NationStates Jolt Archive

In your opinion, should rich people be taxed more than poor people, and why?

The poor and rich should both have to pay similar tax rates.

It is only fair.

For the definition of fair to apply to taxation, I can see one of three possiblities. The first is to have everyone charged at a rate so that we all have the same amount of money left at the end. The second would be where we are all charged at the same percentage rate. The third would be where we are all charged the same monetary rate. I think that the second is the only one that could be supported ethically, so that is the one we should go with.

The wealthy should be taxed higher due to the marginal utility of a dollar. Dollars should be accounted for by their utility and earning potential.

Where a low level dollar (say in the 20 - 30k range) is very inflexible and has very little earning potential, an upper level dollar (say 250k and up) has a great deal of liquidity and earning potential.

In your opinion, should rich people be taxed more than poor people, and why?
all citizens should pay equally, because the government belongs equally to all citizens. we are all equally responsible for our government; rich people do not have greater or lesser responsibility just because they are rich.

Scheme one
There should be a band of earnings which attract no taxation at all. This should be sufficient to obtain housing, food, education, clothing, transport and other essentials (toilet paper etc) for the household. After this there should be a flat rate of income taxation, of somewhwere between 15% and 30% (depends on the services that the government provide.) The lower this is the better.

Scheme two
No income tax whatsoever for anyone. Tax is purchase tax. You pay tax to buy a car, you pay tax to drink a beer etc. No taxation on staple foodstuffs. No taxation on school materials or books, no taxation on medicines, no taxation on basic clothing.
Basic clothing would be defined by the price being no more than twice the raw material costs, and exclude anything made of some materials (silk, alligatior skin, etc.)
Everything else is taxed. The more luxuries you buy, the more tax you pay. There can be scales so that a basic GM or Ford car has a tax of say 15% but a Lexus or Aston Martin has some 50% tax. Lots of options here. Tax the rich, but only if they spend the money. No loss of work motivation.

The wealthy should be taxed higher due to the marginal utility of a dollar. Dollars should be accounted for by their utility and earning potential.

Where a low level dollar (say in the 20 - 30k range) is very inflexible and has very little earning potential, an upper level dollar (say 250k and up) has a great deal of liquidity and earning potential.
Mmm, i like this diminishing marginal utility argument.

all citizens should pay equally, because the government belongs equally to all citizens. we are all equally responsible for our government; rich people do not have greater or lesser responsibility just because they are rich.

For your argument:

Wealthy people depend more on government protection and regulation than poor people, so they consume more government services than do the poor. Therefore, they should pay more.

But that isn't my actual justification for the graduated income tax.

Scheme one
There should be a band of earnings which attract no taxation at all. This should be sufficient to obtain housing, food, education, clothing, transport and other essentials (toilet paper etc) for the household. After this there should be a flat rate of income taxation, of somewhwere between 15% and 30% (depends on the services that the government provide.) The lower this is the better.

Scheme two
No income tax whatsoever for anyone. Tax is purchase tax. You pay tax to buy a car, you pay tax to drink a beer etc. No taxation on staple foodstuffs. No taxation on school materials or books, no taxation on medicines, no taxation on basic clothing.
Basic clothing would be defined by the price being no more than twice the raw material costs, and exclude anything made of some materials (silk, alligatior skin, etc.)
Everything else is taxed. The more luxuries you buy, the more tax you pay. There can be scales so that a basic GM or Ford car has a tax of say 15% but a Lexus or Aston Martin has some 50% tax. Lots of options here. Tax the rich, but only if they spend the money. No loss of work motivation.

I would not mind a sales tax over an income tax, as long as it is graduated for luxury. I do worry that a large sales tax on the sale of luxury items would put a strain on consumption instead of production. I think it is just a substitution of problems.

If it can be established that a graduated sales tax would not lead to wealth hording and a diminished money supply, then I would be all for it.

VO
I think that an explanation of marginal utility would be useful here.
All figures are just for example, no implication is intended of real earnings of anyone anywhere.

Imagine that you earn 50 units a week. Walking home from work you find a 50 unit note. This is worth a lot to you, it will make a lot of difference to your life, It has a high utility.

Now imagine that you earn 500 units a week. In the car park you find a 50 unit note. Now this is nice, but it will not do as much for you as it did for the guy above. It has some utility.

Pipe dream that you earn 5000 units a week. You find a 50 unit note in the private escalator that takes you to your penthouse flat. This is probably not really worth bending over to pick up, but what the heck, you need the exercise. What is it worth to you, almost nothing.

Now imagine that instead of finding the 50 units, each one had to pay 10 units as tax. Who has their lifestyle affected, who suffers for this. Marginal utility, the amount of difference that this value makes to their lives will tell you the answer.
Hence sliding tax scales.

(I actually disagree with progressive taxation, but for other reasons)

I would not mind a sales tax over an income tax, as long as it is graduated for luxury. I do worry that a large sales tax on the sale of luxury items would put a strain on consumption instead of production. I think it is just a substitution of problems.

If it can be established that a graduated sales tax would not lead to wealth hording and a diminished money supply, then I would be all for it.

You tax unearned income at the maximum rate. After all you are buying money, that is the ultimate luxury. This would eliminate the hoarding part.

The problems are in deciding what is a luxury. Is a gun a luxury (*ducks for cover*)? If so, how much of a luxury. But all the same these are political decisions that can be evaluated through the ballot box.

the rich should be taxed more than the poor. they have the money. they are benifitting most by the way that the economy is set up

within reason

there is no sense making tax to punish the rich for being rich. i see no sense in taxing to bring everyone to the same general income level. that just destroys the engine of our economy by making monetary ambition useless

the poor should, and DO, pay some tax. but what is the sense of taxing people who are so poor that any loss of money has to be made up with social programs? im in favor of the current US income tax policy that sets a minimum income below which you dont pay income tax and which, if you work full time and have children, will pay you back more money than you paid in (if you make under that minimum) to reward you for making the effort.

i HATE using tax for social engineering. i oppose the high tax on cigarrettes. i dont think "luxuries" should be taxed higher than other items.

i dont think that all avenues for potential government revenue (tax) should be pursued. we should have a budget based on what we NEED and what can be paid for by taking a reasonable amount of money from the economy as tax.
there are good things that should just not be done by government simply because we dont have the money to pay for them.

Progressive, the rich have more money they don't need, it's only fair, even if they don't use services as much. The poor the exploit probably need the services they fund using the money that they stole from the poor in the first place.

*snip*

While it was simplistic, that was a good analogy.

People also need to remember that with a graduated tax, that people do get taxed the same amount. Everybody pays the same tax rate on each of the tax brackets. So even a millionaire pays low taxes on the first 20,000 dollars of income he/she claims.

My ideal would be a high basic deduction (at the very least equal to the poverty line, but better around $20,000 per household) and a flat tax for all earnings above that amount. Simplify the tax code, remove a lot of the exploitable loopholes and bring the whole business down to the level of the 1040EZ.

This addresses the problem of decreasing utility, and also of equality of contribution. Everybody gets the same basic deduction and everybody pays the same percentage on earnings above that amount. Failing this, I'm fine with a progressive tax scale as it has sort of the same effect in terms of protecting the lower wage earners from having the bread taxed off their table, though it does not present the same appearance of fairness.

Progressive, the rich have more money they don't need, it's only fair, even if they don't use services as much. The poor the exploit probably need the services they fund using the money that they stole from the poor in the first place.

There is a fair exchange of labor for goods in a capitalism, and in a true free market, the value of the goods a person receives will match the labor and capital they provide.

No, they shouldn't be taxed more. But the truley impoverished should have many, many more deductions.

The second part of my answer was vaguely sarcastic, I'm not that stupid!
But I feel there is some degree of truth in it, but that is a very simplistic way of putting it, and I'm not anti-capitalist.

You tax unearned income at the maximum rate. After all you are buying money, that is the ultimate luxury. This would eliminate the hoarding part.

Investment is very important to the economy, if you eliminate the benefits of investment you would seriously damage the economy.

The problems are in deciding what is a luxury. Is a gun a luxury (*ducks for cover*)? If so, how much of a luxury. But all the same these are political decisions that can be evaluated through the ballot box.

That is a problem, but a problem that could be decided indirectly through democracy. We would have to rely on politicians to make unbiased and honest judgements, and that is something I don't like to to do.

In your opinion, should rich people be taxed more than poor people, and why?

You should not be required to pay the Gov. for any more than the services you receive from it. Anything else is re-distribution of wealth a.k.a. stealing under the auspices of a legal action.

You should not be required to pay the Gov. for any more than the services you receive from it. Anything else is re-distribution of wealth a.k.a. stealing under the auspices of a legal action.
You're still talking straight down the party line. Did you click that link (http://www.lp.org) I sent you earlier?

One other point (I'm repeating myself from some other tax thread) is that it is a spendy business to run a country. The U.S. needs x billion bucks a year to run the programs it considers essential. That money's got to come from somewhere and, because of the increasing consolidation of wealth in the country, the bottom quartiles frankly don't got it. Even if we did tax the pants off the poor, there's still the consideration of how much of the wealth of the rich comes through the state. I'm not talking about Halliburton getting a cherry contract, I'm talking about how much the CEO of UPS profits from the federal interstates compared to how much I profit from the federal interstates; how much Boeing or American Airlines profit from the Port Authority compared to how much I do; how much Microsoft profits from copyright law compared to how much I do; how much any company profits from a publically-educated pool of prospective employees. These guys use governmental services at a much greater rate than I do.

You're still talking straight down the party line. Did you click that link (http://www.lp.org) I sent you earlier?

The whole "free market" thing has to be done with more caution than the party suggests. Also, the lack of morality in its leadership is of concern to me as well. I am very strongly anti-abortion. Don't believe the Gov. should be doing marriage as it is a religous institution and shouldn't have anything to do with Gov.

Also, a minimal level of welfare, particularly for individuals with severe mental, developemental and physical disabilities will always be necessary as families, churches and local communities have abdicated that responsibility and will probably never take it back.

The whole "free market" thing has to be done with more caution than the party suggests. Also, the lack of morality in its leadership is of concern to me as well. I am very strongly anti-abortion. Don't believe the Gov. should be doing marriage as it is a religous institution and shouldn't have anything to do with Gov.

Also, a minimal level of welfare, particularly for individuals with severe mental, developemental and physical disabilities will always be necessary as families, churches and local communities have abdicated that responsibility and will probably never take it back.
Well, I respect your differences, but let's face it:

If Republican, Democrat, and Libertarian candidates were on the ballot, both going straight down the party line, who'd you vote for?

Also, a minimal level of welfare, particularly for individuals with severe mental, developemental and physical disabilities will always be necessary as families, churches and local communities have abdicated that responsibility and will probably never take it back.
They've abdicated it precisely because welfare was put in place. The only way to fix it is to get rid of it. It'll suck for a while but them's the breaks.

Well, I respect your differences, but let's face it:

If Republican, Democrat, and Libertarian candidates were on the ballot, both going straight down the party line, who'd you vote for?

I tend to vote Republican but not by much. They are infringing more and more on personal freedoms in the way the Dems keep infringing more and more on my pocket book.

The post that followed yours is one of the main reasons I'm unlikely to vote Libertarian. The coldness and calousness toward those with genuine needs is one of the things that is a major deteriment to the party.

They've abdicated it precisely because welfare was put in place. The only way to fix it is to get rid of it. It'll suck for a while but them's the breaks.
Agreed. But I think that community driven, tax-free charities and facilities should be given a big boost to start us off on the best foot.

