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I’ve finally tired of hearing poorly thought out arguments for why the rich should pay more in taxes than everyone else. So as to not make any one post run on too long, let’s do these as a series of short posts.

Let me say at the outset that:

  1. I understand that nothing I will say in the subsequent series of posts will change anyone’s mind
  2. I don’t think many people care much about logical consistency, or if their arguments even hold up to scrutiny. If it feels good, think it. If it sounds right, say it. It is ain’t right, ignore it. You’ll see what I mean later on. But as an example, when I show you just how progressive the current tax system is, folks will continue to convince themselves that it is not. Ok, fine, then how progressive is progressive enough? I’ll put my chips on the table later.

A meme that I used to hear in response to why markets have been successful has now popped its head up in the tax-the-rich-justification dance (TTRJD). It goes something like this:

the reason the rich should pay more in taxes is that they were only able to earn their income by hiring people that went to (taxpayer funded) public schools, employ people who drove on (taxpayer funded) public roads and otherwise could not do what they do were it not for the awesome goodness of the government – they used more public services and therefore they should pay more for them too

Lots to say, and I am sure readers are especially interested in hearing how I’d respond to the actual claim. However, before we do that, can we at least accept that this version of the TTRJD begins with an absurd logical fallacy. It goes something like this:

  1. Activity X is desirable.
  2. Activity X has not yet occurred.
  3. Group A should be asked to do Activity X because Activity Y has happened.

It should be immediately obvious that neither 1 nor 2 has been demonstrated by asserting 3. For 3 to have any meaning requires the proof of both (1) and (2) but also proof that activity Y is true. But adherents of this version of TTRJD  use 3 as if, on its own, it constitutes an argument. Let’s think of an analogy to make it easier to see its absurdity. And for today’s post, let’s just focus on the first three words. There’s plenty of time to cover the rest.

“All African Americans should be … INSERT YOUR PREFERRED ACTION HERE … because among the black community … INSERT PREFERRED UNSAVORY DATA OR CONVENTIONAL WISDOM HERE.”

The first absurdity is that this argument treats “African Americans” as a single, breathing, sentient entity.  Wouldn’t most people be repulsed by such treatment? So, by being black, you are automatically associated with something undesirable, and by affiliation you ought to be penalized. No individual rights here. No rule of law here – we don’t judge any outcome here based on your character but solely on your membership in a particular (unpopular) group.

What is different about “the rich?” Are “they” a single breathing entity, the whole of which is deserving of scorn and penalty? What singles out the rich as a group for penalty? Are all the rich alike? Are all undeserving of their income and wealth? Did every last one of them acquire their wealth for the same reasons? To make this a little clearer, what if a rich person earns all of their income overseas, taking advantage of overseas labor, overseas schools, overseas roads, and merely resides here in the US. He has not availed himself of the public goods in the US in any greater share (in fact in a smaller share) than any other American that uses roads and most other public goods. Or how about a rich trust fund kid? His income did not come because other people went to taxpayer funded government schools. His income may have come from a land acquisition or investment from a long time ago (preceding government schools) or a far away place (again without American taxpayer support).

What if some other rich people earned their income by building and operating private schools and roads? After all, even if they were taking advantage of government provided schools and roads to do so, their actions of building private schools and roads substantially decreases the burden on other taxpayers (i.e. “society”). What of the self-employed rich person? You know these guys. They may even have gone to private schools their whole lives and they may never have worked with a single person who used government roads or schools. We could go on forever. Do we care at all how that income was arrived at?

Does it ever make sense to talk of groups as single entities like this? Are the rich not mere shorthand for thousands of individual human beings, each with their own hopes, dreams, work ethics, aspirations, quirks, moral failings, etc.?

Note that in asking these questions, we have not nearly touched the surface of whether the meme itself is correct, we will cover that in the upcoming posts. We’ll look at whether taxes are or are not progressive. We’ll look at whether the rich’s income was really made possible by the government. We’ll ask whether progressivity is even consistent with the idea that the rich should “pay more.” And we’ll examine much, much more.

7 Responses to “Taxing the Rich More Meme: A Short Mini-Series”

  1. sherlock says:

    Good post. I’m looking forward to this series.

  2. Harry says:

    Your reasoning is sound, WC.

    Even if we taxed earned income at the same rate for everybody, the guy making ten times as much as the next guy would pay ten times as much in income taxes.

    Now, if the rich guy lived in a tarpaper shack in North Carolina, he might pay a whole lot less in real estate taxes than he would if he owned a four-bedroom house in northern New Jersey.

    One of the root assumptions behind progressive taxation is that people happen to all be just lucky to have more than the next person, and, while that may be true for some — for example, think of the person living over a gas deposit in the Marcellus Shale — it does not mean those riches are ill-gotten and should be redistributed to Philadelphians or to Chuck Schumer’s favorite group.

    I have often wondered why movie stars are so socialist; it may be that in that rat race they feel guilty about having made the big score, and think the world runs the same way.

  3. Justifications go back to ancient times. No one school of thought has a monopoly.

    It might be pointed out that rich people have proportionately more at stake: personal property, investment properties and incomes, inheritances, etc. etc.,

    By definition poor people do not have money; rich people do. Only a pernicious government presumes to tax the poor at the same rate as the rich.

    The empirical truth here and now includes the fact that the tax laws are written to serve the rich. They do not pay any taxes that they do not want to pay in the first place. In fact, it would be likely impossible to write any humanely just tax code that did not allow exemptions and exceptions to ensure true fairness, thus opening the door to the very inequities we sought to avoid.

    Taxation is theft, granted. It is axiomatic by “power and market” that the government must misallocate the resources it steals. That said, not even Ayn Rand invented a better way to fund government. Like Fermat’s Last, it’s a tough problem… The solution might require some square-root-of-minus-one outside the Euclidean box thinking…

  4. jb says:

    Keep going wintercow. Indeed you’ve only scratched the surface with this initial post.

  5. Michael says:

    Michael E. Marotta,
    I’d have to disagree with your definition of poor people having no money. In reality, it’s really hard to define “poor;” or we refering to the stock or the flow? For instance a person with a million dollars is not someone we generally refer to as poor, but if it is a retiree who has it invested in a low risk account earning 2% interest, she/he earns $20,000 which means they live in poverty by official accounting. Similarly there maybe people who earn a large income but have gone deep into debt in order to get it (borrowing to expand a business).

    So I’d have to further disagree with “Only a pernicious government presumes to tax the poor at the same rate as the rich.” To say such violates the principle of equality under the law, unless I’m misunderstanding what you are saying.

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