6 ms·

Why shouldn't the people who benefit the most from how society is structured be expected to pay the most for its maintenance?

by jfager 17y ago

ryanwaggoner 17y ago
Aside from the larger question of why the government has the right to take people's income by force to begin with, I can think of four practical reasons off the top of my head: 1) It is a disincentive to others who might try to reach that level 2) It's hardly clear that the success of the wealthy is due to how society is structured, and not their own effort. Undoubtably some is, but is it 90/10 or 10/90? 3) It encourages relocation of talent, business, and capital to states or countries where the tax situation is more favorable. 4) It's not clear to me that more tax revenue results in a net benefit to society. My opinion is that the rich are better at investing their money for optimum yield than the government, and the end result is more benefit for society.
- encoderer 17y ago
  Do you truly believe there's anybody out there who wouldn't work to attain wealth merely because the gov't takes a higher percentage of it? I mean, seriously?
  - SamAtt 17y ago
    The issue isn't "wealth" as much as it's "more wealth". There's a classic example of a secretary who did her job really well so she got a raise only to find it bumped her into a higher tax bracket and she actually made less money. So from that point on Secretaries didn't bother to excel. This applies equally to the engineer who makes $225,000 and who might be willing to put in extra effort but won't if the reward isn't worth it. So the issue is shifting the cost/benefit equation over to where there isn't enough benefit for people to put in the effort
    - encoderer 17y ago
      That story about the secretary? That is completely contrary to the way a marginal income tax actually works. There is no way, in the American progressive tax system, to get a raise, be moved into a higher tax bracket, and end up taking home less money. It's just not possible. @ryanwaggoner - correct, ty.
      - ryanwaggoner 17y ago
        Actually, it's contrary to the way a marginal income tax works.
      - SamAtt 17y ago
        It can if you combine a marginal Federal Tax with a State Flat Tax. Not all tax systems are progressive
        encoderer 17y ago
        Ok, I'll bite... How? A state flat tax will tax this new raise at the same flat rate as all the existing pay. The marginal federal tax will tax the new raise, in your scenario, at the new, higher tax bracket. But your scenario would have the gov't taxing this new cash into the red, reducing her take home pay. That's not gonna happen. Period.
    - rbranson 17y ago
      This is asinine. Not only will the secretary make more money, but this money will likely be purely discretionary. Her post-tax $80 per week increase isn't immediately going to her rent, utilities, bills, etc, it's going to be extra spending money.
- fleitz 17y ago
  Originally to provide a justice and defense system, both of which are generally regarded as places where market forces would not provide a solution that would adequate protect the rights not ceded by the people to the gov't. Of course, after retaining this right the gov't expanded it for all manner of other purposes. You also have to remember that in most non-US countries rights flow from the crown/gov't to the people, not from the people to the gov't, so the legal justification would be much different and along the lines of "because we didn't cede that to the people"
- lbrandy 17y ago
  Your rather extreme libertarian views have really well thought out rebuttals and it makes me think you haven't actually read much to challenge these ideas of yours. I have major libertarian tendencies and I find your arguments extremely wanting. This is like level 1 libertarianism, where all the arguments, if taken to their natural conclusion, result in a tax rate of 0%. Aside from the larger question of why the government has the right to take people's income by force to begin with Because the government provides services that you cannot "opt-out" of. You benefit from services (ie, defense), no matter how much you try not to, by merely living within the borders. This is our "social contract". The free-rider problem makes this an essentially necessary part of any modern society. It is a disincentive to others who might try to reach that level And your argument ignores the incentives to reach that level (ie, being rich). They are two forces that MUST be balanced. Ignoring the incentives, I can see how you'd view all taxes as ONLY disincentive. This ignores the reality of the situation, however. It's hardly clear that the success of the wealthy is due to how society is structured, and not their own effort. Undoubtably some is, but is it 90/10 or 10/90? It's actually quite clear on issues that take very much for granted. Like binding contract law, law and order, due process, and so on. Even still, no matter what the split, the rich -do- benefit from these more than the poor. This is a rather poor argument, though, because even if the rich didn't benefit more than the poor, the progressive tax system is moral for other reasons (decreasing marginal utility of a dollar, most importantly). It encourages relocation of talent, business, and capital to states or countries where the tax situation is more favorable. Yes, an economic factor that MUST be considered. Again, pretending that all tax raises are bad for a reason like this implies that the optimal tax rate is 0%. It's not clear to me that more tax revenue results in a net benefit to society. My opinion is that the rich are better at investing their money for optimum yield than the government, and the end result is more benefit for society. Is -any- tax revenue a net benefit to society? Or is the optimum zero? If you believe that the optimum is above zero, then you MUST acknowledge that taxes can be too low, and must raised. Any (libertarian) argument that tends to natural conclusion in an optimal tax rate of zero can be discarded as poorly thought-out. On the flip-side, any (socialist) argument that tends to the natural conclusion of an optimal tax rate of 100% can be equally discarded.