Let's cut the military-industrial complex in (at least) half and offer up those billions to a better cause!
There are more solutions (and compromises) available than most people think, if a majority Libertarian government was elected.

"Pardon my capitalism."
Never noticed that in your siggy before. Sweet! T-Shirt worthy, indeed. Is that yours?

They've abdicated it precisely because welfare was put in place. The only way to fix it is to get rid of it. It'll suck for a while but them's the breaks.


People were abdicating it long before welfare. That's why it was put in place to begin with. Not saying it was a good solution or done the way it should have been, but it didn't cause the selfish disregard of others that is present in todays society. Welfare is really more of a symptom than the problem.

People were abdicating it long before welfare. That's why it was put in place to begin with. Not saying it was a good solution or done the way it should have been, but it didn't cause the selfish disregard of others that is present in todays society. Welfare is really more of a symptom than the problem.
I don't believe that the dependant class is a symptom these days. Generations of evidence.

Unfortunately it's a huge problem. Thanks Roosie!

EDIT: You never did answer my previous question PR.

I don't believe that the dependant class is a symptom these days. Generations of evidence.

Unfortunately it's a huge problem. Thanks Roosie!

EDIT: You never did answer my previous question PR.

I said I was most likely to vote Rep. but not by much. There aren't really any options out there that I believe in completely or even 50% for that matter.

In your opinion, should rich people be taxed more than poor people, and why?

In the US they already are, as they pay a higher percentage on their higher income. For example, 38% of $100,000.00 is a lot more than 20% of $30,000.00.

Also, there are poor people who pay no tax and still get a refund. How do they do that? Their income is not high enough to pay tax and they get a low-income child credit. They end up getting all the money they paid in tax back plus the child credit.

Yes I think that there should be a pretty much flat tax rate. Progressive tax policies aren't really fair.

The poor and rich should both have to pay similar tax rates.

It is only fair.
I'm agreeing with you. This is bloody disturbing.

In the US they already are, as they pay a higher percentage on their higher income. For example, 38% of $100,000.00 is a lot more than 20% of $30,000.00.

Also, there are poor people who pay no tax and still get a refund. How do they do that? Their income is not high enough to pay tax and they get a low-income child credit. They end up getting all the money they paid in tax back plus the child credit.

The wealthy still pay the 20% on that initial $30,000.

Yes I think that there should be a pretty much flat tax rate. Progressive tax policies aren't really fair.


I'm agreeing with you. This is bloody disturbing.

I have still managed to disagree with Johnny Wadd on every single issue.

And progressive tax rates are fair.

Investment is very important to the economy, if you eliminate the benefits of investment you would seriously damage the economy.



That is a problem, but a problem that could be decided indirectly through democracy. We would have to rely on politicians to make unbiased and honest judgements, and that is something I don't like to to do.

Investment is very important yes. But simply putting the money in a savings account is not investment. The bank may well invest the money in shares and capital loans etc. These should not be highly taxed, if taxed at all. You can use taxation to direct the investment to where you want it to go, to the sectors where it is needed if you go this way. If there is a shortage of mass transit services, then you cut taxation on investment in this area, and direwct the flow of capital. Government spending, effectively, without the government bureaucracy to go with it.

On the second point, of using democracy to determine what is a luxury, this could be done directly, rather than through politicians. Simply request every family to rank a list of products in order of their being essential. Collate the results, and tax accordingly. The internet could do this very well.

For your argument:

Wealthy people depend more on government protection and regulation than poor people, so they consume more government services than do the poor. Therefore, they should pay more.

But that isn't my actual justification for the graduated income tax.

Poor people consume such things as welfare, Medicaid, food stamps, and WIC. I don't think the rich depend more on "government protection." They can afford alarm systems, etc. and do not normally live in high crime areas. I do believe the poor who live in high crime areas rely more on the government for protection than the middle class or rich.

Investment is very important yes. But simply putting the money in a savings account is not investment. The bank may well invest the money in shares and capital loans etc. These should not be highly taxed, if taxed at all. You can use taxation to direct the investment to where you want it to go, to the sectors where it is needed if you go this way. If there is a shortage of mass transit services, then you cut taxation on investment in this area, and direwct the flow of capital. Government spending, effectively, without the government bureaucracy to go with it.

Banks would be very foolish to allow the money in savings accounts to just sit there, so they in turn use the money people deposit as investments in the form of loans and mortgages. While it is different, the banking system of a nation is also very important.

On the second point, of using democracy to determine what is a luxury, this could be done directly, rather than through politicians. Simply request every family to rank a list of products in order of their being essential. Collate the results, and tax accordingly. The internet could do this very well.

I can agree with you on this point.

Yes I think that there should be a pretty much flat tax rate. Progressive tax policies aren't really fair.


I'm agreeing with you. This is bloody disturbing.

I am also in agreement, but I would like you to explain why you do not find progressive taxation fair.

For me it is a matter of equality before the law. Earning a lot of money does not change this basic right of equality. To demand a higher rate of contribution from you toward society in general, than that which is demanded of others is to discriminate against you. Yes the marginal utility of the tax may be the same on a progressive scale, but the marginal utility of a pain killer is not considered when state treatments are provided, The marginal utility of providing shelter for the elderly is not considered. So why should marginal utility only be considered on one side of the equation.

Poor people consume such things as welfare, Medicaid, food stamps, and WIC. I don't think the rich depend more on "government protection." They can afford alarm systems, etc. and do not normally live in high crime areas. I do believe the poor who live in high crime areas rely more on the government for protection than the middle class or rich.

I am speaking in terms of economic security and not personal security. The government spends far far more providing for the economic security of the wealthy than it does on the poor.

I am not saying that is the way it should be, but that's the way it is and so taxes should be representative of this.

I'm a moderate on economic matters (I score around a 0 on politicalcompass.org). I think there should be a gap between rich and poor, but not too great a gap. There should be progressive taxation, but not socialism. The poor have the right to more government support, but not complete support. The rich should pay some to bring up the rest of society, but not too much.

Why I am considered a "Lefty" in America is beyond me.

...the rich have more money they don't need,...

That they are more likely to invest, which will create jobs, which will employ more people and give the poor an opportunity to get out of poverty.

I am also in agreement, but I would like you to explain why you do not find progressive taxation fair.

For me it is a matter of equality before the law. Earning a lot of money does not change this basic right of equality. To demand a higher rate of contribution from you toward society in general, than that which is demanded of others is to discriminate against you. Yes the marginal utility of the tax may be the same on a progressive scale, but the marginal utility of a pain killer is not considered when state treatments are provided, The marginal utility of providing shelter for the elderly is not considered. So why should marginal utility only be considered on one side of the equation.

First, the people aren't being taxed, the money is. Under a graduated tax there is no differentiation made for the person only the quality of the dollar.

I don't quite understand your arguments on marginal utility, though.

A flat tax rate is only fair. I'm not necessarily against the idea of the very lowest income earners to be given tax breaks - they need a chance to get on their feet, and to see they are providing for their family, thereby increasing their personal morale and leading to better work, aka they can pay taxes later - but someone earning $1,000,000 per annum should pay the same proportion as someone earning $30,000.

I am speaking in terms of economic security and not personal security. The government spends far far more providing for the economic security of the wealthy than it does on the poor.

I don't understand what you are trying to say. What do you mean by "economic security" and how does the government provide it? :confused:

In your opinion, should rich people be taxed more than poor people, and why?

IMO, no... poor people need all the help they can get. That said, I would favor less welfare... maybe restrict it to 3 months if you're fired (to help while you get back on your feet) and other than that, it's for people who can't work.

I'd make a law stating that the highest tax rate is 33%. I know it's arbitrary, but imo nobody should pay more than a third of his income to the government.

I don't understand what you are trying to say. What do you mean by "economic security" and how does the government provide it? :confused:

By ensuring the safety of the markets, ensuring the safety of investments, ensuring the safety of the corporations.

Also, speaking of use of government works, who uses more electricity, who uses the roads more, who uses importing and exporting more, who stands to lose more in the occurrence of a foreign invation?

I don't like using healthcare in this argument, because I don't think anyone should have to pay for it, rich or poor.

First, the people aren't being taxed, the money is. Under a graduated tax there is no differentiation made for the person only the quality of the dollar.

I don't quite understand your arguments on marginal utility, though.

True the money is being taxed. But at the same time not true. If the money did not change hands then no tax would be incurred. So it is actually the financial transaction that is being taxed. (This gets very strange if we keep heading this way.)

Marginal utility does not only aply to the dolars being taxed. It also applies to the services being provided.
Again, invented numbers for the purposes of explanation only.
The state provides 1 policeman for each ten blocks. This has an effect on crime The marginal utility of the first policeman is high. If there are already 10 policemen on patrol for each ten blocks, then adding one more will have no significant effect. Marginal utility is minimal.

In this case the marginal utility does tend to be taken into consideration, as there is no set of basic rights involved. Now let us switch the service to health.

An eighteen year old receives, from the state health services, a kidney transplant. The marginal utility is high. He can now be a fully contributing member of the society for the rest of his life

An eighty year old receives, from the state health services, a kidney transplant. The marginal utility is low. He can contribute more to society, but not for very long in al probability.

How does the state decide which operation to fund. It does it on the basis of a waiting list normally. No consideration of the marginal utility of the operation to society. Why not. Equality before the law. Both patients are human, that is sixty two years older than the other makes no difference. If this equality is to be a measure on the services side, it surely should, for ethical and moral reasons, be a measure on the contributions side. Absolute equality, not marginally adjusted equality. So taxation has to be flat rate, for ethical reasons.

*snip*

Marginal utility should be considered when administering healthcare as well.

I don't like using healthcare in this argument, because I don't think anyone should have to pay for it, rich or poor.

No thank you. I had free healthcare for 26 years. I'm now paying for it, not in dollars, but in pain. No, no thank you.

Marginal utility should be considered when administering healthcare as well.

This then becomes a moral argument about rights and equality. All I am proposing is that the same standards should be used on both sides of the equation. There are similar declining marginal return arguments for education, which imply that universities should not be government funded in any way. The same applies to public transport, to road building. Where should you conside equality as marginally adjusted and where not. I argue that either everywhere, which has some very nasty consequences, or nowhere which results in flat taxation scales.

I still prefer sales taxes rather than income taxes as it avoids this whole issue.

hey, my personal opinion is that what you can contribute, you should. That probably includes taxes. If I was a fuctining member of society instead of a high-school student, i would gladly donate to charities. Taxes are not that far different. (there's other stuff too, but in the end, its paying for stuff that other people cannot). Especially education, doesnt it need more funds? Where I live, education funds have been going downhill for years. All because people dont like taxes. If the taxes were back, I could get a decent education.
Tax=good. Progressive tax= better, since they wont need to buy proportionally more expensive food and clothing, would they?

i just politically compass-ized...
Economic Left/Right: -6.75
Social Libertarian/Authoritarian: -4.05
i'll put that in my sig soon

IK - You seem quite willing to accept the bloated budgets inherent in the system. Do you find it morally favorable to take from the rich to support government waste, or just too challenging to expend the intellectual capital on discovering and eliminating said waste.

There is a fair exchange of labor for goods in a capitalism, and in a true free market, the value of the goods a person receives will match the labor and capital they provide.
There is more to it than labor and capital - there is innovation as well.

