I don't consider paying taxes to a bloated and inefficient government to be the "common good".
I would spend more time being annoyed by all the people charging me rents http://en.wikipedia.org/wiki/Economic_rent
I don't pay 10x as much as my neighbor for the same candy bar or cell phone plan or pair of jeans.
Why smart people consider it 'fair' for my neighbor to pay next-to-nothing for 'civilization' while I have to pay a substantial chunk of my income, I'll never understand. Same service, same price.
The diminishing marginal utility of income is an assumption. In most cases it's a valid assumption, but not always.
Let's say I could show you a situation where a certain individual's marginal utility of income increased with income - for a portion of the utility curve, the curve is convex, not concave. Such situations aren't typical, but they do exist - 'diminishing marginal utility' isn't a law of nature, it's just an assumption.
In such a situation, maximizing utility means certain less well-off people (those on the concave portion of the utility curve) should be subsidizing the more well-off people (those on the convex portion of the utility curve).
In other words, if the goal of taxation is simply to increase utility, in those situations the poor should be subsidizing the rich. If I can show you that for me, each additional dollar has increased utility, you should be willing to concede that that the poor should be subsidizing me.
Yet I've never met a person who used the 'diminished marginal utility of income' argument who was willing to concede that. If you are, you'll be the first.
In other words, arguing diminishing marginal utility's usually just a time-wasting distraction. While it sounds good, I suspect it's not the reason for your argument all.
You're describing "tax deductions", i.e. unusual cases where you extenuating circumstances have reduced their overal utility. How does this work against any aspect of my argument above?
>I suspect it's not the reason for your argument all.
You're right. I think non-progressive taxation is unfair, because there is a diminishing marginal utility of income and I believe that fairness and justice are necessary in society.
Anyone putting their time and/or money to work on a risky enterprise where the expected value is negative - which includes most startup founders and angel investors.
What we do for a living doesn't seem rational - typically, we get back far less than what we put in, especially if you consider opportunity costs. But yet we still do it.
Why do we do this? Entrepreneurs don't strike me as irrational - as a group, I'd consider us more rational than average. Instead of dismissing risk-takers as nuts, you should listen to what our behavior is loudly telling you - our utility curve isn't concave, it's convex. Risk-taking behavior in the face of negative odds only makes economic sense if marginal utility of income increases, not decreases, with income.
You know, it's not only entrepreneurs whose actions shout "hey, diminishing marginal utility of income isn't valid." Anyone who buys a lottery ticket does it too. People aren't stupid. Everyone knows they're on average only getting back a fraction of the money they put into a lottery. What their actions actually tell you is "hey, I value the incredibly small chance of getting rich so highly that I'm happily taking what would otherwise be considered a sucker's bet."
If you really want to maximize utility in the tax code, you'd have to have all of those who behave in risk-adverse ways (with concave utility curves) subsidizing all of those who behave in risk-loving way (with convex utility curves). Which goes a fair bit beyond 'tax deductions'.
Honestly, the way people actually behave makes me think diminishing marginal utility of income is completely questionable - instead, many of us believe and behave like there's an increasing marginal utility of income.
But enough about economics - the argument we're having really hinges on the definition of concepts like 'fairness' and 'justice', which is what you should've started with, not some utility curve argument that's only tangentially relevant. No matter what the utility curve looks like, progressive taxation is repugnant because it's neither fair nor just. It clearly violates the principle of equality before the law - even though all men are created equal, progressive taxation makes the property rights of the wealthy less important than the property rights of the poor. If taxes are a necessary evil, and I suspect they are, they should be proportional, not progressive.
>Anyone putting their time and/or money to work on a risky enterprise where the expected value is negative
That's crap. If the expected value is negative, then it's irrational – clearly there is some outcome with a positive ROI. VCs don't act out of the goodness of their heart.
>you'd have to have all of those who behave in risk-adverse ways (with concave utility curves) subsidizing all of those who behave in risk-loving way (with convex utility curves). Which goes a fair bit beyond 'tax deductions'.
Are you familiar with the capital gain tax? It looks like we already do subsidize risk takers.
> the argument we're having really hinges on the definition of concepts like 'fairness' and 'justice' (...) progressive taxation is repugnant because it's neither fair nor just. It clearly violates the principle of equality before the law - even though all men are created equal, progressive taxation makes the property rights of the wealthy less important than the property rights of the poor. If taxes are a necessary evil, and I suspect they are, they should be proportional, not progressive.
This is a red herring. I'm confused as to how we are supposed to discuss economic policy without resorting to using economics.
