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This is a great idea. The point of a tax is to impose penalties that exist in real life, but are not part of the original transaction: externalities. Widespread

This is a great idea. The point of a tax is to impose penalties that exist in real life, but are not part of the original transaction: externalities. Widespread use of antibiotics has a cost associated with it that must be paid by someone, and it should be part of the price of antibiotics. Much like there's a cost associated with income inequality, so we tax the rich more to supposedly cover that cost. Costs associate with pollution, greenhouse gases, moral hazard, etc. are all risks and costs that must be mitigated at the transaction level, otherwise the market fails.

spacehome 13y ago
> Much like there's a cost associated with income inequality, so we tax the rich more to supposedly cover that cost. That's a fairly disturbing way to frame progressive taxation. In the other examples of taxing externalities, we intentionally discourage the behavior by taxing it. Do you intend to discourage people from becoming rich by taxing it? Also, it takes both rich and poor to have inequality. Why not tax poor people more to discourage poverty?
- ihsw 13y ago
  There are some economic/social theories that suggest homelessness is an adequate and necessary deterrent to poverty. However, I'm not going to address a flaw in your logic, namely that the only role of taxation is deterring undesirable behavior.
  - Houshalter 13y ago
    >There are some economic/social theories that suggest homelessness is an adequate and necessary deterrent to poverty. Is the implication here that if homeless didn't exist, it would actually be ok to tax/punish poverty? Otherwise why even bring that up?
- drjesusphd 13y ago
  > Do you intend to discourage people from becoming rich by taxing it? That's not the intention, but perhaps a side-effect. A minor one, at that. I'd imagine it would be very difficult to discourage people from becoming rich. A progressive tax schedule certainly does not do much discouraging right now. Now that I answered your question, perhaps you can return the courtesy: Does there or does there not exist a high enough degree of income inequality such that there is a cost borne by society?
- fleitz 13y ago
  Progressive taxation? That's a good joke. In what countries that have 'progressive taxation' do the rich actually pay a higher percentage of tax on all sources of income / wealth?
dnautics 13y ago
sorry, generally speaking the point of a taxes is NOT to cover externalities, it is to control the populace and to fill the coffers of the state. Exactly what externalities do cigarette taxes cover? International trade duties? Taxes generally fail in the pursuit of correcting externalities because taxes are set by policy and committees are notoriously bad at pricing. The generally better way to cover externalities is by propertization (so a carbon AUCTION - and not cap-and-trade which has all sorts of politically motivated loopholes and subsidies - would be smarter than a carbon TAX). Furthermore there are plenty of activities that incur externalities (such as homelessness) which we probably shouldn't be taxing. An even better way to correct externalities is to stop making them externalities through social action - get people to value things like companies that destroy the environment less. It's hard work, but you just have to not be lazy in your social action.
- breischl 13y ago
  I agree with your overall point. However, the implicit claim that there are no externalities to cigarette smoking is silly. There are clearly effects on everyone who might be nearby when you're smoking. In the event that you're covered by any sort of public health insurance, which is nearly certain in old age with Medicare and increasingly probable at younger ages, then the effects on your own health become a problem for everyone else.
  - ataggart 13y ago
    >In the event that you're covered by any sort of public health insurance ... then the effects on your own health become a problem for everyone else. A vile argument. The idea that the state is empowered to curtail people's personal activities simply because the state chose to subsidize the personal health care costs of those activities should be anathema in a free and civilized society.
    - breischl 13y ago
      Once we've chosen to subsidize health care, then everyone has a financial interest in everyone else's behavior. I agree that it's a vile situation, but I tend to think it's a reason to avoid government-subsidized health care in the first place. Once we've got it, ignoring the financial consequences is just stupid.

spacehome 13y ago

> Much like there's a cost associated with income inequality, so we tax the rich more to supposedly cover that cost. That's a fairly disturbing way to frame progressive taxation. In the other examples of taxing externalities, we intentionally discourage the behavior by taxing it. Do you intend to discourage people from becoming rich by taxing it? Also, it takes both rich and poor to have inequality. Why not tax poor people more to discourage poverty?

ihsw 13y ago
There are some economic/social theories that suggest homelessness is an adequate and necessary deterrent to poverty. However, I'm not going to address a flaw in your logic, namely that the only role of taxation is deterring undesirable behavior.
- Houshalter 13y ago
  >There are some economic/social theories that suggest homelessness is an adequate and necessary deterrent to poverty. Is the implication here that if homeless didn't exist, it would actually be ok to tax/punish poverty? Otherwise why even bring that up?
drjesusphd 13y ago
> Do you intend to discourage people from becoming rich by taxing it? That's not the intention, but perhaps a side-effect. A minor one, at that. I'd imagine it would be very difficult to discourage people from becoming rich. A progressive tax schedule certainly does not do much discouraging right now. Now that I answered your question, perhaps you can return the courtesy: Does there or does there not exist a high enough degree of income inequality such that there is a cost borne by society?
fleitz 13y ago
Progressive taxation? That's a good joke. In what countries that have 'progressive taxation' do the rich actually pay a higher percentage of tax on all sources of income / wealth?

dnautics 13y ago

sorry, generally speaking the point of a taxes is NOT to cover externalities, it is to control the populace and to fill the coffers of the state. Exactly what externalities do cigarette taxes cover? International trade duties? Taxes generally fail in the pursuit of correcting externalities because taxes are set by policy and committees are notoriously bad at pricing. The generally better way to cover externalities is by propertization (so a carbon AUCTION - and not cap-and-trade which has all sorts of politically motivated loopholes and subsidies - would be smarter than a carbon TAX). Furthermore there are plenty of activities that incur externalities (such as homelessness) which we probably shouldn't be taxing. An even better way to correct externalities is to stop making them externalities through social action - get people to value things like companies that destroy the environment less. It's hard work, but you just have to not be lazy in your social action.

breischl 13y ago
I agree with your overall point. However, the implicit claim that there are no externalities to cigarette smoking is silly. There are clearly effects on everyone who might be nearby when you're smoking. In the event that you're covered by any sort of public health insurance, which is nearly certain in old age with Medicare and increasingly probable at younger ages, then the effects on your own health become a problem for everyone else.
- ataggart 13y ago
  >In the event that you're covered by any sort of public health insurance ... then the effects on your own health become a problem for everyone else. A vile argument. The idea that the state is empowered to curtail people's personal activities simply because the state chose to subsidize the personal health care costs of those activities should be anathema in a free and civilized society.
  - breischl 13y ago
    Once we've chosen to subsidize health care, then everyone has a financial interest in everyone else's behavior. I agree that it's a vile situation, but I tend to think it's a reason to avoid government-subsidized health care in the first place. Once we've got it, ignoring the financial consequences is just stupid.