Naturally the rich should be taxed more.

The system in capitalist countries is disproportionately skewed to benefit them. Even so, they find loopholes, and write offs, and often end up paying tax at a similar rate as those who actually need the money.

I'm in favour of a graduated tax system, with very high taxes on higher income (i.e. 70% above $250k a year) with a higher portion of tax free income (Somewhere around $20k a year).

I still prefer sales taxes rather than income taxes as it avoids this whole issue.

You seem to have taken a slippery slope argument to the concept of marginal utility.

Attempting to attain "fairness" for all does not take into account that for the poor, what is "fair" means they remain poor. In poor neighborhoods, with poor education, poor healthcare and poor foods. After all, they can only afford to pay for that much, isn't that fair? Do they have any money left over? No, of course not.

The middle class, should get the better services, better healthcare and better foods, after all that's fair. They can pay for it, isn't that fair? Do they have any money left over? Perhaps.

The rich can pay for the best services, the best healthcare, the best of everything. They can and should be able to get all of that; they can afford it, its only fair that they be allowed to. Do they have money left over? Of course.

You and I both agree that the rich shouldn't be punished for being rich, but should the poor be punished for being poor? How much money would it take from the rich to empower the poor to make strides towards REAL equity. Give them the better foods, allow them to have real healthcare and better services, better education.

The government can, in theory take some money from the rich that they do use for the basic needs of life, and funnel it through programs to the poor; to help the poor rise out of poverty. If that is not considered worth society's effort, than so be it. But I operate under the concept that the poor should be helped become middle class, the middle class should be allowed opportunities to become rich, and the rich should be allowed to enjoy their fortune without worrying about excessive taxation.

That's perhaps a very different concept then what you are purposing. That the government discard this idea and focus on maintianing the status quo, because after all; its only fair.

The trick is to assure that, at no point, do you LOSE money for having a bigger paycheck. It should always, no matter what, mean that going up in tax brackets is a good thing. Doing so makes it harder for the rich/not-rich gap to remain so strong.

(My dad knows a man who spends half the year building houses, and the other half hunting and so forth. The man would build houses more often, but he found that he didn't make any more money doing so due to the way taxes work. He could be contibuting TWICE as much to the economy through labor and the purchasing of materials etc etc etc otherwise.)

As for taxes in general, it needs to be kept in mind that the whole country benefits from some things -indirectly-.

Education, for example. I will have no kids in my lifetime, due to utter annoyance with the things. However, when I'm 80, I want to have the best damned educated doctor I can get ahold of. My taxes going towards education helps that along.

Really, one of the main issues with 'the rich' is the -pork- problem. They get a great deal more 'pork' than the middle class, and far better quality of it than the lower classes. They also get all these lovely government contracts and so forth if they grease the right wallet, which I'm fairly sure that Bob the Bum can't do.

There's also the fact that people with a lot of money can hire very good accountants. This is mostly a problem with corporations (Which megacorp only paid a single dollar in taxes recently?), but it's amazing how many ways accountants can save your money for you.

But, again, Bob the Bum can't really afford one, nor the education to do it himself.

Say there's a big rock that needs to be moved... Imagine also, that there are a group of elderly women lined up to help move this rock, and there are a group of muscular, young men also there to help move this rock...

Would you expect the elderly women to do the work? Sure, it's only fair that they help out... But honestly, shouldn't the strong men be doing most of the lifting and moving of this burden?

After all, they're the most capable of doing so, and the least likely to be hurt in doing so...

Now, apply this analogy to taxation... Those that are capable of doing more, and would be hurt less by doing more, should be doing more...

So in this sense, I can see the benefit of higher taxation of those with higher incomes...

The capitalist inside me says that we shouldn't be "punishing" the rich for being rich... But it only makes sense to expect everyone to give what they can, and the rich can give more than the poor...

Say there's a big rock that needs to be moved... Imagine also, that there are a group of elderly women lined up to help move this rock, and there are a group of muscular, young men also there to help move this rock...

Would you expect the elderly women to do the work? Sure, it's only fair that they help out... But honestly, shouldn't the strong men be doing most of the lifting and moving of this burden?

After all, they're the most capable of doing so, and the least likely to be hurt in doing so...

Now, apply this analogy to taxation... Those that are capable of doing more, and would be hurt less by doing more, should be doing more...

So in this sense, I can see the benefit of higher taxation of those with higher incomes...

The capitalist inside me says that we shouldn't be "punishing" the rich for being rich... But it only makes sense to expect everyone to give what they can, and the rich can give more than the poor...

It makes a mild amount of sense to give what you can. By the same token if you start taxing people based on what they can give we should be organizing our tax code based on IQ, GPA, SAT scores, level of education, age, physical fitness etc... But of course that is not what you meant ;)

Start taking from people what they "can" give and you'll find they won't want to work so hard merely to have it taken away from them. Say you are making 100k pre tax and take home 75k post tax. Will you put in the effort to make 120k pre tax/take home 80k? I doubt it. That might be an exaggeration, but there will be a limit to how much someone "can" give and still be willing to work.

Not that the USA is anywhere near that point mind you...

In your opinion, should rich people be taxed more than poor people, and why?

Yes they should but not directly.

The main tax income should derive from a consumer tax not income tax.

The point is, theoretically the more you consume the more tax you pay. This is a self levelling system as the rich consume more than the poor. The consumer tax rate would be the same for all.

No tax system is as simple as that and some checks and balances would be needed. For example to offset the fact that consumption of staples represents a higher percentage of poor peoples spending than that of the rich.

So at the start of the tax year everyone would receive consumer credits.
When you buy an item you can offset the tax with credits until all your annual credits are used. This ensures basic needs are not taxed for the poor.
Credits would be the same for rich and poor alike

Some items maybe exempt. Healthcare and education for example. But I guess this kind of thing depends on the type of government you have.

There is more to it than labor and capital - there is innovation as well.

Innovation is capital as well, like knowledge and skill is labor, it is intangible.

all citizens should pay equally, because the government belongs equally to all citizens. we are all equally responsible for our government; rich people do not have greater or lesser responsibility just because they are rich.
Agreed

In your opinion, should rich people be taxed more than poor people, and why?

The rich have more therefore they should pay more and screw the deductions. If you have more you should have fewer ways to keep your money...

>:(

The rich have more therefore they should pay more and screw the deductions. If you have more you should have fewer ways to keep your money...

>:(
Lol thats like the girlscouts charging you more for the cookies cause you earn more ... you get the same service but somehow you are more responsible

Lol thats like the girlscouts charging you more for the cookies cause you earn more ... you get the same service but somehow you are more responsible


Sounds like you're about ready for a consumption tax there UT??

Sounds like you're about ready for a consumption tax there UT??
Naw I don’t think that is viable either … much more of a flat tax man. Percentage is the easiest way to flatten things out in an analogue world

Well I can have alot to say on this thread but I will just choose a very naive argumet: happinesm because I hope you all think that happiness not money is the most important.

If you got a guy that makes 300000 dollar a year and you take away half of it, he can still get a lot of things that makes him happy a fancy car a fancy house and a lot of stuff, so taking the money will basicly not interfer with his happines, if of course he is not really greedy, but then no money in the world will help, because he will just want more and more and never be truelly happy.

But if you have a poor man that only makes 10000 dollar a year and you take away half of it will clearly affects his happiness. But if he with grants and/or tax reduction will only pay around 10 % in tax. He will be able to keep a car, have a ok appartment and maybee even get a vacation. Because even if things is of course evrything, but a car to take you around town and make it able to meet friends, a appartment that is not really drafty and cold and a trip can increase his happiness.

And don't worry with todays capatilistic world he will not get lazy because he will still work to get the life of the rich money, just that he will be more motivated to it know then he don't have to take the subway to work that takes over one hour and also the trip will make he more relaxe before he gets back to work.

Lol thats like the girlscouts charging you more for the cookies cause you earn more ... you get the same service but somehow you are more responsible

Rich people gain more from society than poor people do.

You seem to have taken a slippery slope argument to the concept of marginal utility.

Attempting to attain "fairness" for all does not take into account that for the poor, what is "fair" means they remain poor. In poor neighborhoods, with poor education, poor healthcare and poor foods. After all, they can only afford to pay for that much, isn't that fair? Do they have any money left over? No, of course not.

The middle class, should get the better services, better healthcare and better foods, after all that's fair. They can pay for it, isn't that fair? Do they have any money left over? Perhaps.

The rich can pay for the best services, the best healthcare, the best of everything. They can and should be able to get all of that; they can afford it, its only fair that they be allowed to. Do they have money left over? Of course.

You and I both agree that the rich shouldn't be punished for being rich, but should the poor be punished for being poor? How much money would it take from the rich to empower the poor to make strides towards REAL equity. Give them the better foods, allow them to have real healthcare and better services, better education.

The government can, in theory take some money from the rich that they do use for the basic needs of life, and funnel it through programs to the poor; to help the poor rise out of poverty. If that is not considered worth society's effort, than so be it. But I operate under the concept that the poor should be helped become middle class, the middle class should be allowed opportunities to become rich, and the rich should be allowed to enjoy their fortune without worrying about excessive taxation.

That's perhaps a very different concept then what you are purposing. That the government discard this idea and focus on maintianing the status quo, because after all; its only fair.

The points I was making in the post you quoted were ones that carried forward from where I had started the discussion with VO.
My original post on this thread was this one (http://forums.jolt.co.uk/showpost.php?p=8381378&postcount=6) wherein I suggest that income sufficient to provide the essentials should be free of taxation, or alternatively the essentials themselves should not be taxed.

The concept that the poor should be helped to become the economic middle class (to me class is a much more complex concept than just an economic ststus indicator), and the middle classes provided the opportunity to become rich is fine. The debate is about what are the best and fairest ways of doing this with regard to taxation. Progressive taxation does not assist this process in any way. Targeted government spending can assist the process, but this is independent of the revenue collection choices.

Flat income taxation eliminates any disincentive to earn more. Sales taxation rather than income taxation can be used in many ways to stimulate the local economy, therby providing better opportunities for upward mobility. There does of course, have to be downward mobility as well, and taxing sales allows the person in a slide to concentrate their resources on stopping the slide rather than on helping others up.

It is not exactly a slippery slope argument I was making about marginal utility, although it is very similar. It is an argument on balance, on fairness, on applying the same methods to both sides of the equation. In that it says that if you aply this method here, then you should apply it there it does appear like a slippery slope. The difference is that I am not advocating that it should not be applied at some point for other reasons. There is no precpice which one slides over.

There are fundamental political differences between our positions. You hold that the rich have some social responsability toward helping the poor. I believe that their responsibility is limited to not hindering. They may help if they wish, but this should be voluntary and not imposed through the state.
Given these differences we would obviously advocate different taxation policies. Yours makes sense for your beliefs, I hold that mine makes sense for my beliefs.

Rich people gain more from society than poor people do.
Market value on their skillset (I am not proposing stoping help for thoes less advantage gaining access to a better skill set )

Besides even so they PAY more then the poor with a flat tax as well ... not like we are asking for the same ammount of money

Lol thats like the girlscouts charging you more for the cookies cause you earn more ... you get the same service but somehow you are more responsible

:D Sounds good to me!!

Mmmmmmmm Cookies...:)

:D Sounds good to me!!

