Why Progressive Taxation?

[PoliticalChic]

In another thread, the interesting dichotomy came up, one group of folks stating that an individual's money is not really his, but shared with the government, while others compared taxation with theft, and the government to thugs.

Well, taxes are, as the old saw goes, as ineluctable as death...

...but should they be progressive...is that a bad choice of words? OK...graduated depending on income?

1. Professors at the University of Chicago law school, Blum and Kalven examined and found very little support for progressive taxation as “the possible rationale for desiring to lessen economic inequalities within the confines of a private enterprise and market system,” and found, on the contrary, that since there have been enormous increases in wealth, even among the poorest, and yet the issue of inequality has become more outspoken, “It initially appears that what is involved is envy, the dissatisfaction produced in men not by what they lack but by what others have.” Blum and Klaven, jr., “The Uneasy Case for Progressive Taxation.”

2. The argument is advanced based on a) improvements in the general welfare, and b) allowing the degree of inequality results in injustice between individuals.


a. Whose ‘general welfare’? Instead, the welfare of one group is improved at the expense of the welfare of another group. What are the additional benefits that the wealthy receive for the surrender of wealth?

b. As to the injustice between individuals, this presupposes that the income of the wealthy is undeserved, in the sense that it was due to factors such as monopoly, fraud, duress, and chance. First, these charges must be supported, and then, some correlation shown between the amount of such income and the rate of progressive taxation. Otherwise, the implication is that all persons with large income had the same proportion of undeserved income…


3. Where in this discussion is the question of personal responsibility in achieving success or of the free market’s hand in distributing rewards? Or is the assumption that these factors don’t exist? Why not presume that the richer person merited his wealth?

4. The explanation is that the weakness of the economic basis for the tax pales in comparison to the political basis.

a. As government taxes more and subsidizes more, a greater portion of society’s wealth passes through its hands. Individuals and families have less income to dispose of as they see fit. “…redistribution is in effect far less a redistribution of free income from the richer to the poorer, as we imagined, than a redistribution of power from the individual to the State.” Bertrand de Jouvenel, “The Ethics of Redistribution,” p. 73

 

[Sallow]

Probably because serious audits of just how the wealthy come by their income would really find a great deal of corruption.

That..and the founders never intended private industry to lead to an neo-aristocracy.

 

[Oddball]

That..and the founders never intended private industry to lead to an neo-aristocracy.

They really never intended taxation to be used as a tool of expropriation and redistribution.

 

[Sallow]

That..and the founders never intended private industry to lead to an neo-aristocracy.

They really never intended taxation to be used as a tool of expropriation and redistribution.

Probably not.

And I am also pretty sure there were a good amount of them that never intended to let women and blacks vote or own land..but heck.

Sometimes you roll with the punches.

 

[Oddball]

Probably not nothing...Otherwise they wouldn't have gone out of their way to make all direct taxes apportioned to the states for collection.

The nonsense about blacks and women is non sequitur and a non-starter.

 

[PoliticalChic]

Probably because serious audits of just how the wealthy come by their income would really find a great deal of corruption.

That..and the founders never intended private industry to lead to an neo-aristocracy.

Toothy, you are wrong on so many counts.

1. I hope you read more than the title, because you haven't responded to any of the points....

2. The vast majority of millionaires earned their money, they didn't inherit same....unless their name is Kennedy.
I'm assuming that the same is true of the 271 billionaires in the country. BTW, the next closest nation has about a score of billionaires.

Imagine how rich you could be if you set your mind to it, rather than belly-achin' about other folks.

3. And here is where liberals and conservatives seriously part company.....you guys always think the worst of others. "probably....would find.....blah, blah, blah..."

BTW, they have this new thing, you seemingly never heard of...the IRS?
Sort of obviates your point.

4. "...private industry to lead to an neo-aristocracy..."
An aristocracy is based, usually, on hereditary status...and, as I pointed out in #2 above, that is not the case in the US.

