior that we admonish on the playground all the time. If we don’t accept this from our kids, I’m not sure why we should accept it from our congressmen.”
First this is obviously factually wrong. It's not true that "nobody believes it", if "it" is the logic of the progressive tax. Lots of people believe it. That's why we've had a progressive tax system that's been in place for a century.
But the example is a non-sequitor. It's true we teach our kids not to steal. But what does stealing have to do with taxes? It's the obvious question that could have been raised pointedly in a comment section, but commenters like that often get accused of being trolls or not understanding economics (some of these critics genuinely don't understand economics but that doesn't mean that they don't raise good points that are often left unanswered).
We also teach children that it's important to share their things. We also teach children that in certain human communities it's not only appropriate, but imperative to make contributions to a common fund where welfare is redistributed from those who have means to those who have needs.
I wouldn't use either of those examples to advocate the elimination of the market and the inauguration of communism because that would be inferring too much of the observation about what we teach our kids (and it's not even an outcome I'd approve of). Likewise Landsburg and Boudreaux should not be so impressed with an incomplete, overextended anecdote or try to draw any extensive conclusions from it.
What that guy is actually saying is that people only believe in an incredibly regressive taxation system since the rich should not contribute more toys than the poor.
ReplyDeleteDidn't both Smith and Keynes support progressive taxation?
ReplyDeleteBoudreaux also claims it's envy, even though OWS and make others make it clear that they are angry at the rich for ruining the economy, they don't desire business jets for themselves.
ReplyDeleteHey, I wouldn't mind the deal the rich get, like a 15% tax rate, what they pay for capital gains. I could learn to live with deducting all the expenses I think I should too, instead of the standard deduction. A fair rate of taxation would be a step backward for the rich.
But the real reason for progressive taxation is for a reason our founding fathers knew well, that it is a bad idea to let the rich and powerful get too rich, too powerful, too entrenched. Progressive taxation is one way to deal with that. Revolution is another.
Invisible Backhand
Certain libertarians recognize rights but not duties.
ReplyDeleteThus, taxaxion = theft.
If the kids voted to redistribute the toys, THEN it would be ok.
ReplyDeleteDaniel, when you and I walk across the street, do we care how much money other people have? Do we care we have more money? Do we care we have less money?
ReplyDeleteThe answer is no, no, and no. We do not care. The marginal happiness derived from every additional unit of a currency is zero. I do not care that some people have more money than others. You do not care either. When we have our Lovecraft books and our favourite bands, why do we care about or need any more money? We. Don't. Care.
In personal life, we do not care about these things. So why should we care in public life? Why is public life based on being a busybody who cares about things he personally does not care about? We use this rhetoric during election time, but we don't do so for most of the years between elections.
@Invisible Backhand
ReplyDeleteThis pagan idolatry of dead mortal men whom you call Founding Fathers is silly. Substitute religions are not useful for analyzing genuine relevant concerns of our place and time.
"If the kids voted to redistribute the toys, THEN it would be ok."
ReplyDeleteIt doesn't matter very much if it's OK or not does it? In a democracy it will happen if the kids want it to happen.
I'm not going to get too sniffy about that sort of thing. But on the other hand I have a lot of hobbies to deal with, my home brewing and my roller derby team. Who knows, I might never get the time to pay very much top-rate tax.
I urge all those libertarians and right-wingers who worry about progressive taxation to stop worrying and embrace demotivation. Support your local Great Stagnation.
But what does stealing have to do with taxes?
ReplyDeleteI would argue that the dispensation of tax revenue makes at least some portion of taxation indistinguishable from money stolen in the traditional sense.
I live in Portland, Oregon, where taxes for “sewers” are used to build bike lanes and fund the Rose Festival. Bike lanes are great. I use them often. The Rose Festival is really neat. Charging me double for a service I cannot opt out of, then using half the revenue for something other than that thing, is stealing.
If taxes are something you owe to the city than it does not matter what they spend it on (its certainly a case of brute dishonesty, but do you have proof the money specifically taxed for sewer repair is used to pave bike lanes?).