Mmmmmmmm Cookies...:)
Fine I dont mind geting my cookies cheep while you have to pay more for yours :p (though I dont mind donating to the girlscouts) lets say the grocery store instead

Naw I don’t think that is viable either … much more of a flat tax man. Percentage is the easiest way to flatten things out in an analogue world

I'm torn between the 2 ideas and perhaps one other. If you are paying a percentage those with greater wealth still pay significantly more than with lesser wealth.

The other idea that has occurred to me is a truly flat tax i.e. it costs each citizen $3000.00 or some other more accurate number based on gov. cost per person per year to be a citizen. With possible exceptions for the extremely poor.

Rich people gain more from society than poor people do.

Says who. If I have a billion in the bank but don't use any more of it than someone who makes $20K and make sizeable donations to those in need, it is possible that I would get far less from society than I put into it.

In your opinion, should rich people be taxed more than poor people, and why?
Although I'm far, far from being rich, in monetary terms anyway, I've always wondered why it's ok to penalize the more successful for being ... well ... more successful. However, there is the problem of the accumulation of vast wealth which can then be used to perpetuate vast wealth, sometimes to the detriment of the rest of us. I do not favor repealing the inheritance tax for this very reason.

Traditionally, as a country matures, the accumulation of wealth into the hands of a very few has caused significant disruption to economic and political systems, yet freedom implies that people keep that which they have worked for.

I think a "flat tax" which requires everyone to pay a set percentage of their income from all sources ( together with the total elimination of exemptions and deductions ), a base-line cuttoff below which people pay no income tax and an even lower base-line where there is a "negative income tax," and the continuing use of inheritance taxes might be best.

I'm torn between the 2 ideas and perhaps one other. If you are paying a percentage those with greater wealth still pay significantly more than with lesser wealth.

The other idea that has occurred to me is a truly flat tax i.e. it costs each citizen $3000.00 or some other more accurate number based on gov. cost per person per year to be a citizen. With possible exceptions for the extremely poor.
While that seems more fair a flat percentage is easier and reflects ability to pay better


Those that don’t like a flat rate tax I have noticed generally think of it almost as a fixed amount tax. At lets say 7 percent the rich are paying WAY more in hard money then those of a lower class.

I don’t get why percentages should be adjusted … they are already paying way more just for having the money.

Says who. If I have a billion in the bank but don't use any more of it than someone who makes $20K and make sizeable donations to those in need, it is possible that I would get far less from society than I put into it.

That billion dollars would be produced, backed, and insured by the government. Not only that, it would be stored by the government, and accruing interest through the government. Now, were you to give it all away, that would be a tax deduction and you would not have to pay taxes on it.

While that seems more fair a flat percentage is easier and reflects ability to pay better


Those that don’t like a flat rate tax I have noticed generally think of it almost as a fixed amount tax. At lets say 7 percent the rich are paying WAY more in hard money then those of a lower class.

I don’t get why percentages should be adjusted … they are already paying way more just for having the money.


Actually, you can't get easier than to say everyone with an income of 20K or more pays 3k period is about as easy a tax code as is possible to create. It is also treats us all equally before the law rather than penalizing the successful.

Market value on their skillset (I am not proposing stoping help for thoes less advantage gaining access to a better skill set )

Besides even so they PAY more then the poor with a flat tax as well ... not like we are asking for the same ammount of money

Then refer to my marginal utility argument.

That billion dollars would be produced, backed, and insured by the government. Not only that, it would be stored by the government, and accruing interest through the government. Now, were you to give it all away, that would be a tax deduction and you would not have to pay taxes on it.

Fine, I keep hire my own staff to guard real property like gold, silver, platinum,, whatever and never use the FDIC. And besides, in the first senario, if I contribute more than I cost, who cares if the Gov. is backing, storing and accruing interest, though I don't know that the Gov. has a major role in accruing interest, that part depends on how and where I invest it.

Actually, you can't get easier than to say everyone with an income of 20K or more pays 3k period is about as easy a tax code as is possible to create. It is also treats us all equally before the law rather than penalizing the successful.

That's a negatory, good buddy. FY 2005 U.S. Budget forsees 2,036 billion in receipts, 2,400 billion in expenditures. This means that if every man, woman, child, and retiree in the U.S. were paying an equal, flat tax (not a flat percentage, but a flat amount), they'd have to pony up around $8,000 each. Regardless of income. Once you start ruling out all people below $20,000, you lose the kids, 2/3 of retirees, and minimum wage earners. Which would put the actual "flat rate tax" closer to $12,000-$16,000 per worker.

The reason it either has to be a flat percentage or a progressive scale is that low wage earners don't have the loot.

That's a negatory, good buddy. FY 2005 U.S. Budget forsees 2,036 billion in receipts, 2,400 billion in expenditures. This means that if every man, woman, child, and retiree in the U.S. were paying an equal, flat tax (not a flat percentage, but a flat amount), they'd have to pony up around $8,000 each. Regardless of income. Once you start ruling out all people below $20,000, you lose the kids, 2/3 of retirees, and minimum wage earners. Which would put the actual "flat rate tax" closer to $12,000-$16,000 per worker.

The reason it either has to be a flat percentage or a progressive scale is that low wage earners don't have the loot.

Another clear demonstration that the Gov. is way WAY WAY too big.

I'm not saying that we could or should do this overnight. I'm just saying that this is the fairest, most equal, and simplist method of taxation.

Another clear demonstration that the Gov. is way WAY WAY too big.

I'm not saying that we could or should do this overnight. I'm just saying that this is the fairest, most equal, and simplist method of taxation.

No it isn't. It absolutely fails to take into account who uses and benefits from government services.

No it isn't. It absolutely fails to take into account who uses and benefits from government services.

You mean like those on Social Security Disabilility, Social Security Retirement, Supplimental Security Income, Medicare, Medicaid, WIC, TANF, Health Dept. resources, tax credits, home heating credits, every citizen who's freedom is protected by the military, those living in the prison system just to name a few??

Yes, I'm very much opposed to Gov. subsidizing business and providing care for the wealthy. That should be cut, but simply being wealthy does not entitle the Gov. or anyone else to redistribute ones wealth against that persons wishes.

That billion dollars would be produced, backed, and insured by the government. Not only that, it would be stored by the government, and accruing interest through the government. Now, were you to give it all away, that would be a tax deduction and you would not have to pay taxes on it.
Bzzzzt! Wrong!

The government does not create wealth, nor does it print a dollar for every dollar of value circulating. Your production theory does not hold water.

The US dollar is backed by the government but that has not always been so. It once was backed by silver. now it is a legal tender, for all debts, public and pivate. It is not backed by anything. The government can print as much as it wishes. It is simply a measure of value, no different than a measure of length or weight. The government sets the standards of those too, but it does not back every pound that your head weights. What would it back it with??

That said, your money is not insured by the government. If you burn up a $100 bill the government will not give you a new one. If you place your money in a bank it is insured by a network of banks with the federal reserve on the hook as a backup. There is a limit to that insurance of $100,000, anything over is uninsured. $100 bones is not very much. Meanwhile there are many private investments such as money market, fixed annuities, and corporate bonds which offer fixed principal without government backing.

The government does not 'store' money - which may be a shock to you. Currency which is not in circulation is destroyed by the reserve. Static currency is useless. There is no mountain of cash sitting around.

Also, interest paid on bank deposits does not come from the government. it comes from the bank. Private parties are responsible for all other interest payments for investments save t bills, t bonds and t notes, savings bonds and municipals.

When someone gives money away it does not always result in a tax deduction. There are gift taxes if it is given to an individual - regardless of their need. C4 charities (such as social clubs, political committees, etc) are not tax deductible. Only C3 charities are deductible.

In your opinion, should rich people be taxed more than poor people, and why?

Why should those who have worked hard in order to attain that wealth have to subsidise those who havent?

Why should the talented have to pay for the talentless?

Why should those who have worked hard in order to attain that wealth have to subsidise those who havent?

Why should the talented have to pay for the talentless?
Inversely, why should those with modest income be denied the opportunity to participate in the funding of the government?

Originally, voting was limited to land-owners. They paid the only taxes. The logic being that the people paying should be the ones deciding how it is spent. (Remember, they fought to end taxation without representation?)

Now we are moving more and more back into that direction. Half the taxes are paid by only five percent of taxpayors. People who do not pay any tax have as much say as those who pay it all. It may not be taxation without representation, but it is getting bloody close when the majority taxpayor's vote is only 1/20th of the total votes considered.

Yes, rich people don't spend their money often, why can't it be used?

Yes, rich people don't spend their money often, why can't it be used?
It IS used. Who do you think buys tbills tbonds and t notes? Who do you think invests in the businesses where you work? Who do you think loans the bank money to loan to you to buy a house? Getting it yet? That is the beauty of capitalism.

Oh, and wealthy people spend PLENTY of money. And THAT is very good for the economy.

The government does not create wealth, nor does it print a dollar for every dollar of value circulating. Your production theory does not hold water.

It does not produce wealth, but it gives wealth a monetary value. The monetary value provides a great deal of liquidity which is of decidely more value to the wealthy than it is to the poor.

The US dollar is backed by the government but that has not always been so. It once was backed by silver. now it is a legal tender, for all debts, public and pivate. It is not backed by anything. The government can print as much as it wishes. It is simply a measure of value, no different than a measure of length or weight. The government sets the standards of those too, but it does not back every pound that your head weights. What would it back it with??

The US Dollar is backed by the US government. The actions of the Fed are responsible for determining the value of the dollar. It regulates your dollar through the monetary policy, by issueing financial instruments and resolving debt. If the government decided to start defaulting on its debt, your dollar would be worthless.

That said, your money is not insured by the government. If you burn up a $100 bill the government will not give you a new one. If you place your money in a bank it is insured by a network of banks with the federal reserve on the hook as a backup. There is a limit to that insurance of $100,000, anything over is uninsured. $100 bones is not very much. Meanwhile there are many private investments such as money market, fixed annuities, and corporate bonds which offer fixed principal without government backing.

Through financial engineering it is possible to insure far more than $100,000 dollars. That means that people with the ability to store more than $100,000 has their money insured, those without that ability do not receive any insurance benefit of the sort.

The government does not 'store' money - which may be a shock to you. Currency which is not in circulation is destroyed by the reserve. Static currency is useless. There is no mountain of cash sitting around.

I do know that, the person I responded stated that the billionaire was doing nothing with his money, and in that since the government would simply be storing it, where he can put money in when he wants and can withdraw it whenever he wants, while making no interest. So while the bank would obviously not physically store the money, that would be the essence of the function performed.

Also, interest paid on bank deposits does not come from the government. it comes from the bank. Private parties are responsible for all other interest payments for investments save t bills, t bonds and t notes, savings bonds and municipals.

True, but the bank would be regulated by the government and the fed would enforce interest payments.

When someone gives money away it does not always result in a tax deduction. There are gift taxes if it is given to an individual - regardless of their need. C4 charities (such as social clubs, political committees, etc) are not tax deductible. Only C3 charities are deductible.

He was giving the money directly back to society. C4 charities are generally for self interest, and money given directly to individuals generally is not intended to help society.

Fine, I keep hire my own staff to guard real property like gold, silver, platinum,, whatever and never use the FDIC. And besides, in the first senario, if I contribute more than I cost, who cares if the Gov. is backing, storing and accruing interest, though I don't know that the Gov. has a major role in accruing interest, that part depends on how and where I invest it.

I won't address the first sentence because it is getting a little to far fetched.

It would be impossible to determine exactly how much you cost the government, it is much easier to determine how much the dollars at any tax bracket do cost the government, and that is what a progressive tax code is based upon.