5. I hope you can get your mind around this: taxes is - are?- what keep folks from becoming rich....see, one is taxed on earnings, so if you own lots of stuff, like stocks, you aren't taxes on it- them?
Taxes hurt those trying to become rich, not those who made it already.

 

[WorldWatcher]

>

Personally I greatly dislike the whole system we've saddled ourselves with.

If I were emperor of this country I'd scrap the whole IRS, scrap all the tax laws, scrap the deductions for this, the credits for that, the exemptions for something else. Scrap the hidden taxes when the same thing is taxed multiple time at each stage of production, tax revenue for the government that the average consumer doesn't even know they are paying.

Replace it with a Constitutional Amendment that would bar all levels of government from instituting any kind of property, income, or hidden taxes on everything.

Each level of government would be allowed exactly one tax based on end user, a sales tax. One Federal tax, one state tax, and one local tax. That's it and merchants would be required by law to print each separately on the receipt so citizens would know exactly how much of their money goes to each level of government.



>>>>

 

[Quantum Windbag]

Probably because serious audits of just how the wealthy come by their income would really find a great deal of corruption.

That..and the founders never intended private industry to lead to an neo-aristocracy.

The problem with your theory is that they had to amend the Constitution in order to collect the income tax. If the founders had been smart enough to see an aristocracy arising out of private wealth, and had intended to prevent it, they would not have prohibited direct taxation.

Just saying.

 

[Trajan]

Probably because serious audits of just how the wealthy come by their income would really find a great deal of corruption.

Balzac said it first and it was just as false then, as it is now.

That..and the founders never intended private industry to lead to an neo-aristocracy.

no, they didn't , ( your use of aristocracy here is a hoot too) they didn't really believe in royal and/or classist wealth, it was that whole Locke, Rousseau thang......upward mobility driven by individual merit, not feudal style handouts, you know, and whiz bang stuff like that...hello.

 

[Toro]

Why progressive taxation?

Because there is an enormous amount of randomness in life.

"Work hard and you can own a BMW. Work hard and be lucky and you can own a Gulfstream." - Nassim Taleb.

 

[PoliticalChic]

Why progressive taxation?

Because there is an enormous amount of randomness in life.

"Work hard and you can own a BMW. Work hard and be lucky and you can own a Gulfstream." - Nassim Taleb.

Vague.

Care to attach a percentage to that 'enormous'?

Is half of all 'success' due to luck?

10%?

78.5%?

Or is this a personal revelation, based on a sense of guilt?

 

[Old Rocks]

Those that gain much from the system, should pay a larger amount back into the system.

Also, there is a simple answer. If you are working at entry level wages, just keeping a roof over your head, and food in your belly is a daily challenge. Any loss in income due to taxes directly affects the basics in your life.

If you have a yearly income in seven figures or better, a 10% loss of income, might mean choosing a Bentley instead of a Rolls.

Or, more colloquial, ya gotta prime the pump, sister.

 

[uscitizen]

Probably not nothing...Otherwise they wouldn't have gone out of their way to make all direct taxes apportioned to the states for collection.

The nonsense about blacks and women is non sequitur and a non-starter.

Ohh that is why they George Washington rallied massive troops to put down the rebellion against the first tax we had?

Isn't he known as the father of our country or somesuch?

 

[uscitizen]

btw I support a pure flat personal income tax with no deductions on ALL personal income.

 

[Toro]

Why progressive taxation?

Because there is an enormous amount of randomness in life.

"Work hard and you can own a BMW. Work hard and be lucky and you can own a Gulfstream." - Nassim Taleb.

Vague.

Care to attach a percentage to that 'enormous'?

Is half of all 'success' due to luck?

10%?

78.5%?

Or is this a personal revelation, based on a sense of guilt?

No guilt at all. But its naive to believe that you control all aspects of your life and that you haven't been shaped by randomness and externalities. Life is shaped by the circumstances around you.

