Why should rich people pay a greater share of their wealth to taxes?

@IRFRANK,

IRFRANK wrote:

Quote:
You look a lot like a bloke I saw being interviewed on the Max Keiser report. Was it you? (Genuine question, I'm not trying to suggest anything)

No. There's a lot of goofy people out there.

Well, don't give up hope, you never know when a TV crew may want to interview you.

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@Cycloptichorn,

Cycloptichorn wrote:

But, we don't tax based on wealth, we tax based on income.

I didn't say otherwise.

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And it's hard to argue that those who are profiting to the point where they are considered rich aren't in fact taking more advantage of resources and infrastructure than those who are not.

Yeah, engineeer makes it by definition (i.e. our defense spending protect them and they have more to lose etc) but I don't find that to be a convincing argument for several reasons:

I do not think this is a social imbalance to right. While I believe in equal opportunity I do not believe in legislating equal results. I do not believe that merely on the basis of their income rates we should apply a handicap.

It is popular if you use an unpopular social demographic like rich people but all the same things can be said on average about less vilified demographics such as the inordinately talented. They too will get more milage out of society and infrastructure on average, and will on average have more to secure and all but just because it isn't socially acceptable to vilify them (too much, in the US it's alarmingly acceptable) we don't set about making them a handicap to right this economic "wrong".

In short it comes down to that I do not think there is something inherently wrong with having more than others and some people seem to think so and that mere evidence of having more is justification to make them have less.

1 Reply

@Thomas,

Thomas wrote:

Robert Gentel wrote:
Why should rich people pay a greater share of their wealth to taxes?

For a combination of two reasons:

The marginal utility of income declines as income increases---a fact even ultra-libertarian economists accept.

Being a Utilitarian, I believe public policy should seek to maximize total utility. As long as it can increase total utility by redistributing more income from millionaires to beggars, that's what it should keep doing.
To us Utilitarians, then, a flat tax isn't unfair, but it wastes opportunities for greater happiness for a greater number. We'd rather seize those opportunities.

+1 Thanks! This is easily the best of very few attempts to articulate an ethical argument. Now while you know I find utilitarian arguments compelling I would not be happy with taking this argument to its extreme (total wealth equality). My reasons for doing so are probably some that you share and others you don't, starting with that doing so would decrease total economic output and happiness (to use shorthand for economics I think we are on the same page about) and in that I think you agree but I also think that an individual's property rights must also be taken into account and would like to ask you how you feel about your concepts outside the subject of taxation:

For example, is it ok for a family of squatters to invade the boat house of a rich single millionaire? Where do utilitarian principles end and individual property rights (and the right to act individualistically) begin for you?

And if you don't believe in other kinds of compelled property redistribution why is that?

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@Robert Gentel,

The main reason for taxing more heavily those who have collected the most wealth is to discourage the practice of trying to hoard wealth. Not only because for a practical reason it is better to have a lot of people trying to make money work rather than a few, but also because a democracy needs a middle class to survive and needs the keep the classes from getting divergent aspirations. America has failed to restrain wealth accumulation and now our economy is wrecked and we can't work together, there is a connection.

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@maxdancona,

maxdancona wrote:

First, income inequality is a bad thing.

Not inherently it isn't. Too much of it can be an indication of systemic injustice and be a generally bad thing but income inequality is not inherently bad (we all aspire to different things and make different efforts, they should not all be rewarded equally and income equality can be a bad thing).

Furthermore do you also extend this belief to concepts such as property rights or are you just restricting the need to correct these imbalances though taxes? If so , why?

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Societies with higher income inequality have more crime, more poverty and a lower standard of living.

Why are you against the crime? It can help reduce income inequality.

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Taxing the wealthy to pay for the poor is the way that we provide near universal education and have reduce the number of elderly people dying of starvation in the streets.

Again, this is a false dilemma. Taxes go to all sorts of things, some noble some ignoble. You can't just cherry pick spending and decide that is the reason we tax people progressively. It's just as easy to argue that taxing the wealthy is the way the country manages to drop bombs on other people's kids.

Dump all the political baggage and think of this in an abstract way:

We are making a new country. There are two competing proposals for tax structure. Mine is:

1) Everyone pays the same taxes. Those below the poverty line can be given exemptions as well as services that come from the taxes of those who can afford them.

2) Everyone who is above the poverty line can afford their taxes, some more than others. I propose taxes are flat and that the rich pay more as a function of being rich but that they do not pay a greater percent merely on that basis.

