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Paying 20% of income in taxes (for example) is a much heavier burden to bear if you're making 20k a year than it is if you're making 200 000. Which is why progr
by rebuilder 7y ago
Paying 20% of income in taxes (for example) is a much heavier burden to bear if you're making 20k a year than it is if you're making 200 000. Which is why progressive taxation exists.
- whamlastxmas 7y agoBack in my youth I didn't "get" this the marginal utility of a dollar. I was also a libertarian and Ron Paul supporter. How naive I was.
- alexmingoia 7y agoThe law of diminishing marginal utility refers to homogenous goods. The marginal utility of the dollar only has meaning in the context of a particular good or service. Whether someone earns $20,000/year or $200,000/year says nothing about the marginal utility of dollars with respect to a particular good or service. The diminishing marginal utility of dollars is the same with respect to a gallon of milk for example, whether one has $20,000 or $200,000. I’d also like to point out that “utility” is subjective. There are serious methodological shortcomings with quantifying the subjective satisfaction of various goods and services, particularly heterogenous goods like housing.