You never chose a lack of handicap at your birth, your parents, the DNA you would inherit, what country you would be born in, where you grew up, the school your parents chose for you, the people whom you would meet, the opportunities that presented themselves to you, etc.

"I worked for everything I got." Yes. Good for you. But what would have happened if that job you first applied for wasn't open? I'm sure you would have found another job, but what if the business at that other job went bankrupt? What if it was taken over and your position would have been eliminated? What if your job was disintermediated by new technologies?

The "what ifs" can go on forever. Why? Because randomness plays a significant part in our lives. I can give countless number of examples where people's lives have been dramatically affected by randomness.

Do you believe that if Steve Jobs had been born 200 years ago, the iPad would be two centuries old? Seriously?

Psychologists have long known that people minimize the role of luck in their success while emphasizing it in their failures. It's "bad luck" when their business goes bankrupt because of the recession, but its because of them that their business made a lot of money in the boom before the recession.

Of course, you still have to get out of bed in the morning and put your nose to the grindstone. And if you are successful, good for you. You should be justly compensated and venerated for it. But people under-estimate the affect of circumstance.

 

[editec]

The very nature of capitalism demands it, really.

Think about what capitalism really is...

It is a social contract whereby the producer of wealth, the workers, agree to take less than they produce.

The profit (their unrealized return for their labor) becomes the capital for future investments.

However, since not all the excess capital goes back to productive investments, and since the MARKET cannot (nor should it) be expected to deliever all the services that a society needs, those services must be paid for by taxation.

And since the capitalists make so much more than the workers, they end up with the vast majorioty of excess capital that is needed to keep society functional.

Progressive taxation is the best way to do that (assuming its done well, of course) because you cannot squeeze blood out of a turnip.

If incomes between the classes were more aligned, then the system of taxation could be flatter.

But until that happens, the rich will always, one way or the other, end up paying for, and basically also CONTROLLING governments.

Those of you who want a FLAT TAX?

If you got it, you'd demand it change back.

Why?

Because then government would not be the handmaiden of the CAPTIAL CLASS.

I know many of you who think yourselves capitalists think you'd do better, but you wouldn't.

Ig voernment doesn't pander to the capitalist classes need? If the working classes kept too much of the excess weath, where would capital formation come from?

People living from paycheck to paycheck have no money to invest.

 

[PoliticalChic]

Why progressive taxation?

Because there is an enormous amount of randomness in life.

"Work hard and you can own a BMW. Work hard and be lucky and you can own a Gulfstream." - Nassim Taleb.

Vague.

Care to attach a percentage to that 'enormous'?

Is half of all 'success' due to luck?

10%?

78.5%?

Or is this a personal revelation, based on a sense of guilt?

No guilt at all. But its naive to believe that you control all aspects of your life and that you haven't been shaped by randomness and externalities. Life is shaped by the circumstances around you.

You never chose a lack of handicap at your birth, your parents, the DNA you would inherit, what country you would be born in, where you grew up, the school your parents chose for you, the people whom you would meet, the opportunities that presented themselves to you, etc.

"I worked for everything I got." Yes. Good for you. But what would have happened if that job you first applied for wasn't open? I'm sure you would have found another job, but what if the business at that other job went bankrupt? What if it was taken over and your position would have been eliminated? What if your job was disintermediated by new technologies?

The "what ifs" can go on forever. Why? Because randomness plays a significant part in our lives. I can give countless number of examples where people's lives have been dramatically affected by randomness.

Do you believe that if Steve Jobs had been born 200 years ago, the iPad would be two centuries old? Seriously?

Psychologists have long known that people minimize the role of luck in their success while emphasizing it in their failures. It's "bad luck" when their business goes bankrupt because of the recession, but its because of them that their business made a lot of money in the boom before the recession.

Of course, you still have to get out of bed in the morning and put your nose to the grindstone. And if you are successful, good for you. You should be justly compensated and venerated for it. But people under-estimate the affect of circumstance.

Now, there's some 'meat' to this response!

