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Taxes aren't just about consumption of government services. If you earn more, you've clearly benefited from living in that society more than someone who does no

Taxes aren't just about consumption of government services. If you earn more, you've clearly benefited from living in that society more than someone who does not. Or, as an economist would put it, it's price discrimination - charging more to the customer who gets more value out of the product.

nybble41 8y ago
> If you earn more, you've clearly benefited from living in that society more than someone who does not. No, those who consume more have benefited more. Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less. The ones who benefit most from society are the ones who manage to consume more than they earn.
- jhbadger 8y ago
  There is little to no correlation of benefit to society provided and salary gained. Nobel prize winning scientists are generally not poverty-stricken, but they rarely make anything close to what a successful Wall Street stockbroker does, for example.
- jogjayr 8y ago
  > No, those who consume more have benefited more. Usually you can consume more if you have earned more i.e. have more buying power. But I know that's not what you mean. > Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less. They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow). In any case the taxman doesn't care about "value" provided to society because it's such a nebulous concept. The IRS doesn't let you take deductions for adding value or add extra taxes because you're a telemarketer. Even if you provided a ton of value to society while getting rich, you still got rich. And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this. > The ones who benefit most from society are the ones who manage to consume more than they earn. This is true in the case of those who inherit large fortunes/trust funds and don't work. Tax laws favor them greatly at present (lower estate and capital gains taxes). It's not true at the other end of the scale though. If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it. It's actually a miserable situation that most people work their hardest to never fall into.
  - nybble41 8y ago
    > Usually you can consume more if you have earned more i.e. have more buying power. Sure, but you've produced more as well. The key is whether you're a net producer (earner) or a net consumer. As a general rule, high-earners tend to fall into the first group. Past a certain point earnings tend to outstrip spending; the more capital you have the easier it is to produce things other people want, whereas there's only so much one person can consume. > They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow). We obviously aren't using the same definition of "value" here. If something is valuable, people will pay for it voluntarily. Providing things that are already in abundant supply does not contribute much value, even if they're things people claim to approve of. Of course, the reverse is also true: anything people willingly pay for has value to them. > And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this. As others have already pointed out, this doesn't hold water. The more wealth you have the more capable you are of providing these things for yourself. The rich already own most of the infrastructure, provide quite a bit of the financing for education, and are perfectly capable of hiring their own security. No, the ones who benefit most from having these things provided to them "for free" are those who would otherwise have a difficult time paying them on their own. >> The ones who benefit most from society are the ones who manage to consume more than they earn. > This is true in the case of those who inherit large fortunes/trust funds and don't work. If someone is rich because of an inheritance, that inheritance was a gift. By taxing the estate you're punishing the one(s) earned that wealth. If they want to spend their earnings on their kids rather than themselves, who are you to judge? The recipient of the inheritance is benefiting specifically from the work and prudent saving and investment of the ones who left them that inheritance, not from "society". > If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it. I never said that being reliant on government handouts was pleasant, but there's really no question that these are the people the system is designed to benefit—at everyone else's expense. If it were purely a question of optimizing the material factors, achieving an acceptable standard of living with minimal effort, I think you'd see a lot more people relying on welfare. The only reason the system doesn't collapse under it own weight is that the more nebulous cost in self-respect of deliberately choosing to live as a parasitic freeloader is simply too high for most people to ignore.
- baddox 8y ago
  Under theoretical models of market economics, economic profit is the opposite of providing benefit to society. In perfect competition (which obviously isn’t possible in practice), market prices equal marginal costs (which is great for consumers), and economic profit is zero. Being able to charge more than the marginal cost of your product is a bad thing. It means you are benefitting from things that are bad for society, like imperfect information and barriers to entry.
  - nybble41 8y ago
    > Under theoretical models of market economics, economic profit is the opposite of providing benefit to society. It would be more accurate to say that the opportunity for profit indicates that society is not obtaining the maximum benefit from the available resources. Under theoretical models of market economics you refer to there is no such thing as long-term economic profit. That's because profit is only realized by moving the economy closer to the ideal state, and in those theoretical perfect-information perfect-competition models you're already in the ideal state. In the non-theoretical world, however, things are never that ideal, and opportunities exist to earn a profit by addressing those deficiencies. > It means you are benefitting from things that are bad for society, like imperfect information and barriers to entry. I agree with you 100%. If society didn't have problems then there would be no opportunity to profit by offering solutions. That doesn't mean that you're responsible for those problems, however. Imperfect information is a fact of life, and providing better information is one perfectly legitimate way to earn a profit. Where barriers to entry exist, finding ways to break down those barriers is another way to profit. Now, if you're creating new problems for society, such as spreading misinformation and erecting barriers to entry where none would naturally exist, that's obviously a problem. Negative externalities such as these require restitution to the victims. At this point we've left the economic realm, however, and crossed into the domain of politics.

