Robin Hood Mentality

April 11, 2003 9:35 AM

Soaking the Rich This post probably won't be very well received in this forum which is mostly consisted of lefties, but can you really justify stealing such a disproportionate amount from the rich?

Conventional wisdom holds, correctly, that income inequality has been increasing in recent years, though it still isn't as great now as in some past periods. But while incomes are distributed unequally, the federal tax burden is distributed far more unequally.
posted by VeGiTo (108 comments total)

I don't justify it at all, and I'm somewhat leftish. Plenty of people worked their ass off, made clever choices, and personally stomped on others to make their millions, and that's frankly what America was built upon, like it or not. Those people ought to be able to keep an equivalent portion of their income to what my lazy ass is willing to go out and earn every day.

But also, I'm kind of against income tax as a general rule. So there's that.
posted by padraigin at 9:37 AM on April 11, 2003

"The richest 1% of families will pay $13,000 for the war, vs. $33 for the poorest 20%. "
Yeah, and those ungrateful poor are double-dipping since it's their kids who are in the military getting paid with OUR TAX MONEY! Shameful.
posted by chandy72 at 9:39 AM on April 11, 2003

OK, according to that article, the richest families in America will pay $13,000 in taxes, each, for the cost of the war. The poorest families will pay $33 each. Are you suggesting that those two extremes should be split? That poverty-level families should have to pay $6,000 in taxes?

Maybe it's my low-income upbringing and current lack of funds speaking, but personally I think that if you make a considerable amount of money, I think your taxes should be higher. Because you can afford it. I really don't see the problem.

And while I don't necessarily like taxes, I do think they're necessary, and I've yet to see a convincing argument that income tax = theft.
posted by starvingartist at 9:43 AM on April 11, 2003

God damn. That's awful. Is there some way I can help out these needy rich people?
posted by Skot at 9:46 AM on April 11, 2003

Why income tax=theft.

1) The government bills you. They say they'll spend it on all kinds of great stuff. They didn't ask you, really, though, did they?
2) You don't pay.
3) The government sicks the IRS on you.
4) Oh no, off to jail for you!
5) Not willing to play this little game, you sit down on the floor.
6) The police will eventually pick you up and put you in jail and while you're there, they'll sell your things.

See how it could be construed as theft now?

"Give us your money?"

"No."

"Oh, well, we have this little system where we'll just take it then."
posted by jon_kill at 9:47 AM on April 11, 2003

Poor families pay for wars by sending their children to fight them.
posted by gottabefunky at 9:47 AM on April 11, 2003

The war seems to me like showing up late after your friends order a pizza.

"Uh, yeah, Jon, we ordered this, we thought you'd like it."

"Yeah, well, it has olives on it. Who the fuck eats olives?"

"Uh, well, yeah, that's neither here nor there, we were still counting on you to pay for your share."
posted by jon_kill at 9:49 AM on April 11, 2003

Oh, gottabefunky, that's just the simplest thing ever said.
posted by jon_kill at 9:50 AM on April 11, 2003

Two things this Op-ed doesn't mention:

1. Voodoo or "trickle down" economics does not work. Ask any reputable economist.

2. The rich in this country pay one of the lowest percentages of income tax in the industrialized world.

This and the modern day robber barons have already had their way with the tax system in 2001 what more do you want?

Personally I kind of wish we could have 1900 politics and Teddy Roosevelt back. That was a Republican who understood the relationship between politics and economics...

And on preview if you don't like paying taxes jon_kill move to a country where you pay none. See what kind of security, protection and economy you can expect from the government (if there is one) then.
posted by aaronscool at 9:54 AM on April 11, 2003

but can you really justify stealing such a disproportionate amount from the rich?

Absolutely, for two reasons:

1) The more money you have, the less important each individual dollar becomes, and the more you can afford to pay without feeling a pinch. For someone who lives on $25,000 a year, a hypothetical 25% income tax would be murder: it makes a big difference in your standard of living if you take home $18,750 instead of $25,000. But for someone who lives on $250,000 a year, the same 25% tax is not such a big deal: there's not such a big difference between living on $187,500 and living on $250,000. Either way, you have enough money to live very comfortably.

2) The more money you make, the more advantage you are taking of the society around you. You can't make $250,000 a year without a pool of educated workers to help you do your job, a well-regulated market to advertise in and profit from, a peaceful society defended internally by police and externally by the military, a highway system that gets you to and from work, raw materials from your suppliers, and your finished products to your customers... and on it goes. This isn't the frontier. Nobody makes it on their own. You can only get so far on your own power; nobody makes it into the higher tax brackets without support from the society they live in, and there's absolutely nothing wrong with requiring them to give a little back to help support everyone else.

