Monday, July 14, 2008

Only Half?

My mother, arguing against a progressive tax regime wherein the wealthiest pay a higher percentage of their income in taxes than do the poor, often says something like, "Well, if you just take away rich people's money through taxes, there's no incentive for people to become entrepeneurs or take risks to get rich, so nobody will do anything and the economy will collapse."

And that's just stupid. Go up to thirty people and ask them what they'd do for a ho-jillion dollars (a million, a hundred million, whatever bunch of money you want to use). Then ask them what they'd do for half a ho-jillion dollars. See how many of them say, "I'd give my left arm for a ho-jillion dollars, but fuck, I wouldn't get out of bed for half a ho-jillion dollars. If I'm only getting half a ho-jillion dollars, I might as well keep working at Burger King for $6.00 an hour." Or even try a third of a ho-jillion dollars.

Guess what? I don't think there are very many people who would take a risk or try to make it big with a new idea for a ho-jillion dollars who wouldn't do it for a third of a ho-jillion dollars. Sure, they might not be happy about the idea of the government taking two-thirds of the money they earned -- who would? -- but it doesn't alter the basic fact that few would be dissuaded from trying to get rich because they'd only get to keep $1 billion dollars if they managed to earn $3 billion dollars.

Of course, my mother's argument also neglects the fact that the wealthier one is, the more one disproportionately benefits from government compared to those who are poorer. Poor people pay taxes to support police forces who often oppress and abuse them, to pay for services that they can only use if they pay additional fees they can't afford*, and to keep in place a legal system that creates immense barriers when they try to compete with the already established wealthy. Whereas government protects the assets of the rich, provides services from the police and other agencies that poor people can't dream of**, provides corporate welfare for their businesses so they can rake in bigger profits, and gives access to the decision-makers resulting in the system continuing to be gamed in their favor.

No one likes taxes. And I'm not sure that it isn't wrong for the government ever to get to keep more of the money someone earns than they do. But the idea that the rich should shoulder less of a burden for supporting government than poor people who can less afford it and also benefit from it less is just ridiculous. For the reasons outlined above as well as many others.

* Like when they charge entrance fees at National Parks. We all pay for the parks with our taxes, but if you can't afford the fee to get into the park, then you don't get to use what your taxes paid for at all. Or roads, really. Your taxes pay for the roads, but if you can't afford the fees for a driver's license, car registration, and insurance, then you aren't allowed to use roads you paid for.
**For instance, when JFK, Jr.'s plane went down off the coast of Massachusetts, the state and Feds mobilized a massive emergency search-and-rescue operation, a huge cost in terms of both money and manpower. No effort on that scale would have been launched if you or I had been flying that plane, let me tell you. The Coast Guard would search for a few days and then the search would be "called off" and that'd be it. There'd be no way that state emergency management, for instance, would be involved if you or I were in that plane, but state emergency managent went into full operations when JFK, Jr.'s plane went down. (I know this from talking to people I worked with who worked that operation).


At 12:40 PM, Anonymous chuck said...

Nice to see you back on line!

At 2:37 AM, Anonymous Anonymous said...

Your little "experiment" is so utterly flawed. Very few people would be willing to put in the blood sweat and tears entrepreneurs go through
to end up with their "ho-jillion" dollars. Sure all thirty people may say they would, but put to the test they would run crying saying fu*# the
ho-jillion dollars. It is easy to argue you point with unrealistic scenarios like that. Then your point about the parks
is also laughable...there are tons of free parks the so called "poor" people will never be inclined to visit. You need to research more of the spending habits
of your poor people...what each person spends their money is tell tale of their demographic. To make a blanket comment that they can't visit the
parks they pay for is ludicrous. Most have no inclination to go to National Parks and if they want to go all they need to do is spend their welfare check
going to the park instead of getting their nails done or yapping on their cell phone. Those without welfare checks could put put down their
cigarettes for a week to visit the parks...hell at least they wouldn't be paying their cigarette/government taxes that week. Have you ever watched the documentary
on the homeless guy who was given 100,000 to do whatever he wanted with? Did he take that money and invest it or do anything great with it?
NO. He blew it all, just like 90% of American's would do given that opportunity, but the 10% that would do more with the money are they same ho-jillionaires
you speak of and then they would get punished for doing good with the money by being taxed to high hell for it...which can make any man insane.
Off topic, but point being that 90% of America will never get to even come close to ho-jillionaires because they would squander it and sure
as hell wouldn't want to work to keep that kind of money coming in. Actually your scenario is put in front of hundreds of thousands of college students
every year. The first year in the Pre-Med or Med Schools end with about half quitting, probably more,the lure of the huge payout in the end
isn't worth all the hard work they need to put in to get there. The ones who do make it through are gonna be pissed off when half their hard earned money
is taken away some of which will be given to some the quitters. Then why work that hard in the first place?? It may not make sense to you but the masses of
America definitely feel that way.