Now there is someone who disagrees with #2, and if you do what would your ethical argument be?

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@joefromchicago,

joefromchicago wrote:

I think you mean a use tax or sales tax rather than a flat tax. A flat tax doesn't take usage rates into account at all.

I do think that if the argument is a use-based one that use-based taxes would be a better way to address it but his argument was also just that rich people by definition get more use out of the taxes because they have more to protect.

In that regard the flat tax addresses it because they also pay more, but he went on to say that he thinks they get more proportionally (to their taxes) as well and yes, for that I think use-based taxes would be the most fair way to deal with such a discrepancy.

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In any event, how much do the rich use the justice system? How much do they use the military? The rich benefit inordinately from the political institutions of the state, but how do you tax them on their "use" of those institutions?

Well even if the tax is flat they pay more taxes. Do you think this does not justify the greater use? Do you want the use of these systems to be proportional to taxes?

I am not clear if that is your argument but if use of the system is the criterion is it ethical to reduce the use of the system for the poor to make it proportional to their taxes?

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@hawkeye10,

hawkeye10 wrote:

The main reason for taxing more heavily those who have collected the most wealth is to discourage the practice of trying to hoard wealth.

Well if that is the case it's simply not working. Furthermore I disagree with the notion that hoarding wealth is inherently unethical and have seen nobody here make an ethical argument against it.

1 Reply

@Robert Gentel,

Quote:

Well if that is the case it's simply not working. Furthermore I disagree with the notion that hoarding wealth is inherently unethical and have seen nobody here make an ethical argument against it.

Nor did I, my argument is that allowing the hoarding of wealth does not work on a practical basis, either to support democracy nor to support a strong standard of living for the majoity.

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@rosborne979,

rosborne979 wrote:

They shouldn't. Everyone should pay an equal percentage. But the rich (and large corporations) also shouldn't have access to tax loopholes that allow them to pay less than an equal share. The tax code needs to be simplified to eliminate loopholes that allow for disproportionate taxation.

That's fine with me, but I have a question. Do you think making the rich pay more can be unethical? I am on the fence about it but it is where I lean (that not only is the populist sentiment not based in solid ethics that it may well violate my ethical precepts).

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@Robert Gentel,

Quote:

Well even if the tax is flat they pay more taxes. Do you think this does not justify the greater use?

No, it doesn't. Because the leveraged benefit of these greater services is not a direct linear equation; these greater services are used by the rich to profit far, far more than the average person. The benefit derived is tremendously higher than simply paying an equal percentage as someone poorer. And when you take into account the ability money has to influence our politicians, to change the rules of the game in favor of business, that becomes even more pronounced.

Cycloptichorn

1 Reply

@sozobe,

sozobe wrote:

I found this article convincing:

http://www.newyorker.com/talk/financial/2010/08/16/100816ta_talk_surowiecki

Why? I didn't see any compelling ethical argument in there and wonder what argument you find compelling (and if possible can it be argued generically? without being just a U.S. political debate)?

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@Robert Gentel,

Quote:

In short it comes down to that I do not think there is something inherently wrong with having more than others and some people seem to think so and that mere evidence of having more is justification to make them have less.

This has nothing to do with taxes. You seem to equate taxes with punishment. It's not. It's a social agreement that a group of us (government) will do things that will benefit all of us. The alternative is anarchy. At that point the rich would spend their money on private security, moats, castles, etc.

Expecting the rich to pay taxes is not stealing from them. They benefit from the results.

Taxes are not intended as a way to level the field.

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To the people who are having a hard time approaching this from an ethical point of view I'd like to ask you to try to answer these questions:

Is it wrong to make much more money than other people? If so, why?

If someone makes much more money than me, am I entitled to some of it? If not, why?

If we decide that smart people (or another demographic) are doing better in society and have more lifestyle advantages than average people is it ok for the average people to vote to take more of their income away than from the rest? If not, why? And please don't just jump to another classist argument (e.g. rich people aren't smarter!) that isn't the point, my question is essentially whether it's ethical for the majority to decide that a minority should pay more than them in general, and to later explore why it is or is not in particular cases.

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@IRFRANK,

Quote:

Taxes are not intended as a way to level the field.

They used to be, back when America worked better. We should get back to the 70% tax rates on the uber wealthy.

