Flat Tax and Pulling your own Weight - An Analogy

[martybegan]

A Plutocracy will still need a massive federal bureaucracy; in a Plutocracy the laws, rules, regulations, etc. will be enacted and enforced by a bureaucracy bought, paid for and serving at the pleasure of the power elite. See any bureaucracy in any autocratic oligarchy for an example of repressive; your use of the word in context is silly.

Taxes are not punitive, taxes are. You see them as punitive unless they directly benefit you. Others see taxes as a means to provide services for the many, not simply the few.

Is there waste in government, you betcha. Believing it's the fault of one party or one person is naive and foolish. The problems is systemic, and the solution is not easy or explained in a sound bite.

Taxes as you described them WOULD be puntitive. You are taxing the richer dude more, not because you think he SHOULD pay more, but because you want him to have LESS MONEY, because you think his extra income should not lead to extra political clout.

Its all about intent, and your intent is to punish sucessful people.

If you are so scared of this plutocracy, you should be in favor of the smallest government possible. I find it comical people are more afraid of Xerox than an all powerful federal government.

History suggests the uber wealthy ultimately pay a price, for as power tends to corrupt absolutey, so does great wealth. It becomes a greater 'entitlement' to the power elite, greater than those the New Right suggest is that felt by Social Security and Medicare recipients; it has lead to revolution and to civil unrest as we've seen in North Africa, Greece and to a lesser extent to Wall Street in recent months.

There is more to fear from Xerox or Exxon Mobile or an Enron than to our government; we can toss out the incumbents in Congress and the White House with ease, all we need do is vote. The CEO of Xerox serves a limited constituency and as long as they make money they are happy.

Xerox doesnt have an army or a police force to keep it in power if it so chooses. Also if people really hated Xerox, they could just stop buying copiers from them. A corporation that cannot make money dies quickly. A government that cannot make money just has to increase taxes.

 

[SAT]

I find it moronic that people trust Xerox more than their elected officials in their representative democracy.

I blame Fox News for the stupidity.

The rich are compensated by their money. This "poor rich people" line is ludicrous.

 

[bripat9643]

You just enunciated the Marxist principle of "from each according to his ability. To each according to his need."

Economists have explained many times why this system is doomed to implode.

Here's the metaphor I'm working on to try to explain how wrong this is.

Imagine a group of five people. They're in a room on the third floor of a building with no elevator, and they have 1000 pounds of assorted stuff to bring downstairs and stack outside the building. What's the fair way to do this?

Defenestration-photo
The simplest solution, but only works in highly-specialized cases. Part of Defenestration, an ongoing installation by Brian Goggin at the corner of 6th and Howard St. in San Francisco. Photo by KayVee.Inc.

1. Everyone could bring down their own stuff. If the stuff is such that it's really easy to tell what belongs to whom, then maybe that would be the fair thing to do. This doesn't correspond to taxation at all, but to purchasing. No-one's life is easier, there are no burdens shared or economies of scale, but it's easy and fair.

2. Now suppose the group is a band: 2 guitarists, bassist, drummer with a full kit, and the guy who plays the harmonica.

10_Rolling+Stones_1975_NYC_Ron+Wood+art
Ron Woods' painting of the Stones performing in 1975, by which point they definitely didn't have to carry their own equipment.

Clearly the equipment burden is distributed very unevenly, and they'll never get to the gig on time if everyone is only responsible for their own instrument. So they decide that each person takes down about 200lbs of stuff, to distribute the work more evenly than the burden. This is the flat tax: one-fifth of the population (by wealth) takes down one-fifth of the stuff, the taxes. It looks fair: the burden is equally shared, everyone pulls their own weight.

3. But now, suppose the five people are a family:

grandma, age 75
dad, age 45
mom, age 45
son, age 20
daughter, age 10

and they're taking the stuff downstairs to load into the van and go on a trip together.

[I couldn't find a good picture to illustrate this scenario -- suggestions wanted!]

The 20-year-old son is probably *much* stronger than anyone else. Grandma may have trouble getting down with much more than herself, and while the 10-y.o. is pretty bouncy, she can't really take all that much in any one trip. The parents fall in between.

Is it fair if the son ends up bringing down 600lbs of the stuff, while Grandma brings only 30lbs and the others divide up the rest? Yet I assume we'd all agree that this would be the *reasonable* thing to do, even though it means everyone doesn't "pull their own weight".

In this metaphor, the strong healthy young son represents the wealthy, the people with the most money=strength. This is *progressive taxation*: we're all on this trip together, so we help each other out.

The fact is, speaking as someone who's been poor and who's been well-off, when you're poor each dollar and each percent of income going to taxes *hurts more*. For both poor and wealthy to pay 20%, say, in taxes is *not the same thing*, because it's not the proportion of your income that makes the difference, it's how much it changes the kind of life you can live. When I was making only $10K/year (30 years ago), $1,000 was a monstrous expense, more than I could bear to think about. When we had an income of $80K, $8K was a *lot*, but not more than we could afford for something like a new roof. It had to be budgeted, but it wasn't a catastrophe. I'm not sure what we're going to take in this year, but 10% would make me sweat -- yet not *panic*, as it did when I was truly poor.

Maybe that should be the metric: If you merely *resent* your taxes, you're not paying too much. It's only when they make you at least break a sweat that you might deserve some relief.

A flat tax is like crushing Grandma and little sister under a burden you could bear, because "it's fair!" and "everyone should carry their own weight".

Obsidian Wings

 

[martybegan]

I find it moronic that people trust Xerox more than their elected officials in their representative democracy.

I blame Fox News for the stupidity.

The rich are compensated by their money. This "poor rich people" line is ludicrous.

I dont watch TV for my news, i prefer a combination of the internet and printed news. For opinions I regularly check Ace of Spades and Red State on the right, and Daily Kos on the left. I then prefer to read up using wikipedia to find the source material for various bills, charts, and positions.

Its not about trust, its about fear. Xerox makes copiers. It tries to do it as cheaply as possible to make a profit and stay in business, but pay its people enough to keep them from leaving. The level of poltical machinations is limited to what it wants to do, sell copiers.

The federal government, on the other hand, has a buracracy with a vested interest, maintain the buracracy, and politicians who more often than not have a simple goal, maintain power. The problem is when those in goverment increase its power soley to 1) bribe people to keep voting in the status quo 2) scare people into increasing the scope of goverment, and 3) ignore basic economics to perpetuate the system at the expense of future generations.