So, if we're going to have a government that's supported by involuntary contributions, then yes: rich people should be taxed at a higher rate.
posted by Mars Saxman at 9:56 AM on April 11, 2003

Conventional wisdom holds, incorrectly, that MeFi is dominated by liberals. In fact there is about an equal split between liberals and libertarians. However, conservatives often mistake libertarians for liberals (and liberals mistake libertarians for conservatives), so that to the unobservant conservative, MeFi seems to be dominated by liberals.
posted by DevilsAdvocate at 9:56 AM on April 11, 2003

Didn't bush save something like 40,000 bucks with his latest tax cut? And didn't Cheney save ~$300,000? So what's the big deal about $13,000?
posted by magullo at 9:57 AM on April 11, 2003

Aaronscool: I don't think any of us like paying taxes. Your "if you don't like it, then leave" argument is a little kneejerk, don't you think?

Someone asked how taxation is like theft, and I provided an explanation. That's all.
posted by jon_kill at 9:58 AM on April 11, 2003

Paying taxes is part of being a citizen. While I don't agree with everything that the government spends my hard earned money on, I do agree that I put those people in office.

If you don't like it, get yourself elected on a income tax=theft platform and then change the system.

Also, everyone paying the same percentage in taxes does not = fair for everybody. A dollar is not a dollar is not a dollar. If Bill Gates and I go into a coffee shop and we buy a cup of coffee for $1.25, we both paid the same amount, but it "cost" me a hell of a lot more than it cost him. If both Bill Gates and I paid 5% in taxes last year, he put in a hell of a lot more cash, but it "cost" me more than it cost him.

On preview, what Mars Saxman said.
posted by birgitte at 10:00 AM on April 11, 2003

The L Curve
posted by goethean at 10:01 AM on April 11, 2003

Rich people do pay proportionally more taxes, and maybe they are paying too much, but they also get a lot more use out of their taxes. How many miles of federal highway does a person living at the poverty level travel over compared to the top 1% or even top 50%? How many federal dollars are spent in business owned by the top 10% richest families versus the bottom 90%?

On the other hand the poorest families also take in money through subsidies and so on.

Suppose people were taxed based on their use of things paid for by federal funds, what would the tax rate v.s. income look like then? That would be a far more interesting discussion but nobody seems to want to do the work.

What I would expect to see is that the people in poverty would currently have a negative taxation. They're actually gifted with services that cost more per person than they contribute. The huge mass of people between poverty and maybe the richest 10% would pay the rate of tax dollars v.s. services received and the uppermost 10% would pay substantially less than this.
posted by substrate at 10:01 AM on April 11, 2003

But while incomes are distributed unequally, the federal tax burden is distributed far more unequally.

When any kind of progress is made on the first problem, more people will turn their attention to the second. Until then, the richest 1% can cry me a fucking river.
posted by PinkStainlessTail at 10:01 AM on April 11, 2003

If you don't like it, get yourself elected on a income tax=theft platform and then change the system.

Better yet, if you don't like it, go to countries that theoretically should be libertarian paradises. Albania. Angola.

And bring your own infrastructure.
posted by goethean at 10:02 AM on April 11, 2003

Goddamn, now I'm glad I'm poor. Rich people just can't catch a fucking break in this country.
posted by RylandDotNet at 10:03 AM on April 11, 2003

And how much is the 1% (and upper quintile in general) going to profit when Big Oil moves in to Iraq? Or have already profited from war stocks?

I don't know a lot of welfare recipients with portfolios.
posted by gramcracker at 10:05 AM on April 11, 2003

Goethean, how is that better? You'd rather see someone leave than someone try to make an improvement?
posted by jon_kill at 10:06 AM on April 11, 2003

A greater coup has never been perpetrated than how AM talk radio hosts have managed to get working America to feel bad for the rich.
posted by Space Coyote at 10:06 AM on April 11, 2003

Fine, so in purely statistical analysis, it's not "fair" that one family should pay 50% of their income in taxes while another family pays a percent or two. But that's hardly the only consideration. This article is way too simplistic in its analysis. If you want me to care about the rich being "soaked" your analysis must include more factors and you must have some better ideas to suggest.

On preview: Very well said, Max Sarsman.
posted by orange swan at 10:07 AM on April 11, 2003

How many of the rich got that way because their corporations dodge taxes? CSX and treasury secretary Snow come to mind.
posted by machaus at 10:07 AM on April 11, 2003

jon_kill: Theft, you get nothing in return. Taxation, you do. Not necessarily exactly what you want, but still something.

Dumb analogy.
posted by gottabefunky at 10:07 AM on April 11, 2003

gottabefunky: If I don't get what I want in return on a contract I'm forced into... how is that... not.... theft? Does that mean someone can break into my house and take my stereo and leave a can of soup?