1. I note that you have still neglected to assign a value to your assumed-luck factor.
A lot? A little?

2. "Of course, you still have to get out of bed in the morning and put your nose to the grindstone."
But...but...what if the grindstone fell on the snooze button, ....another example of "assumed-luck factor"?

3. "Psychologists have long known..."
When was the last time you didn't laugh at the obvious nature of psychologists' pronoucements?

4. "But what would have happened if that job you first applied for wasn't open? I'm sure you would have found another job, but what if the business at that other job went bankrupt? What if it was taken over and your position would have been eliminated? What if your job was disintermediated by new technologies?"

What if there were no hypothetical situations???

I love these kind of reponses to support an oh-so-ethereal argument.

"If if's and but's were candy and nuts, we'd all have a Merry Christmas!"

Toro, there is no way to estimate where right-place right-time fits into the success formula, but you know very well that if your son or nephew asked for the secrets to success, you would be able to tick off seven or eight do's and don'ts.

So, back to square one: why penalize success?
I think...get the smelling salts ready....Old Rocks had the most logical response.

5. "I can give countless number of examples where people's lives have been dramatically affected by randomness."
No argument there...but it pales in comparison to the this:
If one finishes high school, waits to have children until married, and holds a job for at least a year, the odds are quite preponderant that one will not end up in poverty, or as a supplicant.

Which has more substance?

6. So why do folks who tend 'Left' begrudge success? Why use the tax system to dun those who have done exactly what a society should wish all citizens to do?(Too much of a pun?)

Could it be, to apply Occam's Razon, and an understanding of human nature, that we should assign to 'envy' the idea of progressive taxation?

 

[Toro]

1. I note that you have still neglected to assign a value to your assumed-luck factor.
A lot? A little?

It's unmeasurable and different for everyone.

2. "Of course, you still have to get out of bed in the morning and put your nose to the grindstone."
But...but...what if the grindstone fell on the snooze button, ....another example of "assumed-luck factor"?

Exactly.

3. "Psychologists have long known..."
When was the last time you didn't laugh at the obvious nature of psychologists' pronoucements?

I work in financial markets. I have been successful at it. I have found that understanding human psychology is as important if not more so than understanding principles of finance and economics.

What if there were no hypothetical situations???

I love these kind of reponses to support an oh-so-ethereal argument.

"If if's and but's were candy and nuts, we'd all have a Merry Christmas!"

Toro, there is no way to estimate where right-place right-time fits into the success formula, but you know very well that if your son or nephew asked for the secrets to success, you would be able to tick off seven or eight do's and don'ts.

So, back to square one: why penalize success?
I think...get the smelling salts ready....Old Rocks had the most logical response.

It's not penalizing success. It is an acknowledgment that randomness and luck, both good and bad, affects lives. It's an acknowledgment that to some extent, one's good fortune or bad fortune is not entirely of their own making.

5. "I can give countless number of examples where people's lives have been dramatically affected by randomness."
No argument there...but it pales in comparison to the this:
If one finishes high school, waits to have children until married, and holds a job for at least a year, the odds are quite preponderant that one will not end up in poverty, or as a supplicant.

Which has more substance?

I agree. But ending up in poverty and not ending up in poverty is a different proposition from making $30,000 a year and making $300,000 a year.

6. So why do folks who tend 'Left' begrudge success? Why use the tax system to dun those who have done exactly what a society should wish all citizens to do?(Too much of a pun?)

Could it be, to apply Occam's Razon, and an understanding of human nature, that we should assign to 'envy' the idea of progressive taxation?

One thing I love about America is that compared to everywhere else I've been, there is much more admiration of those who are successful. That's great! I don't think the Left should be resentful to those who have done well. But on the other hand, the Right shouldn't assume that we all live in a vacuum, completely devoid of influence by everyone and everything around us.

 

[PoliticalChic]

1. I note that you have still neglected to assign a value to your assumed-luck factor.
A lot? A little?

It's unmeasurable and different for everyone.

