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Philosophy of taxes

  1. Jul 29, 2004 #1

    Njorl

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    I contend that there is no fairness in taxation. I'm not saying that taxes are unfair. On the contrary, I am saying fairness does not enter into the matter.

    There is a theory that all wealth is fortuitous, or "lucky". There is the extreme case of the people who win the lottery, or inherit wealth, but that is a small fraction. There are also gifted people, luck in one's genetics is also luck.

    However, most wealthy people became rich through a lifetime of hard work. Then you must ask why people work hard. Is it their character, their psyche, their upbringing? All of these are determined by circumstance. Nobody filled out a form before they were born and checked the "hard-working" box instead of the "lazy" box. So, even wealth earned through a lifetime of hard work is "lucky" wealth.

    This, I believe, eliminates any premise that the tax system should be fair.

    This is not to say that anything goes. There is a moral imperitive for the tax system. It should benefit the society as much as possible, as far as that benefit can be perceived. At first glance, this may look like a justification for Marxism. It isn't, unless you can make the case that Marxism is best for society. I don't think that is so. Clearly, society benefits from hard work and from talents used well. If society wants those benefits, it should monetarily reward those who practice them.

    In a fictional, purely capitalist society, those rewards would only be handed out through the marketplace. You would wind up with a small number of extremely wealthy individuals, and a large mass of extremely unhappy people. The result would likely be the violent destruction of society, or enormous resources devoted to preventing it.

    Graduated taxation serves an amelioritive function in our society. Those who benefit most from a free and ordered society pay most for the maintenance of it. Those who have the least "lucky" wealth are actually reimbursed to give them more of a stake in society. The majority of us pay for the maintenance of our society, but not as much as the wealthiest do.

    Sorry if this seems pedantic. I have found that debates about taxes usually devolve into "the wealthy can afford it" or "it is unfair to be taxed so harshly". Neither argument has merit. Tax the wealthy too harshly, and they willl stop creating wealth. Tax them too leniently, and either society will be unable to govern itself, or the rest of society will be so harshly taxed that it will rebel. It is entirely a matter of practicality. Fairness never enters into it. A 99% tax rate is not unfair. Stupid, it is, but not unfair.

    Njorl
     
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  3. Jul 29, 2004 #2

    loseyourname

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    What's wrong with user fees?
     
  4. Jul 29, 2004 #3
    So Lance Armstrong was just lucky to win six Tours de France. And Martin Luther King, Jr. was just lucky when he established the civil rights movement. Audie Murphy was just lucky when he won the Medal of Honor. Saddam Hussein was just unlucky when he slaughtered hundreds of thousands of people. Adolf Hitler was just unlucky when he deported the Jews to concentration camps. There is no achievement. There is no barbarity. We are all just pawns being played by the hand of fortune.

    You cannot deny achievement on one hand, and then assign blame and responsibility on the other.
     
  5. Jul 29, 2004 #4

    russ_watters

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    Sounds like your opinion - philosophically anyway - matches mine reasonably well (though I'm a bit less pessimistic abou hard work being luck).

    The question, however, is: graduated how much? Not an easy question.
     
  6. Jul 29, 2004 #5
    I can think of no better excuse to fail than Njorl's argument. Care to contradict?
     
  7. Jul 29, 2004 #6

    selfAdjoint

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    I think this "most wealthy people get that way through a lifetime of hard work" is phoney. Many more people work hard for a lifetime and don't get rich. What's the difference? Well you already pointed out that genes are a matter of luck, and with it an unknowable but probably large proportion of cleverness and drive. And for the rest it's strictly luck, one entrepreneur succeeds while six others fail.

    The people who have large amounts of money all want to believe that they deserve it and that any taxes that take part of it away are unjust. But I deny their premise.
     
  8. Jul 29, 2004 #7
    The problem with taxes is the incredible waste that goes along with it.

    I did my own tax research and found that the average US taxpayer paid 37% of their income in taxes, based on data from the CIA World Factbook.

    The average taxpayer could work until sometime around may 7th (starting in january) and never keep a penny if they had to pay their taxes before keeping it. Not only is 1/3 of their working life taken from their hands, but the average person has no control over what's done with it. Politicians have become experts at squandering tax dollars on whatever will get them votes, whether that's free prescription medicine or building an indoor rainforest somewhere I'll never care to visit. I for one think the US government has overstepped its constitutional powers and its time to fall back some.
     
  9. Jul 30, 2004 #8

    Njorl

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    Failure is not to society's benefit, and so will not be rewarded. Blame is irrelevant.

