Should the rich pay a higher tax rate?
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Well at least you've made a justification other than 'because they can'!
The fallacy in this (in my view) is that everyone has a right to live in a society where they have access to certain services (health, education, law enforcement for example). If you are effectively making those who can afford it pay more for these services, won't there be a natural progression (and a demand) that the better services are provided in the areas where these rich live and consume? Isn't that a reality now?
Its not a reality that I am particulary happy with. However in my view, the logic behind why it happens is about as convincing as the 'rich should pay a higher tax percentage' argument.
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Cross-post!
As I state above, is it fair that they benefit from a higher proportion of the services? Should not (for example) the standard of (public) health care you get be the same regardless of your income?
As a counter-argument: Is it therefore fair and reasonable to cut all services and benefits from those not prepared to work?
My point was that the weak are more in need of protection by the government (in the form of equal protection under the law) than the strong are.
I'm saying that everyone should pay the same percentage of their income toward taxes, such as in the following example:
The rich man paying (say) 1% of his 50mil/yr income for the "Transportation Infrastructure" part of his tax bill would thus pay $500K. The worker paying 1% of his $50K/yr income for the same thing would pay $500. I agree with applying the same percentage to both of them.
Others here are suggesting that the rich man should pay (say) 5% of his income where the worker pays 1%. Does that clear it up?
On the contrary, you keep using "business owner" and "rich person" interchangeably. Someone who has made their fortune almost totally by investing in the stock market (Warren Buffett comes readily to mind) or by (say) winning the lottery have different amounts of interest in the transportation infrastructure as say, the owners of United Parcel Service. The owners of UPS as private citizens have an interest in roads roughly in proportion to their wealth, just like every other citizen. As the representatives of a shipping business they have an absolutely critical need for roads. Taxing the businesses according to their use of the roads (and earmarking those taxes for road maintenance) in lieu of just slapping higher tax rates on the wealthy is an option that needs to be considered.
Edit: fixed the quoting
Gothmog
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ainwood,
I am not saying that those who can afford it should pay more, I am saying that people with wealth benefit more from the things that society has to offer. Such as roads, courts, police, healthcare, etc. They depend more on a stable predicable society - that is where their wealth comes from after all.
I don't think society should stop wealthy people from paying more for better schools, healthcare, law enforcement, etc. In america we have private schools, private hospitals, security guard's, etc. But it is very clear to me that the wealthy benefit from good public schools, good public health, and good public law enforcement in any case.
There is a problem with better public services being provided in places where the wealthy live, but that is again a different topic. I was simply arguing that the rich should indeed pay a higher tax rate, because they benefit from a higher percentage of government expendatures.
I am not saying that those who can afford it should pay more, I am saying that people with wealth benefit more from the things that society has to offer. Such as roads, courts, police, healthcare, etc. They depend more on a stable predicable society - that is where their wealth comes from after all.
I don't think society should stop wealthy people from paying more for better schools, healthcare, law enforcement, etc. In america we have private schools, private hospitals, security guard's, etc. But it is very clear to me that the wealthy benefit from good public schools, good public health, and good public law enforcement in any case.
There is a problem with better public services being provided in places where the wealthy live, but that is again a different topic. I was simply arguing that the rich should indeed pay a higher tax rate, because they benefit from a higher percentage of government expendatures.
Gothmog
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IglooDude wrote:
Someone like Warren Buffett benefits hugely from living in a stable predictable society. Really it is everything to people like him. Much more so than any working class person, and he should therefore pay a higher percentage of his income as taxes. That is exactly my argument.
Well, you failed to offer any support for that position. There needs to be a court system that allows a nation to enforce laws on the rich, and even that benefits the rich because they need protection from other rich people as well as organized poor people (and middle class). Laws need to be enforced to keep society working, the rich benefit more from a stable, predictable, society. Thus the rich benefit more from a strong court system and other forms of governmental protection.
I understood what you meant. I have been arguing that the rich benefit from a higher percentage of government expenditures and thus should pay a higher percentage of their income as taxes.
I knew this would come up, we have not defined what a rich person is. However, I was advocating a progressive tax structure where we admit that there is a continuum and tax accordingly. You have made no attempt to define rich.
I agree with that but it would be very hard to do and again drifts off into the topic of how taxes in a given country should work. It is very hard to account for all use of all roads, very hard. For example distribution of a product, without roads a business that makes products could not distribute them. They also benefit from the ease with which consumers can get to the store to purchace said products. Thus, they benefit more from having a good infrastructure than simply adding up weight carried x miles traveled would indicate.
Someone like Warren Buffett benefits hugely from living in a stable predictable society. Really it is everything to people like him. Much more so than any working class person, and he should therefore pay a higher percentage of his income as taxes. That is exactly my argument.
Gothmog
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Heh, ainwood. That does look contradictory when you edit it like that doesn't it?
In the first place I was responding to this
In the second, I was trying to say that the rich already benefit more from government services and so it is correct that they pay a higher percentage of taxes.