  - ryanwaggoner 17y ago
- jfager 17y ago
  Well, the United States government has it because it ratified an amendment to the Constitution saying it does, via the Constitutionally defined process to do so. 1.) Right, I'm going to give up on my dream to get rich because I'm paying a 4% higher marginal tax rate. Nevermind that I can afford an accountant to figure out how to minimize my tax burden and will effectively end up paying a smaller percentage of my wealth. 2.) 'Wealth', as a concept, does not exist except within the structure of the society that recognizes it. Ours happens to be structured so that to some degree you can earn your wealth. It's a Randian fairytale that anyone is wealthy from solely their own effort, though. 3.) That's true. But the U.S. actually has a pretty average tax rate compared to a lot of other places, is more or less stable, and has the largest paying market in the world by far. It's not the only consideration. 4.) That's also true (or at least debatable - a lot of wealthy people invest super conservatively so as to maintain their current wealth, oftentimes right back into the government itself, and are hardly engines of innovation), but you were asking for a basic moral justification, not a full exposition on the effectiveness of the current tax code and budget.
nickpp 17y ago
Who benefits the most from the society IN RAPORT TO HIS CONTRIBUTION: the one making 30k or the one making 300k? Edit: just having the money in the bank is not benefiting. Using service, health care, infrastructure, education, free time, etc. That is benefiting. Edit2: Furthermore, they are ALREADY paying the most.
- jfager 17y ago
  Your claim is that John Paulson is contributing 5 orders of magnitude more to society than teachers, social workers, police officers, firefighters, construction workers, engineers, nurses, and soldiers?
  - ryanwaggoner 17y ago
    It seems a bit intellectually unfair to pit one specific person against a bunch of vague groups of people that we generally hold favorable views towards. In the aggregate, I think one can make the case that the wealthy contribute more to society than the poor, in the form of jobs, capital, etc. How do you determine value to a society other than through what the society is willing to pay? And if those other jobs were worth more to society, presumably we'd pay people more to do them.
    - jfager 17y ago
      A man was paid $6b for winning a bet against homeowners and the entire financial industry. It is relevant to point that out, because it directly contradicts the idea that a person's wealth is proportional to what they've contributed. And it's not like similar situations are hard to find (though his is a much more dramatic example than most). What's intellectually dishonest is pretending that money is the only way to measure value.
      - ryanwaggoner 17y ago
        Are you seriously arguing that millions of people should be taxed more on the basis of what one person may have done?
DanielBMarkham 17y ago
Ok so let's say I have a billion dollars. I can live anywhere in the world I want to -- and with all kinds of luxuries. Seems to me like the "people who benefit most from how society is structured" would be those poor folks who through no fault of their own, perhaps mental retardation, chronic illness, or birth defect, cannot make a living and yet are provided for by the rest of us. These are the people who would die under a differently structured system, right? After all, rich folks got it good under all kinds of systems.
- _delirium 17y ago
  There might be an ethical argument, but the "rich people have lots of options, and might leave" argument isn't really convincing to me. Recall that to avoid U.S. income tax, you must move abroad and permanently renounce your citizenship. How many wealthy Americans do you think would really do that solely due to a tax hike? Especially one that was in the range that would actually likely be passed (i.e. not 99%)?
  - DanielBMarkham 17y ago
    I'm not saying they might leave. I'm saying that rich people have a good life in any kind of system. This includes being mobile. Your point was we should take money from those who got the greatest benefit from our society. By that reasoning, people who are alive now and would have died otherwise have it the best, right? Or does that extra boat or summer house so important that it's a better benefit than living? Listen very closely: whatever system you set up, there will be rich people. If you tighten the tax laws, the rich will be criminals and politically-connected people. But there will always be rich people. It's true in any societal construct. They will always have a better lifestyle than the average person. Given the criteria you have presented, you will never end your quest to find rich people and tax them.
    - _delirium 17y ago
      Is it really true that higher taxes will lead to the rich being criminals and politically connected? My impression is that Sweden, for example, isn't considered more corrupt than the United States, despite having much higher taxes.
fleitz 17y ago
I believe you are conflating society and government, and I'd actually be very much in favor of the gov't providing bills for it's services so that I could cancel the "services" I don't want, and/or find alternate providers.
- _delirium 17y ago
  It's not clear how some of the services would work if there were opt-in though. If I opt out of the government-provided property-rights system, for example, but someone else doesn't, what happens? If we have a dispute over who owns a particular piece of land, usually a court resolves that. But I've opted out of the government court system, so how do we resolve this dispute? By force of arms?