And the Fed insures the level of interest you get through T-Bills and Bonds and such, but that is off topic.

And progressive tax rates are fair.
No they're not. They punish the rich just for being rich. I know that the poor get more of their money taken by the government, but hey, that just gives them more incentive to become rich if they can, right?

Why I am considered a "Lefty" in America is beyond me.
Well, the way John Kerry was talked about in 2004 you'd think he was a socialist, but he came at about +3 on the political compass scale.

There are fundamental political differences between our positions. You hold that the rich have some social responsability toward helping the poor. I believe that their responsibility is limited to not hindering. They may help if they wish, but this should be voluntary and not imposed through the state.
Given these differences we would obviously advocate different taxation policies. Yours makes sense for your beliefs, I hold that mine makes sense for my beliefs.

Well said. Well said indeed. My position does indeed lean towards that policy of social responsibility; but I try to realize that it is not the only way to view the world. I guess in that sense there is still much idealogical debate left to be done in this world. I had assumed through childhood that such debates had ended in the early/mid 20th century. Only recently did I see that they rage on unabated.

Sometimes I assume to much; a nasty vice.

A probing, question on taxation...

In your opinion, should rich people be taxed more than poor people, and why?

No, I do not believe we should let rich people probe poor people while questioning them about taxes.

EDIT: Darn that modern casual dyslexia!

No they're not. They punish the rich just for being rich. I know that the poor get more of their money taken by the government, but hey, that just gives them more incentive to become rich if they can, right?

Read my prior posts and you will see why I don't believe that the rich are punished by a progressive tax system.

Also, in a progressive tax system, the individuals are getting taxed, dollars are.

Especially education, doesnt it need more funds? Where I live, education funds have been going downhill for years. All because people dont like taxes. If the taxes were back, I could get a decent education.


Throwing more money at education will not improve education. What this country needs is real education reform that includes; restoring discipline to the classroom and school; moving disruptive/unruly students to alternative educational programs; reducing administrative costs; reducing the number of administrators; providing a method of firing incompetent teachers; providing rewards and incentives for good teachers.

A voucher system might be a good idea as it would encourage competition and the public schools would be forced to improve or go out of business. Heck, maybe we should privatize public education.

Personally I believe that rich and poor should be taxed equally . . . but everybody is paying far too high taxes today, considering that our government cannot control its own spending.

In your opinion, should rich people be taxed more than poor people, and why?
Yes, because otherwise, the poor people will starve. It is our responsibility as human beings to help those less fortunate than us. Rich people can AFFORD to pay higher taxes. It's ridiculous to have a flat tax rate.

Well, the way John Kerry was talked about in 2004 you'd think he was a socialist, but he came at about +3 on the political compass scale.
The political compass scale, like all political scales, is inaccurate. How did John Kerry come on as socialist? By wanting to restore the top marginal tax rate at 39.6%? By wanting to end tax giveaways to multinational corporations? I call that reason, not socialism.

Yes, because otherwise, the poor people will starve. It is our responsibility as human beings to help those less fortunate than us. Rich people can AFFORD to pay higher taxes. It's ridiculous to have a flat tax rate.

Why is it ridiculous? There have been a lot of god arguments in this thread, both for and against flat rates of taxation and progressive taxation.
Do not confuse the rate with the quantity. If I pay a flat 20% on all earnings over 20,000 per year then:
Earnings________Tax Burden
15,000__________0
30,000__________2,000
50,000__________6,000
150,000_________26,000
400,000_________80,000

So who pays more? The rich. What is wrong with this?

Why is it ridiculous? There have been a lot of god arguments in this thread, both for and against flat rates of taxation and progressive taxation.
Do not confuse the rate with the quantity. If I pay a flat 20% on all earnings over 20,000 per year then:
Earnings________Tax Burden
15,000__________0
30,000__________2,000
50,000__________6,000
150,000_________26,000
400,000_________80,000

So who pays more? The rich. What is wrong with this?
You're right. I LIKE the marginal system. If everyone were to pay the same rate regardless of income, THAT would be ridiculous.

Why is it ridiculous? There have been a lot of god arguments in this thread, both for and against flat rates of taxation and progressive taxation.
Do not confuse the rate with the quantity. If I pay a flat 20% on all earnings over 20,000 per year then:
Earnings________Tax Burden
15,000__________0
30,000__________2,000
50,000__________6,000
150,000_________26,000
400,000_________80,000

So who pays more? The rich. What is wrong with this?
I think Vittos Ordination had the best counter-argument to this, drawing on the marginal utility of extra income for the better-off. I also liked VO's point because it implicitly addresses the gorilla in this particular room, which everyone else in the thread is ignoring. Governments tax the rich more than the poor only partly for progressive reasons or because the rich derive more benefit from a stable society than the poor. They also tax the rich more because they can.

Everyone is answering the question in the origonal post in terms of fairness. This is interesting - it may be simple naivity or it may be a reflection of the American bias in NS, but tax is only partly about fairness. Voters want governments to do stuff, that stuff requires spending, government spending generally neccesitates taxation. That tax has to come from areas of the economy that are prepared to pay it. The taxable capacity of the rich is proportionately higher than that of the poor, because the rich have more disposable income. (This argument can be also re-formulated in VO's marginal utility terms.)

The flip side of this argument is that one of the principles of sound taxation is that it should minimise market distortions, so as to reduce the dead weight costs of taxation. Here again, the marginal utility argument comes into play - taxing the rich is less damaging than taxing the poor. Not least because, if the tax really distorts their economic decisions, they are much better placed to get round the tax than the poor are.

Another way of looking at this argument is to look at the equivalent driver in businesses to capture the maximum value from their customers. Private doctors, lawyers, accountants &c all soak their rich clients rather than offer a minimal service at minimum cost because (a) their services are vital; and (b) they know just how much they can get away with charging their clients. No one complains about that. Why complain when Government does the same?

You're right. I LIKE the marginal system. If everyone were to pay the same rate regardless of income, THAT would be ridiculous.

What is showed was a flat system, not a marginal system.

Under a marginal system you would pay a higher rate the more you earned, something like:
Up to 20,000 - 0%
20,000 - 40,000 - 20%
40,000 - 80,000 - 25%
80,000 - 160,000 - 30%
160,000 - 320,000 - 40%
Over 320,000 - 50%
This is a progressive system.

Earnings________Top Rate__Tax Burden___Diff to Flat
15,000__________0________0___________ 0
30,000__________20_______2,000________0
50,000__________25_______6,500________500
150,000_________30_______34,000_______8,000
400,000_________50_______142,000______62,000

Yes, because otherwise, the poor people will starve. It is our responsibility as human beings to help those less fortunate than us. Rich people can AFFORD to pay higher taxes. It's ridiculous to have a flat tax rate.

If you have a flat tax, say of 25% the rich will pay more than the poor do. If someone makes $250,000.00, (rich?) they will pay $62,500.00 in taxes. If a (middle income?) person makes $50,000.00 they will pay $12,500.00. If a person makes $20,000 (middle income?) they will pay $5,000.00. If someone is poor say $15,000.00 then they will pay $3,750.00 in taxes. Now you could have a minimum income, say $20,000 and if anyone made less than that they would pay no income tax.

So you see, it is not "ridiculous to have a flat tax rate" however it is ridicules to say that rich people would not pay more under such a system. In fact, this system might be better than a consumption tax because the tax is based on income not purchases.

You're right. I LIKE the marginal system. If everyone were to pay the same rate regardless of income, THAT would be ridiculous.

Why would that be ridiculous? :confused:

I think Vittos Ordination had the best counter-argument to this, drawing on the marginal utility of extra income for the better-off. I also liked VO's point because it implicitly addresses the gorilla in this particular room, which everyone else in the thread is ignoring. Governments tax the rich more than the poor only partly for progressive reasons or because the rich derive more benefit from a stable society than the poor. They also tax the rich more because they can.

Everyone is answering the question in the origonal post in terms of fairness. This is interesting - it may be simple naivity or it may be a reflection of the American bias in NS, but tax is only partly about fairness. Voters want governments to do stuff, that stuff requires spending, government spending generally neccesitates taxation. That tax has to come from areas of the economy that are prepared to pay it. The taxable capacity of the rich is proportionately higher than that of the poor, because the rich have more disposable income. (This argument can be also re-formulated in VO's marginal utility terms.)

The flip side of this argument is that one of the principles of sound taxation is that it should minimise market distortions, so as to reduce the dead weight costs of taxation. Here again, the marginal utility argument comes into play - taxing the rich is less damaging than taxing the poor. Not least because, if the tax really distorts their economic decisions, they are much better placed to get round the tax than the poor are.

Another way of looking at this argument is to look at the equivalent driver in businesses to capture the maximum value from their customers. Private doctors, lawyers, accountants &c all soak their rich clients rather than offer a minimal service at minimum cost because (a) their services are vital; and (b) they know just how much they can get away with charging their clients. No one complains about that. Why complain when Government does the same?


Why complain, because the government is not a private individual, or company. It is an institution that has as its primary objective to attend to the requirements of the people it governs. To compare the government to a profit making entity is to make a category mistake (I am sure that you are aware of this WH.)

On to marginal utility, fairness etc. Taxation has to be seen to be fair. If it is not, then those that pay the heavier tax burdens will do one of three things:
1. Leave. The government loses the revenue
2. Stop whatever it is that increases the tax burden. The government loses the revenue
3. Cheat. The government loses the revenue.

There is no way to obtain reliable revenue from a system that is universally perceived as unfair.
Now what s seen as fair is the discussion here. Flat rates, progressive systems, flat value systems. I have been arguing for sales taxation rather than income taxation, as the best method of revenue generation for the government, but also secondarily for a falt rate system on income if you have to have income taxation.

My disagreement with the marginal utility argument is that it is only ever applied on the revenue side of the balance sheet, and never on the services/expenditure side. It seems wrong that a distorting factor can be used here, to reduce equality, but not there. I earn more, so the marginal utility of each pound (lets shift sides of the pond) for me is less, true. I will miss that pound less than someone who earns less than me.
I use my car to earn my living, whereas he only uses his car to visit his mother in law. We both pay the same tax on petrol though. Why no marginal utility here if there is on income. This litre of petrol is worth far more to me than it is to him. I should be taxed less on it.
On the services side. She is intelligent and dedicated so she will gain more from a good school, I am lazy and indisciplined so education is a waste of moiney for me. Why does the government spend as much on me as it does on her. The marginal utility argument says that I should not be educated, and she should be provided with the best education possible.
Similar things hapen with housing, health, pensions, etc. etc.

Why should marginal utility only apply to income tax? It should not apply there if it does not apply everywhere in assessing value.

Why complain, because the government is not a private individual, or company. It is an institution that has as its primary objective to attend to the requirements of the people it governs. To compare the government to a profit making entity is to make a category mistake (I am sure that you are aware of this WH.)
Heh, good call. I'm unfamiliar with the terminology of a category mistake, but I think I know what you mean, and my last line was indeed more by way of a rhetorical flourish than anything that serious. However, to push the argument just a little more ....

We are agreed the primary objective of a (democratic) government is to attend to the requirements of the people it governs. At the same time, in just about every economy I can think of, income distribution is heavily skewed to the left - there are very many more poor than rich. So, ignoring for now market distortions, one could argue that a government does best by the greatest number of its people by instigating progressive taxation.

Probably not an argument I'd care to take much further, but there it is.