In the first place I was responding to this
and saying that this is a bit off topic and that no I don't think they should be provided with better services unless they pay additional money for that (as I mentioned already exists here in america).
In the second, I was trying to say that the rich already benefit more from government services and so it is correct that they pay a higher percentage of taxes.
I think we're tripping over the difference between being wealthy, and growing wealthier. My position is that wealthy people can pursue alternatives (private investigators and private security guards, for example) whereas poor people are more dependent on police and the courts for protection. Yes, rich people have more to lose financially from anarchy, but they are better equipped to deal with anarchy through usage of the resources they already have.
It is easy to account for all use of roads - sales tax on gasoline. The shipping companies would pass on the majority of the costs to the companies requiring the distribution, who would in turn pass on the majority of the costs to the consumers, who would in turn require slightly higher wages for jobs that require a commute, and so on, pushing out the cost of maintaining roads throughout the country in an approximation of the of benefit that they gain from having the roads.
Gothmog
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You have completed the circle of life IglooDude. I too believe in the power of the free market and I think that if implimented would show just how much rich people do depend on infrastructure and stability.
However, there is no way to separate every little aspect of society into quantifiable bits. Gasoline tax wont do it, UPS for example already has huge fleets of trucks that run on natural gas, some people get 15 mpg others get 50 mpg, etc. etc. and what about the whole part of my argument that you quote above? That 'they benefit more than simply adding up weight carried x miles traveled would indicate', which is roughly what you are advocating.
One easy approximation is that offered by PP and myself. It seems clear that wealthy people benefit more from living in society than poor people, and that there is a continuum here. The wealthier you are the more you benefit from living in society vs. anarchy. So, use an exponential formula with a progressive rate and a reasonable deductible! Certainly this will not be perfect, but then what is?
However, there is no way to separate every little aspect of society into quantifiable bits. Gasoline tax wont do it, UPS for example already has huge fleets of trucks that run on natural gas, some people get 15 mpg others get 50 mpg, etc. etc. and what about the whole part of my argument that you quote above? That 'they benefit more than simply adding up weight carried x miles traveled would indicate', which is roughly what you are advocating.
One easy approximation is that offered by PP and myself. It seems clear that wealthy people benefit more from living in society than poor people, and that there is a continuum here. The wealthier you are the more you benefit from living in society vs. anarchy. So, use an exponential formula with a progressive rate and a reasonable deductible! Certainly this will not be perfect, but then what is?
Gothmog
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@ainwood,
Well, I am arguing that people benefit from a % of total government expendatures that roughly tracks their income in an exponential way.
I think my best attempt to summarize was this
take the value that a given individual is extracting from society as a percentage of the total value generated by society. That is roughly the percentage of total government expenditures that I think it would be justified for that individual to pay. Luxury taxes are one way of trying to bridge the gap between 'value' and 'cash income'.
Well, I am arguing that people benefit from a % of total government expendatures that roughly tracks their income in an exponential way.
I think my best attempt to summarize was this
take the value that a given individual is extracting from society as a percentage of the total value generated by society. That is roughly the percentage of total government expenditures that I think it would be justified for that individual to pay. Luxury taxes are one way of trying to bridge the gap between 'value' and 'cash income'.
So tax natural gas (and of course diesel) as well. Also, tollbooths are getting more efficient with "Easypass" electronic billing, and I understand London is going that way too. As to fuel efficiency, it generally corresponds to the carrying capacity of the vehicle, so I see no reason for adjustment. You are missing my point regarding how the directly-taxed shipping companies would spread the cost out to their customers, who would in turn spread the cost out to THEIR customers, and so on. THAT is how the benefit of the road infrastructure gets measured.
And you have made no case for the exponential formula in place of the fixed-percentage-rate formula. Someone making a million a year paying a hundred thousand in taxes while someone making 50K a year paying 5K in taxes still seems reasonable to me, and both are paying a rate of 10%.
Gothmog
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Well in this context I really can't do much better than my summary quoted to ainwood above.
I think that rich people benefit more from living in a stable, predictable, society than poor people do as a growing proportion of their wealth.
I feel that I have offered quite a bit of evidence and examples for this stance.
You think that poor people benefit as much if not more from living in a stable, predictable society than rich people do.
I do not feel that you have offered any evidence for this stance.
Still, we can agree to disagree on this point.
It seems very clear to me that people benefit from government expenditures towards creating a stable, predictable, productive society in a growing proportion to their wealth. In my model it is like a pyramid, the number of stones supporting you tells you how much you are benefiting.
Your gas tax example as you present it is so idealized that I am not sure how to respond to it. It is the circle of life as I said before but really doesnt address the issue of who is benefiting and who is paying. Of course the consumer must pay for the products, who else would?
I think I address the core issue above and in response to ainwood.
I think that rich people benefit more from living in a stable, predictable, society than poor people do as a growing proportion of their wealth.
I feel that I have offered quite a bit of evidence and examples for this stance.