Why shouldn't the people who benefit the most from how society is structured be expected to pay the most for its maintenance?

by jfager 17y ago

Why shouldn't the people who benefit the most from how society is structured be expected to pay the most for its maintenance?

ryanwaggoner 17y ago

Aside from the larger question of why the government has the right to take people's income by force to begin with, I can think of four practical reasons off the top of my head: 1) It is a disincentive to others who might try to reach that level 2) It's hardly clear that the success of the wealthy is due to how society is structured, and not their own effort. Undoubtably some is, but is it 90/10 or 10/90? 3) It encourages relocation of talent, business, and capital to states or countries where the tax situation is more favorable. 4) It's not clear to me that more tax revenue results in a net benefit to society. My opinion is that the rich are better at investing their money for optimum yield than the government, and the end result is more benefit for society.

encoderer 17y ago
Do you truly believe there's anybody out there who wouldn't work to attain wealth merely because the gov't takes a higher percentage of it? I mean, seriously?
- SamAtt 17y ago
  The issue isn't "wealth" as much as it's "more wealth". There's a classic example of a secretary who did her job really well so she got a raise only to find it bumped her into a higher tax bracket and she actually made less money. So from that point on Secretaries didn't bother to excel. This applies equally to the engineer who makes $225,000 and who might be willing to put in extra effort but won't if the reward isn't worth it. So the issue is shifting the cost/benefit equation over to where there isn't enough benefit for people to put in the effort
  - encoderer 17y ago
    That story about the secretary? That is completely contrary to the way a marginal income tax actually works. There is no way, in the American progressive tax system, to get a raise, be moved into a higher tax bracket, and end up taking home less money. It's just not possible. @ryanwaggoner - correct, ty.
    - ryanwaggoner 17y ago
      Actually, it's contrary to the way a marginal income tax works.
    - SamAtt 17y ago
      It can if you combine a marginal Federal Tax with a State Flat Tax. Not all tax systems are progressive
      - encoderer 17y ago
        Ok, I'll bite... How? A state flat tax will tax this new raise at the same flat rate as all the existing pay. The marginal federal tax will tax the new raise, in your scenario, at the new, higher tax bracket. But your scenario would have the gov't taxing this new cash into the red, reducing her take home pay. That's not gonna happen. Period.
  - rbranson 17y ago
    This is asinine. Not only will the secretary make more money, but this money will likely be purely discretionary. Her post-tax $80 per week increase isn't immediately going to her rent, utilities, bills, etc, it's going to be extra spending money.
fleitz 17y ago
Originally to provide a justice and defense system, both of which are generally regarded as places where market forces would not provide a solution that would adequate protect the rights not ceded by the people to the gov't. Of course, after retaining this right the gov't expanded it for all manner of other purposes. You also have to remember that in most non-US countries rights flow from the crown/gov't to the people, not from the people to the gov't, so the legal justification would be much different and along the lines of "because we didn't cede that to the people"
lbrandy 17y ago
Your rather extreme libertarian views have really well thought out rebuttals and it makes me think you haven't actually read much to challenge these ideas of yours. I have major libertarian tendencies and I find your arguments extremely wanting. This is like level 1 libertarianism, where all the arguments, if taken to their natural conclusion, result in a tax rate of 0%. Aside from the larger question of why the government has the right to take people's income by force to begin with Because the government provides services that you cannot "opt-out" of. You benefit from services (ie, defense), no matter how much you try not to, by merely living within the borders. This is our "social contract". The free-rider problem makes this an essentially necessary part of any modern society. It is a disincentive to others who might try to reach that level And your argument ignores the incentives to reach that level (ie, being rich). They are two forces that MUST be balanced. Ignoring the incentives, I can see how you'd view all taxes as ONLY disincentive. This ignores the reality of the situation, however. It's hardly clear that the success of the wealthy is due to how society is structured, and not their own effort. Undoubtably some is, but is it 90/10 or 10/90? It's actually quite clear on issues that take very much for granted. Like binding contract law, law and order, due process, and so on. Even still, no matter what the split, the rich -do- benefit from these more than the poor. This is a rather poor argument, though, because even if the rich didn't benefit more than the poor, the progressive tax system is moral for other reasons (decreasing marginal utility of a dollar, most importantly). It encourages relocation of talent, business, and capital to states or countries where the tax situation is more favorable. Yes, an economic factor that MUST be considered. Again, pretending that all tax raises are bad for a reason like this implies that the optimal tax rate is 0%. It's not clear to me that more tax revenue results in a net benefit to society. My opinion is that the rich are better at investing their money for optimum yield than the government, and the end result is more benefit for society. Is -any- tax revenue a net benefit to society? Or is the optimum zero? If you believe that the optimum is above zero, then you MUST acknowledge that taxes can be too low, and must raised. Any (libertarian) argument that tends to natural conclusion in an optimal tax rate of zero can be discarded as poorly thought-out. On the flip-side, any (socialist) argument that tends to the natural conclusion of an optimal tax rate of 100% can be equally discarded.
- ryanwaggoner 17y ago
jfager 17y ago
Well, the United States government has it because it ratified an amendment to the Constitution saying it does, via the Constitutionally defined process to do so. 1.) Right, I'm going to give up on my dream to get rich because I'm paying a 4% higher marginal tax rate. Nevermind that I can afford an accountant to figure out how to minimize my tax burden and will effectively end up paying a smaller percentage of my wealth. 2.) 'Wealth', as a concept, does not exist except within the structure of the society that recognizes it. Ours happens to be structured so that to some degree you can earn your wealth. It's a Randian fairytale that anyone is wealthy from solely their own effort, though. 3.) That's true. But the U.S. actually has a pretty average tax rate compared to a lot of other places, is more or less stable, and has the largest paying market in the world by far. It's not the only consideration. 4.) That's also true (or at least debatable - a lot of wealthy people invest super conservatively so as to maintain their current wealth, oftentimes right back into the government itself, and are hardly engines of innovation), but you were asking for a basic moral justification, not a full exposition on the effectiveness of the current tax code and budget.