You need to come down to the level of the layman and get off the philosophical high horse to understand. What you think makes sense
may really make sense hypothetically, but people WILL stop wanting to strive when most of their money is being taken away. Perhaps a happy medium would be
allowing the ho-jillionaire put his or her tax dollars towards what programs they felt were necessary?? But I don't think this argument is truly over
the is about the upper middle class who have worked so hard for their money only to see it squandered away by
the huge government machine. Just going to slip further and further down the socialistic slope...with crazy taxes like that.

I just have to say on the police statement, you have to be a real idealist to say sh*@ like that. You need to go to work for a few weeks with one
of the major inner city PD's. Put yourself in the line of fire before you go accusing them of being oppressive. Watch the documentary on
the formation of the Crips and Bloods...when the police were oppressive and abusive gang violence went down as did murders. When they were accused
of being too oppressive and the police chief backed them off, gang violence sky-rocketed and murders tripled. So, I guess what you are saying is
just let the idiots kill themselves off...that would be of better public service to them all. You need the oppressive police force to keep the idiots from killing each other.
And if that means a few innocent people being pulled over via profiling, then so be it.

Go ahead and pick apart this comment. I know you will spin it just to your taste.

At 7:15 PM, Blogger R. Paul Wiegand said...

With respect, I think you miss the point. Mark's point was to address the idea that a progressive tax system is flawed because it divests people of motivation. His argument is extreme because he is talking about the extreme end of that progressive scale.

There is no evidence that I have ever seen that a progressive tax system leads to any less productivity than a flat scheme. Indeed, our income tax is ostensibly progressive, and most Americans believe we are particularly productive.

Your counter argument does not make sense to me. So restrict your attention to those people who really would put in the effort ... and the hypothetical situation is precisely the same. The point is that the "reward gradient" is not a boolean: People who are motivated to produce something for a lot of money are not suddenly entirely unmotivated because they will get somewhat less than a lot of money.

From a financial and efficiency point of view, a progressive system makes the most sense. Taxing the wealthiest more raises more money from the fewest number of people. This is what makes the estate tax such a perfect tax: virtually no one pays it, but it still raises a lot of money.

If you have evidence that a progressive tax system inherently reduces productivity, I am all eyes. But simply asserting that it is so is unpersuasive.

I cannot speak for the "masses of Americans" (and neither can you), I can only speak for myself. I worked very hard to get my education, and I did not do it for money. Most of those that I know who spent a lot of time, energy, and money on their education did not do so for money. Most of the people I know who spent a lot of time, energy, and money on their businesses (including some very conservative people) did not do so entirely for money.

People work hard for a lot of reasons. People are unproductive for a lot of reasons. Let's not cheapen a complicated discussion with sweeping generalizations.

Out of curiousity, what do you believe the "upper middle class" is? You are aware that the upper limit of the middle 20% of American households (not individuals) is a salary of about $60k? I suggest that you read this article, which does a nice job of summarizing our many misconceptions of just who is or isn't middle class.

Finally: a bit of a pet peeve, I am afraid ... we do not have not a socialist economy. Progressive tax systems are not the same thing as socialism. Taxation in general is not equivalent to socialism. Neither wasteful nor efficient spending of tax money is indicative of our being socialistic. There's no reason to bring the word up except to engendered some kind of emotional response.


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