I am in complete agreement that taxation needs to be proportional. I just think that they should be proportional to real purchasing power, instead of being proportional to income.
>Risk-taking behavior in the face of negative odds only makes economic sense if marginal utility of income increases, not decreases, with income.
You seem to be intent on misrepresenting it the concept of marginal utility. Making more money will always increase your utility; it just does so at a smaller rate.
If you have a yearly income of $20,000 a $1,000 raise is going to make a much more significant difference in your life than if you make $80,000. If it costs a minimum of $10,000 a year to clothe and feed yourself, a 10% flat tax is going to affect someone who is poor a lot more than it is going to affect someone who isn't.
This is what is unfair.
> the way people actually behave makes me think diminishing marginal utility of income is completely questionable
You've yet to present an argument against this idea. Casting it aside because it is ideologically convenient for you does not make it untrue.
However, none of these are true.
I mean, sure, that's mostly local money, and it's a small portion of what you are paying in taxes, but people who live in good areas have a vastly different relationship with law enforcement than people who live in bad areas, and really, should be charged quite a lot more for that law enforcement, as they are getting vastly better service.
(granted, law enforcement, and the federal oversight of law enforcement is a small amount of our taxation; but it is the most obvious place where the rich get vastly more out of the system than the poor.)
You forgot to show that the taxes that we pay go for said civilization. Some do, but the vast majority don't.
For example, the US govt spends, per capita, about the same as western european countries. None of the folks arguing for higher taxes would suggest that we're getting the same level of services. Since we're paying and not getting, it's unclear why things would change if we paid more.
BTW - The author of "Taxes are the price of civilization." also said "Three generations of imbiciles are enough." in a decision upholding forced sterilizations (of someone who probably wasn't an imbicile, but instead a victim of sexual abuse by a govt official). Progressives are like that....
Yes, and the ideological forebears of American conservatives today had a penchant for lynching people with a different skin colour. See how blanket statements are easy?
Back in the '20s people had a different perception of what is a reasonable thing to do to people. No Progressive today believes in eugenics, blah blah blah.
Not even close.
http://gregmankiw.blogspot.com/2010/03/taxes-per-person.html
Never confused tax rates with revenues. (And yes, tax revenue per capita is the correct thing to compare with benefits received.)
You may have been confused by the fact that the US tax system is far more progressive than European systems.
See http://www.themoneyillusion.com/?p=4626 for some additional discussion.
> Yes, and the ideological forebears of American conservatives today had a penchant for lynching people with a different skin colour.
Actually, they didn't - conservatives were driven out of the South after reconstruction by an alliance of southern democrats (who were populists) and progressives.
Jim Crow was instituted by Democrats and the progressives at the time applauded. Wilson thought that it was such a good idea that he segregated the US military....
Most of the votes for the civil rights acts came from Northern Repubs. The vast majority of the opposition came from Southern Dems. And, no, the Democrat party didn't repudiate them - they retired in good standing during the 70s.
That's why MLK was a Republican....
Yes, today's conservatives oppose affirmative action. Feel free to explain why poor white and asian kids should give up slots to middle class blacks.
I'm more inclined towards Yglesias' counter argument in the second link, in that the US has plenty of room to raise taxation but that's a reasonably persuasive argument. As a Canadian, I still think Americans whine about their taxation rates a bit too much, but I suppose we have a better end of the deal.
>Actually, they didn't - conservatives were driven out of the South after reconstruction by an alliance of southern democrats (who were populists) and progressives
>The vast majority of the opposition came from Southern Dems.
Now you're mixing terms.
1) No one can speak for Progressives in the 1910s. For one, I am simply not informed enough but… I doubt anyone had a racially enlightened point of view at the time. More recent scientific developments have discredited the racial theories of the time and so everyone changed their mind.
2) You're being disingenuous. Being a Democrat does not mean you're progressive; look at the modern day Blue Dog Democrats. If they opposed civil rights, they were certainly not progressives.
In fact, the geographic distribution you're describing matches a certain recent election map… http://www.cnn.com/ELECTION/2008/results/president/
>Feel free to explain why poor white and asian kids should give up slots to middle class blacks.
I'm arguing for wealth redistribution. I haven't got a well-formed opinion on affirmative action; you'll have to take that up with someone else.
Whether the US could have more revenue doesn't address my point that the US has sufficient revenue to satisfy the demands of folks asking for more revenue. Given that, it's unclear why more revenue would satisfy those demands.
The US govt spends more, per person, than does Canada, yet we get fewer benefits. When that changes, we can talk about more spending per person.