On to marginal utility, fairness etc. Taxation has to be seen to be fair. If it is not, then those that pay the heavier tax burdens will do one of three things:
1. Leave. The government loses the revenue
2. Stop whatever it is that increases the tax burden. The government loses the revenue
3. Cheat. The government loses the revenue.

There is no way to obtain reliable revenue from a system that is universally perceived as unfair.
Essentially we agree here, though you ignore coercive effects. My other caveat is reflected in the highlighting I've added above. It's actually a very large caveat for me - one of the reasons I am sceptical about economics is its failure to address psychology and perceptions - in this context marketing. However, we are talking about principle here, so let's assume perfect information across the whole system and no coercion.

Now what s seen as fair is the discussion here. Flat rates, progressive systems, flat value systems. I have been arguing for sales taxation rather than income taxation, as the best method of revenue generation for the government, but also secondarily for a falt rate system on income if you have to have income taxation.
I would argue that sales taxes are inherently regressive, but let that pass for now.

My disagreement with the marginal utility argument is that it is only ever applied on the revenue side of the balance sheet, and never on the services/expenditure side. It seems wrong that a distorting factor can be used here, to reduce equality, but not there. I earn more, so the marginal utility of each pound (lets shift sides of the pond) for me is less, true. I will miss that pound less than someone who earns less than me.
I use my car to earn my living, whereas he only uses his car to visit his mother in law. We both pay the same tax on petrol though. Why no marginal utility here if there is on income. This litre of petrol is worth far more to me than it is to him. I should be taxed less on it.
I think what you are arguing here for is value added or percentage-based sales/purchases taxes, which are indeed a popular form of taxation. (Is 'popular' the right word?) The value added calculation takes some account of the marginal utility aspect of consumption. Fixed or flat rate duties are a very blunt instrument, and tend to be even more regressive than other taxes on consumption. However, they do tend to be very cheap to administer, which is good, and when applied to areas of inelastic demand, not too distortive.

However, you are describing part of the dead weight costs of sales taxes, which is a problem. The only way to address this is to offer reliefs to specific deserving cases, which is often done (eg, tax exempt diesel for UK farmers). However, it's a technical challenge to get the scope of the reliefs right, and can be both expensive to administer and open to abuse.
On the services side. She is intelligent and dedicated so she will gain more from a good school, I am lazy and indisciplined so education is a waste of moiney for me. Why does the government spend as much on me as it does on her. The marginal utility argument says that I should not be educated, and she should be provided with the best education possible.
Similar things hapen with housing, health, pensions, etc. etc.
Hmm, not sure how true this is, though it will depend on your location.

Insofar as education in the UK is subsidised, more education is provided to those who benefit, eg through tertiary education. However, I have to concede that compulsory education distorts that effect. Likewise UK state health and pensions are broadly (and very imperfectly) allocated on the basis of need, and in the case of the former, partly on potential benefit.

I can see your point though, and agree with some of it. I think the problem is one of the identification of utility and consequent allocation. There are both practical and political limits to how far Governments can (and should) monitor individuals' lives in order to get these right. (Nanny state anyone?)
Why should marginal utility only apply to income tax? It should not apply there if it does not apply everywhere in assessing value.
I agree with your question, but I'm not sure your answer follows. For me, an imperfect solution is not necessarily worse than no solution at all. (Is this the difference between a philosopher and a statistician here? ;) ) I could also throw back the question: if the principle of marginal utility could be applied both to government spending, would you favour its application to tax?


With the exception of the last point, it seems to me we're largely arguing over detail and practical application in the above. However, you're still arguing in terms of 'fairness'. There is also a pragmatic argument to be made in favour of directing tax at those areas of the economy with the greatest taxable capacity, irrespective of fairness. It makes it easier to raise the revenue, and cheaper - not just in administrative costs, which should anyway be marginal, bit also in potentially very substantial costs to the economy.

A good example of this is the UK's flat rate excise duties on tobacco, alcohol and oils. The government will tell you these are there to discourage harmful behaviour, and that's true enough. But that's not why the UK levies these taxes while, for example, other EU members don't. The UK government levies these taxes because the UK is an island, and demand in these goods is very inelastic, so the UK government can, largely, get away with it (and other EU states can't, because of smuggling).


One last point, based on the 'rich always get richer while the poor get poorer' argument. In a skewed economy and all else being equal, the rich will tend to accumulate wealth while the poor lose it - certainly relatively and probably in absolute terms. The rich are able to invest and prosper, and, crucially, the poor are much less able to withstand economic shocks or overcome hurdles. This is not just an idealogical argument, but is actually a simple extension of probability theory as practised most notoriously by Casinos (aka 'the House always wins'). For me, this makes a very strong argument for government seeking to correct this effect by whatever means, of which progressive taxation is one.


(Got to go for now, BTW - I'm neglecting my kids!)

Heh, good call. I'm unfamiliar with the terminology of a category mistake, but I think I know what you mean, and my last line was indeed more by way of a rhetorical flourish than anything that serious. However, to push the argument just a little more ....
A category mistake is to place something in the wrong cartegory of objects. An example would be to say that my bed is extremely selfish. (Beds are just not the right sort of thing for selfish to apply to them) Likewise governments are not the right sort of thing for the concept of customer to apply. (One of the fundamental errors in neo-con thinking. No implication of you being a neo-con intended.)

We are agreed the primary objective of a (democratic) government is to attend to the requirements of the people it governs. At the same time, in just about every economy I can think of, income distribution is heavily skewed to the left - there are very many more poor than rich. So, ignoring for now market distortions, one could argue that a government does best by the greatest number of its people by instigating progressive taxation.
There are many more poor, and even if each of these having the same weight in the governments considerations as each of the rich, does not cause a leftward shift in policy. The leftward shift implies a concern for more aspects of a citizen's life than a central position. A rightward shift implies fewer aspects are considered to be of government responsibility. (That is my understanding of this anyway. I may well be wrong).

One could argue that progressive taxation does the most good for the most people, in fact it is commonly so argued. There are counter arguments, using such things as the Laffe curve, that this only works up to a point. If fairness is not a consideration, and just utility is, then progressive taxation is justified. The problem with this is that if you sacrifice fairness here, you can not reasonably justify anything on the basis of fairness elsewhere, and this removes the justification for nearly all social programs.


Essentially we agree here, though you ignore coercive effects. My other caveat is reflected in the highlighting I've added above. It's actually a very large caveat for me - one of the reasons I am sceptical about economics is its failure to address psychology and perceptions - in this context marketing. However, we are talking about principle here, so let's assume perfect information across the whole system and no coercion.

I, not being an economist, am not at all clear what you mean by coercion in this context. I agree that what I have read and seen of economics seems to ignore the fact that people are involved and not computational models. As you say though, we are discussing principle in its fully idealised glory.


I think what you are arguing here for is value added or percentage-based sales/purchases taxes, which are indeed a popular form of taxation. (Is 'popular' the right word?) The value added calculation takes some account of the marginal utility aspect of consumption. Fixed or flat rate duties are a very blunt instrument, and tend to be even more regressive than other taxes on consumption. However, they do tend to be very cheap to administer, which is good, and when applied to areas of inelastic demand, not too distortive.

It may be the case that to apply marginal utility to determine the duties levied could be considerd a value added tax, but I have never heard of it being done anywhere. The sales duties are flat value duties. They do not take into account the utility to nor the earnings of the purchaser. I admit that it would be nigh on impossible to administer a progressive duty on fuel for example, but this does not mean thaty it is "fair" to consider marginal utility as a justification for progressive taxation on income.

However, you are describing part of the dead weight costs of sales taxes, which is a problem. The only way to address this is to offer reliefs to specific deserving cases, which is often done (eg, tax exempt diesel for UK farmers). However, it's a technical challenge to get the scope of the reliefs right, and can be both expensive to administer and open to abuse.
No more expensive or difficult than measuring the marginal utility of income. This is done in a very crude way, so why not at least use some simplified and crude measure on the sales tax side. Just a rebate based on quantity would do something to indicate an intention to take marginal utility into account. (This is based on the crude assumption that those who use fuel in the process of earning their living, will use more than those who use it for purely recreational purposes.) Perhaps a rebate for to companies rather than to individuals. There are various methods that would be possible.

Hmm, not sure how true this is, though it will depend on your location.
Why does the marginal utility of education depend upon location? It has to depend on the benefit received by the student. Good students benefit more from each pound than bad ones. Government expenditure simply does not, in general, reflect this.

Insofar as education in the UK is subsidised, more education is provided to those who benefit, eg through tertiary education. However, I have to concede that compulsory education distorts that effect. Likewise UK state health and pensions are broadly (and very imperfectly) allocated on the basis of need, and in the case of the former, partly on potential benefit.
Allocation on the basis of need is not allocation according to marginal utility. A kidney transplant for a sixty year old does not have the same utility as one for a twenty year old, but this is not taken into consideration. Only the need of both, which is equal, is considered. (This is one of the reasons I argue against progressive taxation, rather than for spending according to marginal utility.)

I can see your point though, and agree with some of it. I think the problem is one of the identification of utility and consequent allocation. There are both practical and political limits to how far Governments can (and should) monitor individuals' lives in order to get these right. (Nanny state anyone?)
There are insurmountable problems, even if you go the Orwellian route. The solution is to not demand that marginal utility be taken into account in order to be fair. To this end, remove progressive taxation.

I agree with your question, but I'm not sure your answer follows. For me, an imperfect solution is not necessarily worse than no solution at all. (Is this the difference between a philosopher and a statistician here? ;) ) I could also throw back the question: if the principle of marginal utility could be applied both to government spending, would you favour its application to tax?
If it could be applied to the same degree, then I could accept it. I have other ethical and moral reasons for not wanting it applied, the kidney transplant case for example, but I could accept its application. I do not think I would favour it though. I would still prefer a flat rate taxation, or a scaled luxury tax on purchases.

With the exception of the last point, it seems to me we're largely arguing over detail and practical application in the above. However, you're still arguing in terms of 'fairness'. There is also a pragmatic argument to be made in favour of directing tax at those areas of the economy with the greatest taxable capacity, irrespective of fairness. It makes it easier to raise the revenue, and cheaper - not just in administrative costs, which should anyway be marginal, bit also in potentially very substantial costs to the economy.

If pragmatic solutions are permissable, regardless of fairness, then we should follow the inuit tradition and put our elderly out to die of exposure. Just because something works, does not make it justifiable. It may be easier and cheaper to raise revenue using a progressive system, but it does not mean that this justifies taxing the rich at a higher rate. The effects of extra taxation on the rich to the economy are highly disputed. It is the rich that provide the capital that drives the economy. If this capital is reduced by a higher tax burden, the economy's motor loses some horsepower.

A good example of this is the UK's flat rate excise duties on tobacco, alcohol and oils. The government will tell you these are there to discourage harmful behaviour, and that's true enough. But that's not why the UK levies these taxes while, for example, other EU members don't. The UK government levies these taxes because the UK is an island, and demand in these goods is very inelastic, so the UK government can, largely, get away with it (and other EU states can't, because of smuggling).

This, surely is an argument for not applying excessive taxation, not one against flat rate taxation. If the duty rate on alcohol was 20% instead of over 100% then smuggling would not be a problem. I live in a country that has one of the longest land borders in the world. (I think it is second after Russia) We have flat rate duties, and we do have some smuggling problem, but no more than continental Europe does. If the rate is not significantly higher than it is in neighbouring countries, this is not a problem. If you are going to have purchase taxes, however, this does have to be controlled. In the past this would have been impossible, but with electronic fund transfers etc. there are means of doing this, cheaply and effectively.

