There’s no point in dancing around it. There is little economic justification for taxing the rich. People are envious of others. People seek ways to lower the status of others and raise the status of themselves (I suppose I do that too, I’m no saint). The reason to tax the rich is because”we” don’t like them, and they should be punished.
This is simply nuts. Think about all of the people you don’t like in the world. I don’t like Islanders fans (I’m a Rangers fan – sorry students from Long Island!) I don’t like unmotivated people. I don’t like overeducated people. Heck I sort of hate myself too. Does it follow that all of these folks should be punished and penalized?
But among this same group of rich-envious folks includes a good number of people who believe the government can and should plan many aspects of the economy. So let’s make a deal dear planners. I propose that rather than sticking it to the rich, which can and should impose negative costs on the economy, why doesn’t the state actually act like someone that is trying to add value? Stop laughing!
Seriously, here’s an idea: suppose the reason to tax the rich is to secure more money to build roads and bridges and the like; or suppose that you just want the rich to “pay more” or whatever else you do, why is it so popular to pursue a destructive, property taking approach when there are dozens of other ways to do it?
Isn’t it argued that the rich spend money frivolously? So why not have the wizards in DC and the state capitols offer the rich a deal: we’ll make you some really cool stuff if you agree to buy some of it? Think about this – the government is uniquely positioned to offer goods and services to the rich that I don’t think many private companies would be able to offer without lots and lots of risk.
So check this out: the Russian government will be selling space hotel trips to people in less than 5 years’ time. The cost will be $165,000 for a 5 day stay and $825,000 for the rocket transport. There’s a million dollars of spending right there that is not destructive, since the rich space travelers would have voluntarily paid for it, it adds “aggregate demand” and gets money into the hands of the rocket maintenance people and vendors for example, and does not distort the incentives to work, invest and save. I’d argue that even if these ventures sucked they would be far less harmful than levying taxes.
What is preventing such thinking? After all, the government can do some really intense stuff, and I would argue that even middle class families would drop a pretty sum to experience some of those things. Seriously, how many of you wouldn’t drop lots of dollars to ride in an F-18 hornet?
I know what you’re all going to say:
(1) What if the rich don’t buy the space trips or submarine rides? Aren’t the taxpayers on the hook?
(2) It’s not fair if the rich get to ride on nuclear submarines and blow up icebergs, and the rest of us unwashed masses cannot.
To which I say:
(1) Isn’t that just the same thing as “stimulus” spending?
(2) It’s incredible to live in a world where that is a serious worry.
So what’s the deal envy people? What’s the deal? You get to target the spending of the rich AND you get to play central planner. Don’t you want to do it? And if not, please explain why without contradicting yourself on your tax the rich views.