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@IRFRANK,

IRFRANK wrote:

This has nothing to do with taxes. You seem to equate taxes with punishment. It's not. It's a social agreement that a group of us (government) will do things that will benefit all of us. The alternative is anarchy. At that point the rich would spend their money on private security, moats, castles, etc.

Expecting the rich to pay taxes is not stealing from them. They benefit from the results.

Sigh, this is really tedious but let me give it a try:

1) I am not arguing against taxes.

2) Your argument only makes sense if I am arguing against taxes.

Quote:

Taxes are not intended as a way to level the field.

That is the argument that some are posing. It certainly isn't the argument that I am.

Do you have an ethical argument in favor of taxing progressive taxation or not?

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

No, it doesn't. Because the leveraged benefit of these greater services is not a direct linear equation; these greater services are used by the rich to profit far, far more than the average person.

Do you think that an individual's use of societal services should be proportionate to taxes? If so, should the poor be denied services that do not correspond with the taxes they pay? If not, why not?

1 Reply

@Robert Gentel,

Your premises are flawed. The titular question is "why should rich people pay a greater share of their wealth to taxes." People have been answering that. I know of no one here who alleges that it's wrong to make more money than others. I know of no one here who alleges that others are entitled to someone else's money because that someone else makes more money. Those are "have you stopped beating your wife" questions, loaded questions. You're changing the rules in the middle of the game.

People's tax rates are not established on the basis of moral terpitude. Taxes are not assessed for the purpose of the wholesale redistribution of wealth. Have you been watching Fox News exclusively lately?

1 Reply

@Setanta,

Setanta wrote:

Your premises are flawed.

What "premises" might those be Setanta? Laughing

Quote:

People's tax rates are not established on the basis of moral terpitude. Taxes are not assessed for the purpose of the wholesale redistribution of wealth. Have you been watching Fox News exclusively lately?

I don't watch TV, but then again this isn't really a question so much as an attempt to portray me negatively. Even then it's not a very good one as I am not a conservative.

Do you have an ethical argument to posit to the discussion or not? I am seeking ethical arguments and not general ranting about taxes.

1 Reply

@Robert Gentel,

Quote:

Is it wrong to make much more money than other people? If so, why?

No, but it's not wrong to tax those people more money than everyone else, either, for the various reasons presented in this thread. I haven't seen an ethical argument by you or anyone else here that shows that it isn't; just nebulous claims that it's 'unfair' to take different amounts from different people.

I can see that you have no problem exempting those under the poverty line from taxes; how can you be for that, but be against charging additional taxes to those over the 'rich' line? They are two sides of the same coin: we justify taking less or no taxes from the poor, because they can't possibly afford to pay the same rates as everyone else without causing massive disruption to their lives. We justify taking more taxes than the rich, because they most certainly can afford to pay higher rates than everyone else without causing even minor disruption to their lives.

Quote:

If someone makes much more money than me, am I entitled to some of it? If not, why?

We are all entitled to profit somewhat off of the money earned by everyone else in society. That's how the social compact, and the concept of a shared society, works.

Can you point to any country who has a truly flat tax, which seems to be what you are proposing (with the exemptions for the poor, noted) who has experienced success with their system? Where it can be shown to have greatly benefited all members of society for them to do so? I have looked at the list of countries who employ a flat tax rate, and they are most decidedly not economic leaders of our world...

Cycloptichorn

1 Reply

@Robert Gentel,

Robert Gentel wrote:

Cycloptichorn wrote:
No, it doesn't. Because the leveraged benefit of these greater services is not a direct linear equation; these greater services are used by the rich to profit far, far more than the average person.

Do you think that an individual's use of societal services should be proportionate to taxes? If so, should the poor be denied services that do not correspond with the taxes they pay? If not, why not?

Can you imagine the complexity of the situation you describe here? It would be completely unworkable and extremely expensive compared to our current system of progressive taxation, which is cheaper and has no downside whatsoever, other than some misguided grudges held on behalf of the people who are the absolute best off in our society.

I'm serious about that last part - nobody is hurt in any fashion by our current system of taxation. Nobody who is earning enough money to see their earnings fall into the highest marginal tax rates is suffering due to those rates. Perhaps if our rates were double or triple what they are today, you might have a convincing argument. As it is, I don't understand the moral basis for arguing that more money should be left with people who aren't harmed in any way by taking it - and who profit greatly by the fact that our country stays stable, in large part due to the high taxes they pay.

Cycloptichorn

1 Reply

Why should rich people pay a greater share of their wealth to taxes?

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