nickpp 17y ago

Who benefits the most from the society IN RAPORT TO HIS CONTRIBUTION: the one making 30k or the one making 300k? Edit: just having the money in the bank is not benefiting. Using service, health care, infrastructure, education, free time, etc. That is benefiting. Edit2: Furthermore, they are ALREADY paying the most.

jfager 17y ago
Your claim is that John Paulson is contributing 5 orders of magnitude more to society than teachers, social workers, police officers, firefighters, construction workers, engineers, nurses, and soldiers?
- ryanwaggoner 17y ago
  It seems a bit intellectually unfair to pit one specific person against a bunch of vague groups of people that we generally hold favorable views towards. In the aggregate, I think one can make the case that the wealthy contribute more to society than the poor, in the form of jobs, capital, etc. How do you determine value to a society other than through what the society is willing to pay? And if those other jobs were worth more to society, presumably we'd pay people more to do them.
  - jfager 17y ago
    A man was paid $6b for winning a bet against homeowners and the entire financial industry. It is relevant to point that out, because it directly contradicts the idea that a person's wealth is proportional to what they've contributed. And it's not like similar situations are hard to find (though his is a much more dramatic example than most). What's intellectually dishonest is pretending that money is the only way to measure value.
    - ryanwaggoner 17y ago
      Are you seriously arguing that millions of people should be taxed more on the basis of what one person may have done?

DanielBMarkham 17y ago

Ok so let's say I have a billion dollars. I can live anywhere in the world I want to -- and with all kinds of luxuries. Seems to me like the "people who benefit most from how society is structured" would be those poor folks who through no fault of their own, perhaps mental retardation, chronic illness, or birth defect, cannot make a living and yet are provided for by the rest of us. These are the people who would die under a differently structured system, right? After all, rich folks got it good under all kinds of systems.

_delirium 17y ago
There might be an ethical argument, but the "rich people have lots of options, and might leave" argument isn't really convincing to me. Recall that to avoid U.S. income tax, you must move abroad and permanently renounce your citizenship. How many wealthy Americans do you think would really do that solely due to a tax hike? Especially one that was in the range that would actually likely be passed (i.e. not 99%)?
- DanielBMarkham 17y ago
  I'm not saying they might leave. I'm saying that rich people have a good life in any kind of system. This includes being mobile. Your point was we should take money from those who got the greatest benefit from our society. By that reasoning, people who are alive now and would have died otherwise have it the best, right? Or does that extra boat or summer house so important that it's a better benefit than living? Listen very closely: whatever system you set up, there will be rich people. If you tighten the tax laws, the rich will be criminals and politically-connected people. But there will always be rich people. It's true in any societal construct. They will always have a better lifestyle than the average person. Given the criteria you have presented, you will never end your quest to find rich people and tax them.
  - _delirium 17y ago
    Is it really true that higher taxes will lead to the rich being criminals and politically connected? My impression is that Sweden, for example, isn't considered more corrupt than the United States, despite having much higher taxes.

fleitz 17y ago

I believe you are conflating society and government, and I'd actually be very much in favor of the gov't providing bills for it's services so that I could cancel the "services" I don't want, and/or find alternate providers.

_delirium 17y ago
It's not clear how some of the services would work if there were opt-in though. If I opt out of the government-provided property-rights system, for example, but someone else doesn't, what happens? If we have a dispute over who owns a particular piece of land, usually a court resolves that. But I've opted out of the government court system, so how do we resolve this dispute? By force of arms?