You think that poor people benefit as much if not more from living in a stable, predictable society than rich people do.
I do not feel that you have offered any evidence for this stance.
Still, we can agree to disagree on this point.
It seems very clear to me that people benefit from government expenditures towards creating a stable, predictable, productive society in a growing proportion to their wealth. In my model it is like a pyramid, the number of stones supporting you tells you how much you are benefiting.
Your gas tax example as you present it is so idealized that I am not sure how to respond to it. It is the circle of life as I said before but really doesnt address the issue of who is benefiting and who is paying. Of course the consumer must pay for the products, who else would?
I think I address the core issue above and in response to ainwood.
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So at the other end of the spectrum, those on welfare should pay infinite tax!
THe fallacy is that you also need to look at what the taxpayer is contributing to society. This is why company tax rates are (generally) lower than personal tax rates -> the companies are seen as contributing to society by creating jobs etc. The disjoint is that the companies themselves are (generally) funded by investment.
aneeshm
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Instead of theorising , I'll offer some concrete examples of how capitalism , and a flat tax rate (with a minimum income , below thich there is no tax) are the only practical way to go .
In India , any economic observer will tell you that the ingustrial growth has been inversely proportional to the txes imposed . The first extreme was the Indira Gandhi regime , with a 99 % progressive tax (where it was mathematically impossible to earn above a fixed amount) , and the surrent government , which has brought in more forex than all the previous governments combined , with its liberalisaton and opening up of the economy , and relaxtion of the governmental controls . Practically , the poor have benifited much more under this regime than under any other .
As to the contributing to society agument , the rich contribut much more even at flat rates . Lets see , who contributed more to the economy , Bill Gates or all the charity organisations combined ? I'd say Bill did more . He gave jobs to those who would otherwise be living on welfare , or have a lower standard of living .
In India , any economic observer will tell you that the ingustrial growth has been inversely proportional to the txes imposed . The first extreme was the Indira Gandhi regime , with a 99 % progressive tax (where it was mathematically impossible to earn above a fixed amount) , and the surrent government , which has brought in more forex than all the previous governments combined , with its liberalisaton and opening up of the economy , and relaxtion of the governmental controls . Practically , the poor have benifited much more under this regime than under any other .
As to the contributing to society agument , the rich contribut much more even at flat rates . Lets see , who contributed more to the economy , Bill Gates or all the charity organisations combined ? I'd say Bill did more . He gave jobs to those who would otherwise be living on welfare , or have a lower standard of living .
WickedSmurf
pr0
I am more concerned over how they spend the tax money than over how/why/from who/where/when they collect it. Them, of course, being the gov't.
Disclaimer: Have not read entire thread
Disclaimer: Have not read entire thread
Gothmog
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ainwood wrote:
"There is room on the hill,
they are telling you still,
but first you must learn to smile while you kill"
I am not that extreme in my ideas, but there is certainly a kernal of truth there.
It works pretty well IMO, but the wealthy have used their political influence to undermine that basic idea in many ways. This of course is the reason why most wealthy people are against a flat tax. They already benefit greatly from other aspects of our current tax structure, ones that a flat tax would do away with. But again that is a much more complex discussion.
I can see where you might think so but I would argue that welfare produces more value for rich people in the form of social stability than it does for people who collect it. Once again, the core of my argument is that taxes are collected to help produce a safe, stable, predictable society. The kind in which one can feel safe with an investment that wont pay off for a decade or more. I think that this type of society benefits people in society in a rising proportion to their wealth. Some would argue that welfare actually produces negative value for those on it as it makes them complacent and not willing to fight exploitation. To paraphrase "they give us a dime so we wont demand a dollar", or in the words of John Lennon:
"There is room on the hill,
they are telling you still,
but first you must learn to smile while you kill"
I am not that extreme in my ideas, but there is certainly a kernal of truth there.
You keep using the word fallacy, I do not believe it is justified in this context. We have an honest disagreement about who benefits more from government expenditures and thus who should pay for them. I am not trying to deceive you or lie to you. I understand that companies contribute a lot to society, as do most wealthy people. In some real sense that is why they are wealthy. They are already being paid back by society for their contribution IMO. Once again you have strayed off to how specifically taxes should be paid - e.g. corporate taxes, gas taxes, income taxes, etc. I have opinions about this but really the topic at hand is 'should the rich pay a higher tax rate', I think they should because I think they benefit more from government expenditures in a way that rises with income. I think if we had an equation of the type offered by PP with the ability to adjust based on elections we would see the extent of the progression reach an expectable level as controlled by market forces. In fact we see something similar in America already, a progressive tax structure with a reasonable deductible (though I think it could be higher) and corrections based on elective forces.
It works pretty well IMO, but the wealthy have used their political influence to undermine that basic idea in many ways. This of course is the reason why most wealthy people are against a flat tax. They already benefit greatly from other aspects of our current tax structure, ones that a flat tax would do away with. But again that is a much more complex discussion.
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