seraphson
Member
- Joined
- Sep 26, 2011
- Messages
- 674
Hello all,
I was curious if I could lend some of your time in regards to the argument against a "progressive tax system", a system that reduces the taxation on the less wealthy and increases the taxation of the wealthier.
Here is an argument for such a progressive tax system.
This is the proposed original argument (not by me) against the progressive tax:
Here is a response to that in favor of a progressive tax.
Here is my retort to the response above that is in favor of the progressive tax:
I'm not asking nor looking for "pats on the back" but rather objective criticism in my argument that can either improve or correct my understanding of the topic. Do I ramble, sidetrack, and/or confuse a potential reader? Hell, maybe I am wrong which would be all the more better in regards to learning something new. Thanks.
I was curious if I could lend some of your time in regards to the argument against a "progressive tax system", a system that reduces the taxation on the less wealthy and increases the taxation of the wealthier.
Here is an argument for such a progressive tax system.
This is the proposed original argument (not by me) against the progressive tax:
It doesn't matter if you have different views than me. Understanding this requires simple math skills.
Let's say Person #1 makes $50,000 annually.
Person #2 makes $500,000 annually.
Person #2 makes 10x as much as Person #1.
Let's say both pay a total of %10 of their earnings annually in taxes.
Person #1 pays $5,000 in taxes per year.
Person #2 pays $50,000 in taxes per year.
Person #2 pays 10x as much taxes as Person #1.
I don't see much more to it than that...
Comments? Questions? etc. etc. etc...
Here is a response to that in favor of a progressive tax.
I'm going to talk about electrons for a moment.
Electrons are extremely important. They transmit much of the energy we use to power our society, including the computer screen you're reading this on right now. Everyone uses electricity, everyone understands how important and valuable it is, and everyone expects to pay a price for using it.
But electrons by themselves are worthless. You can have as many electrons as you want, but they don't do you any good in your appliances if they're not connected to a voltage to make them flow and do work. So you can keep your electrons if you want to be possessive about it. They just won't be any good to you.
Dollars (pounds, euros, yen, rubles, shekels...) work the same way. They have no value by themselves; the only thing that makes a dollar valuable is the fact that someone somewhere will accept it in trade for goods or services of real value. So, you can whine and complain about the government taking away YOUR dollars as taxes, and how they're punishing you by confiscating wealth, but guess what? If everyone were to decide tomorrow that we're abandoning dollars for barter, you'd get to keep all your precious dollars, and you'd be kinda screwed, and the thing is, if you're not obliged to spend your money in ways you don't want to, no one else is obliged to ACCEPT your money if they don't want to. So bitching and complaining about being taxed when you're rich is kinda like bitching and complaining about not getting to keep all of your electrons.
But there's more. Much more. The economics of electricity favor economies of scale; it's easier to transmit a whole lot of electrical power to one user than it is to distribute it through a vast grid of many small users. With the money system, it's kind of the opposite. Money is really, really useful for making economies flow well, but it works best when everyone uses it. You're better off being able to pay your workers a salary instead of having to supply them with clothing, groceries and housing. Yet the VALUE of money as a system increases greatly for those who use more of it. At the subsistence level, I don't care much if I'm paid in money or food; I'll just spend the money on food anyway. At the middle-class level, hey, I'll prefer the money because that lets me get a mortgage and life insurance and maybe a pension plan. At the highest income levels, well, money is absolutely indispensable; enormous wealth today depends on being able to conduct transactions using money, speculating on share prices, etc.
Money (not wealth, but money) is a system, a service provided by the state and the people as a whole (because all of as are prepared to accept it in trade), but the high end users gain far more benefit from it than the low end users. It therefore makes sense, solid laissez-faire capitalist free market sense, to charge a higher premium for the use of money at high income levels than for lower income levels. In fact, it's very much in the interests of rich people to subsidize the use of money by poor people.
Another way to think about the relative power of money: Who can do more with a million dollars? One millionaire, or a thousand people with a thousand dollars each? Assume living expenses are $500 per person. The millionaire has FAR more economic power with his money than those thousand people combined. Or think of mortgages: If $200,000 all at once so you could buy a house wasn't worth more than $200,000 spread out over time, nobody would be willing to pay interest on a loan. And yet we do; we're willing to pay the bank $300,000 over time in exchange for the use of $200,000 right now.
So, my point here is that progressive taxes are not in the LEAST bit unfair, and it's absolutely appropriate that people with a low income should pay little or nothing in income tax, while the very rich should pay a high marginal rate. It's not punishment. It's a sound economic choice.
Final point: If you think the user fee for money is too high, don't use so much. Try barter instead. Oh, that makes it impossible to cash in those stock options? Gee. What a shame.
Here is my retort to the response above that is in favor of the progressive tax:
Your analogy in regards to today’s currencies is correct on the point that they originate value that’s determined by the demand, by people, for said currency. In short you could just say money’s value is subjective. A big fallacy exists that things like gold and silver have “inherent” value but those too, as your point gets across, are subjective. The disconnect and most likely the reason for said fallacy to exist is that we can “print” a virtually limitless amount of currency simply by entering keystrokes at the central bank. Gold and silver however are but a finite resource on our planet. Even though its value too is subjective it’s interesting to know that you can still get a gallon of gas today for about 15 cents. That is of course if you pay in silver dimes and nickels; one of the ill effects of inflation on fiat currencies. This is also why a mechanic that did an oil change 40 years ago compared to a mechanic today exerts (for all intents and purposes) virtually the same amount of effort/productivity but gets paid so much more (in increasingly debased fiat currency). Of course there’s a disparity that concerns the gap of whether or not our real wages increase in line with living standards but that’s another subject.
More to the point though I need to focus on the part where you pose a scenario where society arbitrarily decides to suddenly go from using money to bartering. For society to do such a thing would cause nothing short of a systemic collapse of society (that is if all people were forced to use nothing but barter), literally unwinding thousands of years of monetary and market evolution in 24 hours. So the probability of this occurring under the free will of the people is zero (and respectively pointless to propose). Of course assuming such a thing was to occur a new form of money would arrive extremely quickly since Sam really wants Bob’s goat but Sam only has rice that Bob doesn’t want. They clearly need a form of money if they have any desire to improve the capacity, efficiency, and speed of trade. But why am I talking about goats, rice, gold and silver? Because unlike your virtually infinite supply of “electrons” and slowly over time devaluing fiat currencies we resort to a form of money that’s desirable due to its scarcity, durability, and fungibility.
So, what’s my point here? The point is that many people desire money and so they work for it. So you really can measure money as a measurement of productivity too. Some people work very hard and even take risks (entrepreneurs) at a chance to acquire more. So, tell me again how people bitching about being taxed have no right to bitch since they worked to obtain said money (of course deducting those collecting entitlements including the bailout businesses)? After all as I already noted people work for money and that’s part of where money derives its value from. Why shouldn’t they be able to keep all that they worked for? Is it greed? Ironically I believe it’s greedy for people to tax them even more so than normally on the sole basis of them simply having more than the average Joe. How is it not a punishing behavior to tax even more on those that worked more to gain their wealth? How is that even close to “sound”? Perhaps though the minds of the envious. What a shame.
I'm not asking nor looking for "pats on the back" but rather objective criticism in my argument that can either improve or correct my understanding of the topic. Do I ramble, sidetrack, and/or confuse a potential reader? Hell, maybe I am wrong which would be all the more better in regards to learning something new. Thanks.
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