nybble41 8y ago

> If you earn more, you've clearly benefited from living in that society more than someone who does not. No, those who consume more have benefited more. Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less. The ones who benefit most from society are the ones who manage to consume more than they earn.

jhbadger 8y ago
There is little to no correlation of benefit to society provided and salary gained. Nobel prize winning scientists are generally not poverty-stricken, but they rarely make anything close to what a successful Wall Street stockbroker does, for example.
jogjayr 8y ago
> No, those who consume more have benefited more. Usually you can consume more if you have earned more i.e. have more buying power. But I know that's not what you mean. > Earning more is just the opposite: it shows that you've provided more benefit to society than someone who earns less. They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow). In any case the taxman doesn't care about "value" provided to society because it's such a nebulous concept. The IRS doesn't let you take deductions for adding value or add extra taxes because you're a telemarketer. Even if you provided a ton of value to society while getting rich, you still got rich. And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this. > The ones who benefit most from society are the ones who manage to consume more than they earn. This is true in the case of those who inherit large fortunes/trust funds and don't work. Tax laws favor them greatly at present (lower estate and capital gains taxes). It's not true at the other end of the scale though. If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it. It's actually a miserable situation that most people work their hardest to never fall into.
- nybble41 8y ago
  > Usually you can consume more if you have earned more i.e. have more buying power. Sure, but you've produced more as well. The key is whether you're a net producer (earner) or a net consumer. As a general rule, high-earners tend to fall into the first group. Past a certain point earnings tend to outstrip spending; the more capital you have the easier it is to produce things other people want, whereas there's only so much one person can consume. > They're not very strongly correlated. It's possible to provide value without seeing much in reward (janitors, nurses, schoolteachers), earn plenty without providing much or even negative value (telemarketers, those opioid manufacturers we're hearing about), or both provide value and earn $$$ (Google, StackOverflow). We obviously aren't using the same definition of "value" here. If something is valuable, people will pay for it voluntarily. Providing things that are already in abundant supply does not contribute much value, even if they're things people claim to approve of. Of course, the reverse is also true: anything people willingly pay for has value to them. > And your society's enforcement of laws and property rights, educated citizenry, and infrastructure were likely crucial to this. As others have already pointed out, this doesn't hold water. The more wealth you have the more capable you are of providing these things for yourself. The rich already own most of the infrastructure, provide quite a bit of the financing for education, and are perfectly capable of hiring their own security. No, the ones who benefit most from having these things provided to them "for free" are those who would otherwise have a difficult time paying them on their own. >> The ones who benefit most from society are the ones who manage to consume more than they earn. > This is true in the case of those who inherit large fortunes/trust funds and don't work. If someone is rich because of an inheritance, that inheritance was a gift. By taxing the estate you're punishing the one(s) earned that wealth. If they want to spend their earnings on their kids rather than themselves, who are you to judge? The recipient of the inheritance is benefiting specifically from the work and prudent saving and investment of the ones who left them that inheritance, not from "society". > If not having a job and being on food stamps/medicaid/unemployment was really all that great, you'd have far more people looking to get in on it. I never said that being reliant on government handouts was pleasant, but there's really no question that these are the people the system is designed to benefit—at everyone else's expense. If it were purely a question of optimizing the material factors, achieving an acceptable standard of living with minimal effort, I think you'd see a lot more people relying on welfare. The only reason the system doesn't collapse under it own weight is that the more nebulous cost in self-respect of deliberately choosing to live as a parasitic freeloader is simply too high for most people to ignore.
baddox 8y ago
Under theoretical models of market economics, economic profit is the opposite of providing benefit to society. In perfect competition (which obviously isn’t possible in practice), market prices equal marginal costs (which is great for consumers), and economic profit is zero. Being able to charge more than the marginal cost of your product is a bad thing. It means you are benefitting from things that are bad for society, like imperfect information and barriers to entry.
- nybble41 8y ago
  > Under theoretical models of market economics, economic profit is the opposite of providing benefit to society. It would be more accurate to say that the opportunity for profit indicates that society is not obtaining the maximum benefit from the available resources. Under theoretical models of market economics you refer to there is no such thing as long-term economic profit. That's because profit is only realized by moving the economy closer to the ideal state, and in those theoretical perfect-information perfect-competition models you're already in the ideal state. In the non-theoretical world, however, things are never that ideal, and opportunities exist to earn a profit by addressing those deficiencies. > It means you are benefitting from things that are bad for society, like imperfect information and barriers to entry. I agree with you 100%. If society didn't have problems then there would be no opportunity to profit by offering solutions. That doesn't mean that you're responsible for those problems, however. Imperfect information is a fact of life, and providing better information is one perfectly legitimate way to earn a profit. Where barriers to entry exist, finding ways to break down those barriers is another way to profit. Now, if you're creating new problems for society, such as spreading misinformation and erecting barriers to entry where none would naturally exist, that's obviously a problem. Negative externalities such as these require restitution to the victims. At this point we've left the economic realm, however, and crossed into the domain of politics.