> I doubt anyone had a racially enlightened point of view at the time.
Based on what? Mark Twain certainly shows otherwise.
> If they opposed civil rights, they were certainly not progressives.
Sure they were. In fact, today's progressives claim them as their ancestors. Yes, including Wilson, Holmes, and Sanger.
Yes, some racists are conservatives. However, if we look at who has implemented racist policies in the US, we find progressives and their allies.
> See how blanket statements are easy?
and,
2. How are you seriously trying to pretend that these policies were the bastions of "progressives and their allies"?
I'm not pretending - it's the truth.
Bull Connor, the Birmingham, AL sheriff famous for firehosing civil rights demonstrators, was a prominent Democrat in AL and was a delegate to five Democratic National Conventions (1948, 1956, 1960, 1964, and 1968). He wasn't the exception - he was the rule.
I know who instituted Jim Crow and how the political alliances of the time worked. (Do you really think that Republicans had political power in Jim Crow south?) I also know who segegated the US military. I also know who wrote "Three generations of imbiciles are enough" in a Supreme Court decision upholding forced sterilization. I've also looked at who voted for and against the various civil rights acts in the 60s. I know that Davis-Bacon was intended to keep poor blacks from moving north and taking jobs from white union members.
In each case, it's Democrats in alliance with Progressives.
That's just for starters.
I note that you haven't bothered to cite anything more than outrage. Feel free to list two things that Repubs have done that compares to the elements of that list.
Republicans at the time weren't saints, but they were considerably better on race issues than Democrats and Progressives. That's why MLK was a republican.
It helps to pay attention instead of parroting dogma. For example, do you know what the "slaves count for 3/5 of a person" clause in the constitution is about and who wanted the number to be 1 and who wanted the number to be 0?
It's a clause for determining the number of representatives that a state gets in the House of Represenatives. The slave states wanted slaves to be counted as 1 while the not-slave states wanted slaves to not count at all. 1 gives the slave states more representatives while 0 gives them less....
Given that, would it be better for the number to be 1 or 0?
Pre-1913 America had a radically different view on what kinds of services the government should provide. Most of the US budget is split between Social Security, Medicare/aid and the Military.
How do you think those things get paid for? You really think the $2 per pound you pay for tomatoes includes the true cost of growing a tomato and getting it into your car? If so, I've got a bridge you might be interested in...
Regarding old people, as a group they worked pretty hard to build the modern world and its conveniences and efficiencies that we enjoy, so I don't mind paying them dividends.
I didn't say that the government does not do or provide ANY good things. However that does not mean that paying taxes to a government that IS inefficient and bloated can or should be called the "common good". The same government spent over a trillion dollars on wars in Iraq and Afghanistan. Are those wars part of the common good? The same government spends half a trillion on welfare of various sorts. Is that welfare part of the common good? The same government got us almost 15 trillion dollars in debt. Is that debt part of the common good?
Different people may say yes to one, two, or all of the three things above. I, however, would say no to all of them. To me, paying taxes to the government is most definitely NOT the common good.
If 96% of our taxes are being spent on things you hate, and have no practical purpose for you.... isn't it right to dislike taxes in general, and question the government as bloated and inefficient?
If you hate spending, fight the spending. Federal government has only the weakest correlation between tax levels and spend levels.
Here in PA they took $40 million from the fuel tax fund and gave it to the railway companies to modify all the underpasses, so they could stack containers 2-high all the way without the top one getting stuck. And that is just one state, and one example.
If anything, fuel taxes and road maintenance are one thing the govt (sort of) gets right, in that it is a tax on usage of something and automatically scales up or down depending on how much you use the resource. If only they would stop stealing from the funds for non-highway purposes...
Edit: I am sincerely curious about why I'm being downvoted. If you think your government is broken, work to fix it.
Yeah, it's a problem. The problem is we can't all work on every problem. Some of us have jobs, personal crisis, or is already working on one of those problem.
>Some of us have jobs, personal crisis, or is already working on one of those problem.
Most of us do fuck all. I should know, I'm sitting in my underwear past noon on a Sunday commenting on HN.
Mostly, I just focus on internal improvement, since it is something that I can change within myself. Trying to take on the local corrupt buffoon of a government thinking you can rule the city better is a definition of hubris.
It's no more arrogant than starting a company because you think you can make a better product or service than any of your competitors.
Which is exactly the point of a representative democracy. We elect other people to work the problems we can't. If they do an unsatisfactory job, then we should elect someone else.