    Njorl
     
  10. Jul 30, 2004 #9

    amp

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    Njorl, thats an insightful summary of a spiritual concept of civil-societal administration and it is a wise policy because many times those with the least 'luck' turn out to be the ones with the most to give.
     
  11. Jul 30, 2004 #10

    selfAdjoint

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    Njorl and Amp - I agree with what you said!
     
  12. Jul 30, 2004 #11
    Not only do you have to work hard, you also have to work smart.

    However you slice it, this is the No Free Will philosophy.

    As long as people are driven by their own self-esteem, "blame" (as you call it) will always be relevant. People don't work hard just to get ahead, but also to establish their own self-worth. You are taking self-worth away from them when you declare their accomplishments a matter of luck.

    Pride comes not only from possessing something, but being involved in obtaining the possession, whether it be athletic skill, education, or material objects (such as custom hot rods). You cannot take away that pride without adversely affecting productivity.
     
    Last edited: Jul 30, 2004
  13. Jul 30, 2004 #12
    Consider a 25% flat tax. A man who makes $1 million per year pays $250,000 to the government. A man who makes $100,000 per year pays $25,000 to the government, $225,000 less than the richer man. Sounds like a fair system that satisfies your criteria.
     
  14. Jul 30, 2004 #13

    russ_watters

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    I agree with that too, but I'm not sure its pertinent.

    However:
    How can you say that? Failure (big failures) in the U.S. is rewarded with cash: welfare, unemployment, bankrupcy.
    The counter-argument though, is that no one else deserves it either.
     
  15. Jul 30, 2004 #14

    BobG

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    I'd have to go with John on this one. Money is important when it's the difference between having necessities and not having them, being able to weather misfortune or having every misfortune turn into a major disaster. Once a person makes somewhere around $50,000 a year, they have enough money to buy as much happiness as money can buy. After that, money becomes more of a validation that you've done well than a real difference maker in your life.

    Which is precisely why Njorl's basic premise, that fairness has little relevance to how much you can tax a person, is still correct. It's easier to trade civil stability for money with someone who can cough it up than with someone who's more concerned about HOW to pay a hospital bill than whether the hospital's actually any good.
     
  16. Jul 30, 2004 #15

    Njorl

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    Welfare and unemployment are at best consolation prizes. Bankruptcy is certainly no reward. Can you seriously contend that any of these are remotely as satisfying as living a secure, middle-class life?

    Njorl
     
  17. Jul 30, 2004 #16

    Njorl

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    Believe me, $50,000 a year is not all of the happiness money can buy. In many parts of the country, it is not even buying much in the way of a house, let alone happiness.

    In my county, a family of 4 can expect to pay about $1700 for mortgage that is purchased through low-income housing, property taxes and property insurance, $600/mo for food, $300/mo car payment, insurance and gas, $200 electric and heat, $30 water, $20 phone. That's about $2850 per month. That's about all the take home pay there is for $50k/yr.

    And that's just Montgomery county Maryland. New York and San Francisco have much higher costs of living.

    Njorl
     
  18. Jul 30, 2004 #17

    Njorl

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    I wouldn't call it unfair. My point is fairness is moot. The only question is how well does it work? Does it cause the economy to grow? Does it keep the people happy?

    I would argue that even a regressive tax (everyone pays their first $15,000 as tax) was acceptable if it worked. Of course, no regressive tax is going to work any time in the near future. For such to be true, we would all need to be wealthy.

    Njorl
     
  19. Jul 30, 2004 #18

    BobG

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    Uh, yeah. Putting dollar amounts out there probably doesn't tell much since cost of living can vary so much. Maryland's a lot more expensive than Colorado (although I'd sure love the thought of a $30 water bill).

    But it does bring up a problem with federal tax rates. People are effectively pushed to a higher tax bracket in some areas than others with the same equivalent income. I.e. - a person in Omaha making 30 or 35K is being taxed at lower rate than someone making 50K in the DC area, in spite of the two incomes being roughly equivalent in buying power.
     
  20. Jul 30, 2004 #19

    russ_watters

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    Certainly living a secure middle class life is a better "prize" but a "consolation prize" is still a "prize." And those consolation prizes have alternatives too: the alternative to bankrupcy, for example, is having the bank take your house.
     
  21. Jul 30, 2004 #20
    So, if poor people can't afford the user fees, they get no police protection?

    How would user fees work for an issue such as clean air? "Step right up, fill your air tanks".
     
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