August 08, 2006

What Upsets Us

Let's say we all go to the movies. And they say, Eric, your ticket costs $7.50. Jeff, since you're not married but you're working, your ticket costs $12. Matt, since you're only working part time, your ticket will be $3. Likely, Jeff would be mad that Matt gets in for a quarter of his ticket price just because Jeff has a better job. And that's why uneven taxation with completely uneven distribution ticks people off.


Arcane Rest said...

i think the fair tax is the way to go because it allows taxation on the things you spend. If Eric went to the movies and he makes $40,000 he would have a 21% tax on the ticket, if matt decided to go to the movies even though he has less money then he will have a 21% tax, and if jeff decided to not go to the movies at all he would no to be taxed. The idea is that the non-essential items or even used items would be taxed. Although it is a hefty tax, there is a system of monthly rebates up to on money the poverty line or something. And we all in essence get taxed 20% gross from the paycheck, so wouldnt it make sense to be taxed 20% on expense?

Sabai said...

Your 20% sales tax would replace income tax, correct? So, my entire wage comes straight to me, and only gets taxed on my expenditures?

Arcane Rest said...


Sabai said...

while that would obviously make things fair, that would really hinder spending, if everything cost 20% more, even if people had 20% more money, they would definitely be more conscious about what they buy. Why can't we just income tax everyone 21%?

Sabai said...

Never mind. I don't like that either. Any other suggestions?

Jeff said...

Alright, I'll bite. And I'm going to play the "Morality" card.

A flat tax on income (or no income tax and a higher sales tax) is morally indifferent. It says everyone has equal opportunity in this world, so everyone should have the same tax burden -- reality be damned.

To quote a line from Barack Obama, the concept of the 'Ownership Society' (of which the Flat Tax is a part) "Lets us say to the child who was born into poverty—'pull yourself up by your bootstraps.'"

What I'm getting at is that everyone, in fact, does not have equal opportunity.

Progressive Taxation, on the other hand, is more ethically responsible because it accounts for the fact that we're not all winners in life's lottery. It says to the people who have most benefited from the education system, the stability of their environment, and life's random luck -- give a little back.

(It also addresses that those who are making more than the rest of us can afford to give up a little more than the rest of us -- though that's not my argument.)

It recognizes that we are not disconnected from one another and we have a shared burden to our fellow man. I think that as a Christian you can appreciate that, even if it "upsets us."

Sabai said...

My fear there would be that progressive taxation truly is not helping people. This goes back to my whole "we all want the same results idea." We all want people to have equal opportunity in life. But, instead of trying to make sure that happens, progressive taxation just says that it can't, and we're going to correct that with economic fiddling that's disruptive and damaging, as long as it ends up in equality. This is leading to a new question..

Jeff said...

Agreed that we all want what's best, but I'm a staunch opponent of the Reagan philosphy that says government's the problem.

Progressive taxation on the wealthy can only be labelled "damaging" if you ignore that that money goes directly back as an investment into the economy (by building better public works, providing better education, establishing social programs, cutting down on the foreign debt, etc.)

My former Macroeconomics professor would also have me remind you that when the government takes your tax money, it wholly invests/spends it. But when you're given it as a private investor, you save a portion of it, thus delaying spending and slowing present economic growth. Thus, it's incorrect to label progressive taxation simply as "damaging" without this wider discussion.

Sabai said...

Let's widen the discussion a bit more. I will concede the 100% wholly investing of the government, but I will also see the results of this as the U.S. Postal Service, the Department of Motor Vehicles and our Public School System as instiutions that do not have to compete and therefore can have as horrendous results as they want with no fear of closing, which they do. I'm not exactly sure if there's anything that the government could handle better than just handing the money to a private company with true fiscal responsibility that would produce greater results.

Steve said...

Let's say that you want the change to be revenue neutral. That means someone is going to have to pay more taxes. If you do not have the base level of income that isn't taxed (making it slightly progressive), it's going to be the poor most of all.

Either A) this is going to lead to an increased need for social services, which will lead to increased spending and driving up deficits, or B) increased and deeper poverty, which is a destabilizing factor in our society.

The question becomes, what is the goal with a tax policy. Is having a fair means more important, or must we search for the tax policy with the best end results (although obvious we could disagree over the likely end result of different tax policies).