ReplyDeleteIf taxes are something you don't owe to the city than it certainly is theft.
Of course it all depends on the extent to which the city (or any government) has a legitimate claim to your earnings.
Prateek,
ReplyDeleteYou are acting as though governments don't need to be funded and that funding isn't a "public issue" and that the issue of progressive vs regressive taxation is just an issue of being a "busybody".
Also, this article overlooks the fact that as a whole taxation, when all levels of government are taken into account are regressive and that progressive federal taxation would help balance things out a little.
Andrew, if you want to talk about government solvency, talk about government solvency.
ReplyDeleteIf you want to talk about changing the patterns of income in society, talk about changing the patterns of income in society.
But don't talk from both sides of your mouth. We can't just keep shifting goal posts on the taxation issue. Are taxes for solvency or for satisfying third party philosophical opinions on society? Since the discussion assumes it is the latter, I merely said it was a trivial matter and involved being nothing other than a busybody.
Prateek is of-course correct. If government charge for services then the simplest and most logical tax would be a poll tax. But, I doubt Andrew would like that.
ReplyDelete"its certainly a case of brute dishonesty"
ReplyDeleteIn the UK we also have this routine lying by the government about the purpose of taxation.
I like it when the left complain about corporations lying. Normally they have very little evidence, just a few commercials that may be misleading. The state however lies routinely and this never warrants a mention. Even most Libertarians don't mention it.
Wait, what? How are "government solvency" and how you keep the government solvent not the same issue?
ReplyDeleteYour really confuse initial first post tried to act like the tax code isn't a "public issue" to be publicly debated. It is, regardless of this arbitrary distinction you are making.
Unless you are taking the micro101 position that the poll tax is the most efficient and there is no further discussion about taxes needed.
I was just commenting on the realities of income distribution. The issue of taxation only came up tangentially, not as the main issue, in the original blog post.
ReplyDeleteMost of us don't care how much money other people have. Many people tolerate watching football or baseball, with mediocre millionaires running across the field. They don't get irritated or angry when Carlos Tevez refuses to play even when he is paid 200,000 euros a week. And I did not know a single child in school who cared about his teachers being better paid than his parents, if they were.
So when no average person really cares in day-to-day life how much money other people have, then there is no point in discussing it. It does not bother anyone's moral sentiments, because for a lot of us, the marginal happiness derived from every additional dollar is zero. Who. The. Hell. Cares?
"In the UK we also have this routine lying by the government about the purpose of taxation."
ReplyDeleteI've always assumed its going towards funding some form of government activities. If its something I owe to them I wouldn't care much what they do with it after the fact. I make use of its services, the legal system, and even abuse these to a certain unavoidable extent as well. If the private market might make bring me these services more efficiently thats be nice, but as is thats just fantasizing and it'd be pretty immoral to cut myself off from civil society in protest.
"I like it when the left complain about corporations lying. Normally they have very little evidence, just a few commercials that may be misleading. The state however lies routinely and this never warrants a mention. Even most Libertarians don't mention it."
Both lie pretty routinely depending on the actor in question. What I find more curious is the lengths people go to get rid of the possibility that someone on their own team might do something wrong. You noted an example of those on the Left and a lot of wishful thinking, but we see the same thing on the right whenever anybody mentions the possibility of a private sector abuse (as proven by your own "never backed up by any evidence" comment). How about the radical notion that it is not government or corporations that lie, but that these things are a part of human nature? This is contrary to the common sense of both biases, but the source of these lies is human and it is not the case that "the state" nor "evil corporations" have somehow corrupted man.
Prateek:
ReplyDelete"Many people tolerate watching football or baseball, with mediocre millionaires running across the field. They don't get irritated or angry when Carlos Tevez refuses to play even when he is paid 200,000 euros a week."
From the experience of American gridiron football (some people call it "handegg," heh), and baseball and basketball, it is pretty clear that many ticket holders begrudge their high prices to overpaid athletes, to some degree.