2. "Of course, you still have to get out of bed in the morning and put your nose to the grindstone."
But...but...what if the grindstone fell on the snooze button, ....another example of "assumed-luck factor"?

Exactly.



I work in financial markets. I have been successful at it. I have found that understanding human psychology is as important if not more so than understanding principles of finance and economics.



It's not penalizing success. It is an acknowledgment that randomness and luck, both good and bad, affects lives. It's an acknowledgment that to some extent, one's good fortune or bad fortune is not entirely of their own making.

5. "I can give countless number of examples where people's lives have been dramatically affected by randomness."
No argument there...but it pales in comparison to the this:
If one finishes high school, waits to have children until married, and holds a job for at least a year, the odds are quite preponderant that one will not end up in poverty, or as a supplicant.

Which has more substance?

I agree. But ending up in poverty and not ending up in poverty is a different proposition from making $30,000 a year and making $300,000 a year.

6. So why do folks who tend 'Left' begrudge success? Why use the tax system to dun those who have done exactly what a society should wish all citizens to do?(Too much of a pun?)

Could it be, to apply Occam's Razon, and an understanding of human nature, that we should assign to 'envy' the idea of progressive taxation?

One thing I love about America is that compared to everywhere else I've been, there is much more admiration of those who are successful. That's great! I don't think the Left should be resentful to those who have done well. But on the other hand, the Right shouldn't assume that we all live in a vacuum, completely devoid of influence by everyone and everything around us.

Good!

1. "It's not penalizing success. "
Is it rewarding?
Oh, merely using the tax system to further the interests of society?

Well, then how about reversing the tax system, reducing taxes as you go up the financial ladder, to indicate to all how much we appreciate hard work, wise lifestyle choices, and entrepreneurship???

Could we impose my hypotheticals rather than yours?

2. And, you did an excellent job of explaining why it is bogus to consider the luck factor in taxation:
"It's unmeasurable and different for everyone."


And you signing on to my silly example:
"But...but...what if the grindstone fell on the snooze button, ....another example of "assumed-luck factor"?[/quote]

Exactly."
....proves my point.

3. "I have found that understanding human psychology is as important if not more so than understanding principles of finance and economics."
And yet, you and those who think like you do assume that only you -the rhetorical you- have this ability, i.e., to think and understand "principles of finance and economics."

How about the poor, those who you strive to help....don't they know what they must do to be successul? Or do they view success as something different?
Or do they factor in that you guys will simply raise taxes on the successful to make up for any lack on their part?

Could be?

4."It's an acknowledgment that to some extent, one's good fortune or bad fortune is not entirely of their own making."
So, by your logic, the more successful, the more luck involved, the higher taxes?

Let's see, you admit that you have no way to either prove it, or quantify it, but it's there....and so we'll tax it! But the additional taxes aren't a punishment...??

I love how the left of center (you'll admit to that, won't you?) usually considers religion as some kind of pejorative, because it relies on faith, but has no problem using 'faith' or 'belief' when it suits their argument?

Kind of sounds like 'birthers'....


5. "...ending up in poverty and not ending up in poverty is a different proposition from making $30,000 a year and making $300,000 a year."
Hey...I thought you said you understood human nature????

You mean everyone judges success the way you do?

Perhaps you should consider this definition:

"Success is what gets you closer to what you believe is important."

And, that is why individual rights are so important. We're all different.
Shouldn't society be proud of the rich, rather than use them as a cash cow?


6."...there is much more admiration of those who are successful."
Admiration or envy? Isn't that what the OP is about?

 

[Toro]

Well, then how about reversing the tax system, reducing taxes as you go up the financial ladder, to indicate to all how much we appreciate hard work, wise lifestyle choices, and entrepreneurship???

Could we impose my hypotheticals rather than yours?

No, because you can work very hard and make great lifestyle choices and still not be successful financially due to factors beyond your control. I know people who did everything right for the last 30 years and were wiped out in the financial crisis.