One last point, based on the 'rich always get richer while the poor get poorer' argument. In a skewed economy and all else being equal, the rich will tend to accumulate wealth while the poor lose it - certainly relatively and probably in absolute terms. The rich are able to invest and prosper, and, crucially, the poor are much less able to withstand economic shocks or overcome hurdles. This is not just an idealogical argument, but is actually a simple extension of probability theory as practised most notoriously by Casinos (aka 'the House always wins'). For me, this makes a very strong argument for government seeking to correct this effect by whatever means, of which progressive taxation is one.

That it is an aplication of probability theory, which we agree on, does not mean that anything should be done about it. The view that there is a responsability to prevent anyone from falling into complete poverty, regardless of the potential lack of effort or motivation of that person, is an ideological position. There are plenty of positive actions that governments can take to help those who are willing to help themselves, without punishing the successful to support the lazy. Business venture capital, education credits, loan underwriting, consultancy, incentive programs, tax exemption for enterprise start ups etc. All of these things can help the poor, without punishing the rich.

One or two technical questions:
1. What do you mean by coercion? (asked earlier)
2. Why is sales tax regressive if you have no income tax?


(Got to go for now, BTW - I'm neglecting my kids!)

Mine is playing on a computer across the study. So I can post for a while, but sorry for the delay as things like dinner got in the way.

If the rich are taxed more... why become rich? if the poor/middle class are taxed more... how can they rise themselve?

Percentage is the only way to go...

A flat tax rate. No dodges, not deductions. Flat rate and no sales tax.

A category mistake is to place something in the wrong cartegory of objects. An example would be to say that my bed is extremely selfish. (Beds are just not the right sort of thing for selfish to apply to them) Likewise governments are not the right sort of thing for the concept of customer to apply. (One of the fundamental errors in neo-con thinking. No implication of you being a neo-con intended.)
Thanks for the definition. (Though I'll probably forget it - I'm rubbish at remembering labels.) I would have been amused if you'd thought of me as a neo-con given my arguments so far.
There are many more poor, and even if each of these having the same weight in the governments considerations as each of the rich, does not cause a leftward shift in policy. The leftward shift implies a concern for more aspects of a citizen's life than a central position. A rightward shift implies fewer aspects are considered to be of government responsibility. (That is my understanding of this anyway. I may well be wrong).
There may be confusion over my use of the term 'left skew' here. I simply meant that income distribution graphs are skewed heavily to the left - that is, that there are very many more poor than rich. I think our understanding of left and risht governments may be slightly different BTW. I would expect a left wing government to stay the hell out of individuals' lives, but then I saw Thatcherism as hugely interventionist. We may be in danger of heading off at a big tangent on this point.
One could argue that progressive taxation does the most good for the most people, in fact it is commonly so argued. There are counter arguments, using such things as the Laffe curve, that this only works up to a point. If fairness is not a consideration, and just utility is, then progressive taxation is justified. The problem with this is that if you sacrifice fairness here, you can not reasonably justify anything on the basis of fairness elsewhere, and this removes the justification for nearly all social programs.
I would argue you need both utility and fairness, and, where they conflict, a balance. I think social programs can also be argued on grounds of utility. Even at a cynical level, social exclusion increases social costs, and so is to be avoided.
I, not being an economist, am not at all clear what you mean by coercion in this context. I agree that what I have read and seen of economics seems to ignore the fact that people are involved and not computational models. As you say though, we are discussing principle in its fully idealised glory.
I wasn't meaning anything technical by 'coercion'. All I meant is that taxation requires the stick as well as the carrot. The carrot is the appeal to fairness, social respectability and the benefits of properly funded government (however defined). The stick (my 'coercion') being financial and other penalties for non-compliance.

(On a complete tangent, one of my favourite facts about economic behavioural theory is that a lot of it rests on experiments and simulations that use, as often as not, economics students (a convenient resource for economics professors). Unfortunately, a recent Nobel prize winner, whose name I forget, ran a neat little experiment that showed that economics students are both more rational and more selfish than the population at large. Which I think counts as a bit of an 'Oops' for economics.)
It may be the case that to apply marginal utility to determine the duties levied could be considerd a value added tax, but I have never heard of it being done anywhere. The sales duties are flat value duties. They do not take into account the utility to nor the earnings of the purchaser. I admit that it would be nigh on impossible to administer a progressive duty on fuel for example, but this does not mean thaty it is "fair" to consider marginal utility as a justification for progressive taxation on income.
What I was saying here is that the cost to the taxpayer of value added taxes (eg the UK's VAT) and percentage sales taxes is directly linked to the price of the goods or service being taxed. So, in principle, they have the same marginal effect irrespective of the value or quantity of the taxed goods. Consequently, they are less distortive than flat rate duties (eg £3.50 per packet of fags, or whatever it is these days here in the UK). Which is why value added taxes are so popular with Governments these days - they not only have administrative benefits, but they also impose less costs on the economy.

To the extent that wealthier consumers are prepared to pay more for value added (and thus value added tax), such taxes are also more progressive than flat rate duties.

(Fuel is actually fairly difficult to tax progressively in this manner - in the general run of things, it's a difficult commodity to add value to.)
No more expensive or difficult than measuring the marginal utility of income. This is done in a very crude way, so why not at least use some simplified and crude measure on the sales tax side. Just a rebate based on quantity would do something to indicate an intention to take marginal utility into account. (This is based on the crude assumption that those who use fuel in the process of earning their living, will use more than those who use it for purely recreational purposes.) Perhaps a rebate for to companies rather than to individuals. There are various methods that would be possible.
I think we could get distinctly bogged down in hypotheticals on this point. In fact, I would agree to the extent that, just as the progressiveness of income taxes can be (crudely) based on income, so the progressiveness of consumption taxes can be based on price, either by the value added calculation or by a percentage. In many ways there are similarities between the two measures, and I would see them as complementary.

I would also say that the difference between differential tax rates, tax credits/rebates and subsidies is largely a matter of presentation rather than substance. They mostly all boil down to transfers.

Just as an illustration of the kind of technical difficulty faced in targeting rebates &c, your idea of using quantity for fuels would have the perverse effect of rewarding gas guzzlers. The rebate for companies is better - in fact, it's inherent in the mechanism of value added tax and allowable business expenses.
Why does the marginal utility of education depend upon location? It has to depend on the benefit received by the student. Good students benefit more from each pound than bad ones. Government expenditure simply does not, in general, reflect this.
My bad - I garbled my point. I simply meant that the funding structure and amounts for education and other government services will depend on the country in which you reside. I would still argue that government education expenditure on individuals does reflect their benefits to the (limited) extent that good students remain in education longer or attend elite, better funded institutions.
Allocation on the basis of need is not allocation according to marginal utility. A kidney transplant for a sixty year old does not have the same utility as one for a twenty year old, but this is not taken into consideration. Only the need of both, which is equal, is considered. (This is one of the reasons I argue against progressive taxation, rather than for spending according to marginal utility.)
I agree with your theoretical point. However, as I understand it in the NHS, the allocation of restricted resources, eg transplants, depends partly on an assessment the extent to which a patient will benefit from them. So a younger, fitter patient is more likely to get the kidney.
There are insurmountable problems, even if you go the Orwellian route. The solution is to not demand that marginal utility be taken into account in order to be fair. To this end, remove progressive taxation.
I agree with your first sentance, but not your conclusion. I think we have to agree to differ on that. I see consistency in Government decision making as being a worthy aim, but not an absolute requirement.
If it could be applied to the same degree, then I could accept it. I have other ethical and moral reasons for not wanting it applied, the kidney transplant case for example, but I could accept its application. I do not think I would favour it though. I would still prefer a flat rate taxation, or a scaled luxury tax on purchases.
Fair enough.
Personally, I'm not keen on luxury taxes as a revenue raiser. Either they tend not to raise much revenue, or they put fairly mundane 'luxuries' that happen to be defined as such completely outside the range of most people. The definition of luxury also tends to be somewhat arbitrary.
If pragmatic solutions are permissable, regardless of fairness, then we should follow the inuit tradition and put our elderly out to die of exposure. Just because something works, does not make it justifiable. It may be easier and cheaper to raise revenue using a progressive system, but it does not mean that this justifies taxing the rich at a higher rate. The effects of extra taxation on the rich to the economy are highly disputed. It is the rich that provide the capital that drives the economy. If this capital is reduced by a higher tax burden, the economy's motor loses some horsepower.
I'm not arguing that pragmatic solutions are permissable regardless of fairness. As above, I would argue for a balance between the two. If a system has cost and economic advantages, that, for me, is a factor to take into account. We may just have a different theory of government.

I wouldn't want to disagree that capital is required to drive our (capitalist) economies, certainly at this time of night. It's less clear to me how much of that capital is provided by rich households, but of course their contribution is extensive. However, taxation and re-distributed wealth can be used either for direct investment or to stimulate such investment through increased demand. How efficiently it does that compared to private capital is contententious, but that efficiency is partly an inverse function of the extent to which taxation distorts economic decisions being made by those being taxed. Hence part of my argument for progressive taxation on pragmatic grounds.

This, surely is an argument for not applying excessive taxation, not one against flat rate taxation. If the duty rate on alcohol was 20% instead of over 100% then smuggling would not be a problem. I live in a country that has one of the longest land borders in the world. (I think it is second after Russia) We have flat rate duties, and we do have some smuggling problem, but no more than continental Europe does. If the rate is not significantly higher than it is in neighbouring countries, this is not a problem. If you are going to have purchase taxes, however, this does have to be controlled. In the past this would have been impossible, but with electronic fund transfers etc. there are means of doing this, cheaply and effectively.
No argument with your point about excessive tax rates. I was simply pointing out that the UK can get away with abnormally high tax rates in some specific areas, arguably with social benefits, not (just) because of those benefits or percieved notions of fairness but because an accident of geography.
That it is an aplication of probability theory, which we agree on, does not mean that anything should be done about it.
Agreed.
The view that there is a responsability to prevent anyone from falling into complete poverty, regardless of the potential lack of effort or motivation of that person, is an ideological position.
Agreed. However, I would argue there are, in addition, selfish, practical reasons for wanting to minimise levels of absolute poverty.
There are plenty of positive actions that governments can take to help those who are willing to help themselves, without punishing the successful to support the lazy. Business venture capital, education credits, loan underwriting, consultancy, incentive programs, tax exemption for enterprise start ups etc. All of these things can help the poor, without punishing the rich.
Agreed. However, if these actions cost money, and they generally do - even if only through deferred income or payments - that money has to be found from somewhere. In the context of Government, that means a transfer from those that have to those that do not have. I'm not out to punish the rich, and of course the costs of such schemes should be minimised within the parameters of effectiveness. All I am arguing is that one of the ways of minimising the overall costs is through progressive taxation.

One or two technical questions:
1. What do you mean by coercion? (asked earlier)
2. Why is sales tax regressive if you have no income tax?
1. As above, just the common sense meaning that tax authorities have to have effective ways of ensuring compliance.
2. Partly my statement is based on my empirical knowledge that such taxes always hit poorer households proportionately harder than richer. The simple explanation is that poorer people spend proportionately more of their income on consumption than richer people. They also have less choices in terms of avoiding such tax. Rich households are more likely to save and/or invest and defer consumption generally (measured as a proportion of available income). There's also the technical point that a lot of what the rich spend their money on can be difficult to tax, eg financial services.

