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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

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.

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.