2. And, you did an excellent job of explaining why it is bogus to consider the luck factor in taxation:
"It's unmeasurable and different for everyone."

No its not. You started this thread on the principles of progressive taxation, not on the exact marginal levels. The fact that we cannot measure with precision the exact probabilities of success in life does not obviate the maxim that randomness affects outcomes. We can't measure the exact probability of an earthquake at a given place and time either, but that doesn't mean we don't accommodate for the unknown probabilities of an earthquake.

And you signing on to my silly example:
"But...but...what if the grindstone fell on the snooze button, ....another example of "assumed-luck factor"?

Exactly."
....proves my point.

No. You merely provided a pithy example to wave aside the broad affects of randomness on people's lives without actually addressing the issue. Power goes out at night, snooze fails, the worker sleeps in and he is fired for not showing up. Betcha that's happened somewhere.

3. "I have found that understanding human psychology is as important if not more so than understanding principles of finance and economics."
And yet, you and those who think like you do assume that only you -the rhetorical you- have this ability, i.e., to think and understand "principles of finance and economics."

I didn't say that. It was you who dismissed the work of psychologists with sleight of hand, presuming that we should dismiss without question the work of those who dedicate their lives to the study of psychology.

How about the poor, those who you strive to help....don't they know what they must do to be successul? Or do they view success as something different?
Or do they factor in that you guys will simply raise taxes on the successful to make up for any lack on their part?

Straw man. I didn't say we should raise taxes. I said we should have a progressive tax system. Nor did I say we should raise taxes ad infinitum. What I'm saying is that those who earn more should pay a higher rate of taxation because we recognize that not all of their success is due to their own effort. But I do believe that the majority of one's success if based on individual effort, and thus marginal tax rates should reflect that. I am willing to consider a flat tax where the first amount of income is tax free, which is effectively a progressive tax system.

But surely if you believe that life is all about the success one puts in, you must be for taxing inheritance at 100%, right? I mean, how can one argue that life isn't affected by randomness when someone is born with $10 million?

4."It's an acknowledgment that to some extent, one's good fortune or bad fortune is not entirely of their own making."
So, by your logic, the more successful, the more luck involved, the higher taxes?

So, by your logic then, there are NO accentuating circumstances that affects one's life. Every single step along the way is due to the will of the individual. Every single thing around the individual is irrelevant, and the only factor which affects one's standing in life is what they do. Seriously?

Let's see, you admit that you have no way to either prove it, or quantify it, but it's there....and so we'll tax it! But the additional taxes aren't a punishment...??

Asking for an exact measurement of randomness is about as valid as measuring the exact amount of freedom. But that doesn't mean freedom, or randomness, doesn't exist.

But we do know some things which can be inferred about randomness. For example, we know that a child born to a single parent is less likely to be successful than one born to two parents. We know that a child is more likely to go to university if both parents have been to university compared to those whose parents never went. There are numerous such studies concluding that the environment affects one's upbringing.

I love how the left of center (you'll admit to that, won't you?) usually considers religion as some kind of pejorative, because it relies on faith, but has no problem using 'faith' or 'belief' when it suits their argument?

Kind of sounds like 'birthers'....

I have no idea what you are talking about.

And you see that guy in my sig? That's Stephen Harper. If you don't know who he is, Google him.

5. "...ending up in poverty and not ending up in poverty is a different proposition from making $30,000 a year and making $300,000 a year."
Hey...I thought you said you understood human nature????

You mean everyone judges success the way you do?

Perhaps you should consider this definition:

"Success is what gets you closer to what you believe is important."

And, that is why individual rights are so important. We're all different.
Shouldn't society be proud of the rich, rather than use them as a cash cow?

This is a thread about taxation, isn't it? I mean, you started it. So why are you going off on this other tangent? I agree that success isn't just monetary. Start a thread about that and I'll back you up. But it's irrelevant in this thread on progressive taxation.