Mine is playing on a computer across the study. So I can post for a while, but sorry for the delay as things like dinner got in the way.
And mine are now safely tucked up in bed, which is also where I should be heading.

TTFN.

White Hats.

Thank you for the discussion, yet again interesting and useful. We appear to have fundamentally different political ideals, but, unlike some on this forum, are capable of discussing the matter with civility.

That the NHS is now considering the utility of their actions is news to me. It was always something that there was a large lobby on for both sides (utility vs equality). However as I am no longer in the UK, this kind of thing can easliy slip by without my noticing.

I like the observation about the sample populations for economics studies. Not exactly representative huh. (Why not just raid the modern languages school, and social sciences department at the institution to balance this bias out?) :)

With regard to luxury goods taxation, I would suggest that it is possible to define what are the basic needs of a family, from fresh food through to toilet paper etc, and to exempt these from taxation. Other goods can be taxed oin the basis of their relative necessity. i.e. you tax a basic family car, of up to 1000cc, at a fairly low rate, but a four wheel drive, 3.8 litre turbocharged open top sports car at a much higher rate. Likewise for entertainment items or clothing. (Clothing you allow a band which could be calculated in relation to the raw material costs of the garment, which is tax free. Then you go increasing the tax rate as the price/material cost ratio changes, until you reach the pure luxury items of high fashion.)
It is not impossible to create a sales/luxury tax scheme which will provide sufficient revenue (particularly if you tax financial services as luxury sales, which they are) but not harm the poor.

One big advantage is that the government could direct spending into or out of areas by changing the tax rates on the products of that area. If, some time in the future, oil is in really short supply then tax rates on all plastic products could be pushed sky high to reduce the demand for these oil consuming objects. etc.

Just thinking aloud really. (Sleep well. I am in a different time zone to you, GMT -3 hours, so this I am posting at 11:30ish, not 02:30 AM.)

Shocking as it may be to some of you, I am all for progressive tax rates. The question is HOW progressive.

Many, mostly liberals, feel that every time the government comes up short the answer is to raise taxes. This is like a family budget coming up short so we make the kids get jobs. Maybe we first oughta re-evaluate our budget and trim waste, no?

Raising taxes is like raising prices. Imagine if the good folks at K-Mart decided that since WalMart is eating into their profits they will just raise their prices to make up for it. How long do you think that'd work?

I do think that EVERY American should pay federal taxes. Rich, poor, middle - all. Ther is no reason why a person of modest means should be denied the ability to participate in the funding of the government any more than they should be denied the right to vote. Taxation is part of and a repsonsibility of representation.

Tax brackets should be of wider reach and narrower scope. There is no reason a person making $100,000 should pay at nearly double the RATE of someone who earns $30,000.

I also feel that payroll taxes should be eliminated. Americans should pay their tax like they pay thier mortgage - once per month by check. It is their money it should pass through their hands first. Maybe then citizens will take a more proactive role in watching government waste.

Government is necessary, but it is far from superlative. Many problems can be resolved and tasks achieved without government interference.

Shocking as it may be to some of you, I am all for progressive tax rates. The question is HOW progressive.
Why? Why not a flat percentage of income?

Many, mostly liberals, feel that every time the government comes up short the answer is to raise taxes. This is like a family budget coming up short so we make the kids get jobs. Maybe we first oughta re-evaluate our budget and trim waste, no?
I could not agree more. We do not simply borrow more money, or impose an uncontestable pay rise demand when we want to spend more. We have to control our spending.

Raising taxes is like raising prices. Imagine if the good folks at K-Mart decided that since WalMart is eating into their profits they will just raise their prices to make up for it. How long do you think that'd work?
By this analogy, the prices are higher for the rich in a progressive scheme. Won't they just go shop in wal mart (Leave the country)?

I do think that EVERY American should pay federal taxes. Rich, poor, middle - all. Ther is no reason why a person of modest means should be denied the ability to participate in the funding of the government any more than they should be denied the right to vote. Taxation is part of and a repsonsibility of representation.
Firstly this is not just about the USA. It is about taxation by any government, including that of the USA.
Secondly, those of modest means may well be able to pay some taxation, but the truly poor can not. There has to be a minimum income, below which you do not pay tax. The level of this minimum is debatable, but its existence seems to be agreed by all. (Tell me if I am wrong folks)

Tax brackets should be of wider reach and narrower scope. There is no reason a person making $100,000 should pay at nearly double the RATE of someone who earns $30,000.
Why should they pay at a highrer RATE at all. They pay more if they pay at the same rate.

I also feel that payroll taxes should be eliminated. Americans should pay their tax like they pay thier mortgage - once per month by check. It is their money it should pass through their hands first. Maybe then citizens will take a more proactive role in watching government waste.
And many wil not pay what they should, as they will have spent the money elsewhere. What could the Government do about it? Put them in prison and incur further costs together with the reduced income. Alternatively exile them, kicjk them out of the country. This would be the equivalent of a bank foreclosing on a mortgage that is in default. I think it would not work. I agree with the principle, but I think it is impractical.

Government is necessary, but it is far from superlative. Many problems can be resolved and tasks achieved without government interference. Very true.

No. Everyone naturally desires to be rich, and it is a formula for economic success. However, a progressive bracketing tax system punishes those who make money. That's why I'm in support of a flat tax: to encourage all people to work to their fullest potential, and to not discourage ambition.

White Hats.

Thank you for the discussion, yet again interesting and useful. We appear to have fundamentally different political ideals, but, unlike some on this forum, are capable of discussing the matter with civility.
Your sentiments are recipricated. ;)

That the NHS is now considering the utility of their actions is news to me. It was always something that there was a large lobby on for both sides (utility vs equality). However as I am no longer in the UK, this kind of thing can easliy slip by without my noticing.
I might be wrong here - I was writing from memory. However I'm pretty sure that essential quality of life is factored into individual cases' cost benefit analyses.
I like the observation about the sample populations for economics studies. Not exactly representative huh. (Why not just raid the modern languages school, and social sciences department at the institution to balance this bias out?) :)
Never under-estimate the attraction of samples of convenience to academics who should know better - the other course students are busy being the subjects of their own departments' experiments. (You'd think they could swap, but meh.)
With regard to luxury goods taxation, I would suggest that it is possible to define what are the basic needs of a family, from fresh food through to toilet paper etc, and to exempt these from taxation. Other goods can be taxed oin the basis of their relative necessity. i.e. you tax a basic family car, of up to 1000cc, at a fairly low rate, but a four wheel drive, 3.8 litre turbocharged open top sports car at a much higher rate. Likewise for entertainment items or clothing. (Clothing you allow a band which could be calculated in relation to the raw material costs of the garment, which is tax free. Then you go increasing the tax rate as the price/material cost ratio changes, until you reach the pure luxury items of high fashion.)
It is not impossible to create a sales/luxury tax scheme which will provide sufficient revenue (particularly if you tax financial services as luxury sales, which they are) but not harm the poor.
This is a potential subject in itself, which I don't have the stamina for at the moment. However, as a general principle, too much detail or definition in tax law is a blank cheque for the legal and technical advisors; and politics dictates that governments are generally less prepared to spend that sort of money than the big companies.

By way of illustration: luxury cars - fairly easy to define, hence frequent candidates for luxury tax, but fresh food is surprisingly difficult to define, due to ambiguity in the difference between storage and preparation. Also, in western economies, fresh food is arguably more of a luxury for urban populations than prepared food, because of storage and transport costs. The way round this is traditionally to tax restaurants at a higher rate than food for home consumption, but even this would (unfairly) catch burger bars, canteens &c.

Financial services a luxury? They include insurance and bank charges, so I'm not sure. And, frankly, any financial services provider that got themselves caught by a luxury tax is not one that would stay in business for long. Financial instruments lend themselves perfectly to legal avoidance.

Again, an easy proxy for luxury is price (subject to specific exceptions), and this is inherent in value added and percentage-based sales taxes.

One big advantage is that the government could direct spending into or out of areas by changing the tax rates on the products of that area. If, some time in the future, oil is in really short supply then tax rates on all plastic products could be pushed sky high to reduce the demand for these oil consuming objects. etc.
Differential tax rates to stimulate local production are effectively subsidies. Apart from theoretical implications for free trade and market efficencies, there would be immediate practical problems with the international trade regulators. Again, plastics present definition difficulties - many are derived from petro-chemicals, but not all. Some plastics are derived from either type of source (I think).

I am nit-picking in all this, and do recognise laws can be written to get round a lot of these issues. What I'm trying to do is illustrate is that differential sales taxes require a fair amount of sophistication to run progressively other than simply on price. And sophistication in tax law breeds administrative costs and the risk of successful legal challenges to the tax base. Hence I percieve the need for a pragmatic balance.
Just thinking aloud really. (Sleep well. I am in a different time zone to you, GMT -3 hours, so this I am posting at 11:30ish, not 02:30 AM.)
Indeed. My wife is demanding the internet connection for work this evening. Clearly this is a wholly unreasonable prioritising of her business over my NS, but since her company is picking up the broadband bill, I feel constrained to accede. I'll catch you around sometime else.

Shocking as it may be to some of you, I am all for progressive tax rates. The question is HOW progressive.

Many, mostly liberals, feel that every time the government comes up short the answer is to raise taxes. This is like a family budget coming up short so we make the kids get jobs. Maybe we first oughta re-evaluate our budget and trim waste, no?

Raising taxes is like raising prices. Imagine if the good folks at K-Mart decided that since WalMart is eating into their profits they will just raise their prices to make up for it. How long do you think that'd work?

I do think that EVERY American should pay federal taxes. Rich, poor, middle - all. Ther is no reason why a person of modest means should be denied the ability to participate in the funding of the government any more than they should be denied the right to vote. Taxation is part of and a repsonsibility of representation.

Tax brackets should be of wider reach and narrower scope. There is no reason a person making $100,000 should pay at nearly double the RATE of someone who earns $30,000.

I also feel that payroll taxes should be eliminated. Americans should pay their tax like they pay thier mortgage - once per month by check. It is their money it should pass through their hands first. Maybe then citizens will take a more proactive role in watching government waste.

Government is necessary, but it is far from superlative. Many problems can be resolved and tasks achieved without government interference.


Imagine the amount of processing it would take for individual checks EVERY single month from every taxpayer in the country :p (not arguing with your idea but just think of the infeasability of monthly payin)

Imagine the amount of processing it would take for individual checks EVERY single month from every taxpayer in the country :p (not arguing with your idea but just think of the infeasability of monthly payin)

So pay it yearly. What matters is that people actually see how much they are paying.

Concordiania, you are a genius.

Now, suppose the average tax is say, 25%. [I have no clue if it is, I don't pay taxes yet.]

Then add in another 6% of income that is spent on consumer taxes. So thats 31%. So why not make it so that there is a 40% Consumer tax. Then give everyone vouchers that let them spend $20,000 dollars tax free. For whatever. This elimenates the IRS or the CRS, and thus, we won't have to pay them!

Or....

Make there be a sliding scale of taxes. But also enable enough loopholes (only for a PERSON!) so that it is practically a fixed percentage. That way, Ambitious Rich people can get loads of moolah, while dumb old Richard 'I just inheriteded 20 trillion' McRich picks up the collective tab of all the poor people.