At the same time, most people recognize also that the same athletes can reinvigorate a franchise. For the owners, that means money from contracts and merchandise. For the players, that means more attention and more good games.
So I would disagree with your argument that people don't care when an expensive player gets a bad season (maybe this has something to do with the more local nature of club ownership in the States, as opposed to the European football clubs with ownership in Asia or the Arabian Peninsula).
"So when no average person really cares in day-to-day life how much money other people have, then there is no point in discussing it."
You've made the mistake of trying to form an argument from the conflation of controversial statements. The first statement goes "no average person really cares how much money other people have." Well, the OWS protests would seem to belie that claim. The bigger point which you sidestep by putting it this way is whether people should care: As Chester Bowles says, "A bigger slice of a smaller pie is still more pie."
People might not, as individuals, understand whether policies targeting unbalanced wealth distribution or "too big to fail" banks matter, but surely you wouldn't argue that their ignorance should be the basis of a serious policy discussion!
Warren,
ReplyDeleteI think we both accept that lying is part of the human condition. I agree that the both governments and businesses regularly try to lie. We could argue all day about who lies more, it's like asking if men or women lie more, gathering statistics on it would not be easy. But, the costs and benefits to both sides are quite different. Businesses can be taken through the courts if they lie, with great cost to them. Governments however regulate themselves, the law is much less of a limit to them. That's why we have this situation where there are well-known government lies.
For example, in Britain there is "national insurance" which we are told pay for insurance like services such as unemployment benefit and healthcare. In fact, it is treated just like any other tax.
It's perfectly obvious that what the government tax from us is going towards government services of some sort. Whether we believe we are morally obliged to pay a tax is a separate issue to the honesty of the government's claims. Your viewpoint seems to be "If I should pay taxes then what do I care what pretext the government give?" I do care because I think it shows something about the honesty of those who rule us. For me it's just the same with businesses. If a business makes claims I think are lies then I'll take that into account as a negative if I'm buying in that market.
"but surely you wouldn't argue that their ignorance should be the basis of a serious policy discussion!"
ReplyDeleteSilly paternalism.
Now we have switched goal posts again. First we say that incomes of people should be changed, because it satisfies third-party opinions of most people.
But then, we switch goalposts and say that people SHOULD have third-party opinions of how much others earn, and if they don't, they don't know what is good for themselves.
Okay, so if how much money other people earn is not what most people care about, then it does not matter, because you care about it, and your third party opinions matter more. What a futile, pointless venture. You want a policy that benefits nobody and nobody wanted, because it keeps your third party preferences.
Come on. Occupy Wall Street was a movement started by a Canadian group called Adbusters - a self-declared "hipster" magazine advocating a postcapitalist utopia. The average person is not a hipster, by the very definition of hipster. It started as a fringe movement, which was later joined by coalition agendas of people with different demands. It still stands that in day to day life, no sane person cares about how much money complete strangers have.
It doesn't even register to most of us.
Current,
ReplyDeleteI completely agree on your point re: government and businesses. I'm just trying to say that they are both human institutions and will suffer from this same problem without good incentives or moral people to counteract them. The difference in our ability to hold government to account on a regular basis is certainly important and I wasn't trying to certainly wasn't trying to side step it. That is, I would think, is a much better point against people on the left than the one I see some people make.
re: taxation I'm afraidI might have been a bit haughty with my position. You are certainly correct that the way the institutions conduct themselves matters. Your correct that I'm not making the moral claim that we have an *obligation* to pay taxes, but assuming we did for the sake of argument I would say that a bit of potency in collection is perfectly justified in certain circumstances (I'll readily concede, Current, that the example of national health insurance and some own personal tax stories I could tell might be stretching line a bit).
"For me it's just the same with businesses. If a business makes claims I think are lies then I'll take that into account as a negative if I'm buying in that market."
Fair point and I certainly try to do the same for governments whenever possible.
So I *think* we're much closer than I thought at first.
I agree Warren, our views are much closer that we first thought.
ReplyDelete