Too easy.
posted by jon_kill at 10:10 AM on April 11, 2003

The real problem is that this article seems to only consider federal income taxes. The federal income taxes are progressive (higher incomes pay higher rates). When you look at the total tax burden, which includes federal payroll tax and state and local taxes, things even out much more because the other taxes tend to have much flatter (regressive) rates. By one estimate, the Citizens for Tax Justice say the richest 1% earned 19% of the nation’s income and paid 26% of the nations federal taxes. Not too shabby for millionaires. And one more statistic (from the same source) is that the poorest 20% pay about 13% of their income in state and local taxes while the richest 1% pay only about 8% of their income. Clearly, as long as the WSJs and Fortunes of this world focus only on federal income tax they can come up with some impressive and scary numbers. They need to be challenged to look at the whole tax burden before we start to consider the reforms they advocate.
posted by Tallguy at 10:11 AM on April 11, 2003

I'm sorry pinkstainlesstail, but what do those two things have to do with each other? If income tax is fair, then the only fair way of applying it is for everybody to pay in equal proportions. What justification could you possibly have for disincenting people to achieve in a free market society by burdening them with the cost of paying their own fair share of the costs plus some portion of the costs of other people who don't achieve in a free market society? How about we reverse it and tell the poorest 1% they will now be restricted from the benefits of living in a free market society in accordance with their proportion they pay into the system?
posted by JollyWanker at 10:11 AM on April 11, 2003

They didn't ask you, really, though, did they?

Well, they kind of did if you live in a democracy, but that only opens another can of worms so I'll stick with the argument that they got rich on the backs of the workers anyway, plus I find PinkStainlessTail to be very persuasive on this issue.
posted by biffa at 10:12 AM on April 11, 2003

Goethean, how is that better? You'd rather see someone leave than someone try to make an improvement?

Depends what you mean by "improvement". I think our economy is doing poorly enough without another tax break for Cheney & friends, thanks very much.

Hitler and Stalin tried to improve the world, too. They just did so very badly.

If contemporary Albania is your idea of paradise, then yes, I'd rather you go there than implement your plan here.

/godwinization
posted by goethean at 10:13 AM on April 11, 2003

First of all, I see a lot of numbers with no studies cited. How fucking hard is it to post your sources? I just can't believe that professional economists don't cite their sources.

Secondly, money makes money. Personally I think that income tax should be removed, and "net worth" tax should be implemented. I don't know much about taxes, but it seems like our current tax law has a bunch of rules that skirt around this issue, but never address it directly. Income tax on interest, capital gains tax, estate tax, and so on; they're hinting at this basic truth, but they don't have the balls to come out and say it.

In my view, most of our national spending goes to protect wealth and financial interests, not people. Hence, the wealthy should be paying a vastly disproportionate amount of taxes, because they're receiving the vast majority of the service.
posted by zekinskia at 10:15 AM on April 11, 2003

It has been pointed out that even though income tax hits the rich harder than the middle class and the poor, other taxes hit the others more, namely:

Property tax hits the middle class harder than the poor and the rich because they tend to have proportionally more of their wealth tied up in their homes.

Sales tax hits the poor harder because they must spend more of their money immediately, rather than being able to put it away like those with more income.
posted by CrunchyFrog at 10:15 AM on April 11, 2003

Those of us with vast personal fortunes employ many people, keeping the economy going. I do believe the tax rates across the board are too high, however the idea that the current system "soaks the rich" is patently absurd, especially when the government provides a system where the more money you have, the more likely you'll be able to work the system and pay less tax due to various shelters and loopholes. Furthermore, the government creates a system were businesses can thrive, the basis of most wealth.
posted by cell divide at 10:15 AM on April 11, 2003

I can't believe people actually take this kinda BS seriously.

Rich people pay more taxes because they HAVE MORE MONEY! Thus, a larger $$$ amount for income tax doesn't hit rich people harder, because it's really just a drop in the bucket when you look at their bank statements.

Anyone who's taken an introductory economics class(on preview, at least a couple of you have) knows that the more money you have, the less you pay for basic goods(food, rent, etc) as a percentage of your total income. Thus, you can afford to kick down more in taxes.

That poorest quintile of Americans who will pay "just $33 each" for the war can't even afford healthcare and I'm sure food is a struggle too.
posted by wrench at 10:17 AM on April 11, 2003

biffa: A democracy without a "none of the above" checkmark on the ballot is hardly a democracy at all, in my opinion. In effect, you're just electing one gang of thugs or another, who will take your money in exactly the same way.
posted by jon_kill at 10:17 AM on April 11, 2003

Whoops! Goethean, are you sure you don't mean Godwin? Sorry, dude, you lose.
posted by jon_kill at 10:18 AM on April 11, 2003

I don't have the statistic handy, but I read recently that a survey of Americans found that somewhere near 10% thought, when asked, that they were in the top 1%, and about 25% thought they'd be in the top 1% in a few years.

This could explain a fair bit.
posted by Space Coyote at 10:19 AM on April 11, 2003

I think all of us on the Mars Saxman side are all saying the same thing, and personally I think he summed it up wonderfully.

For those that agree with this article, that's fine -- it really comes down to where you place your priorities. To oversimplify it, it's basically a question of what's more important: "individual" or "society"?

And jon_kill, you've made your decision clear. There's not much more to add, right?
posted by jragon at 10:20 AM on April 11, 2003

how is that... not.... theft?

In plain black-and-white rationale, it's not theft because it's the law. Period.

You can call taxes, or for that matter abortion, gun rights, sodomy, child labor protection, drug law, jury duty, speed limits, social security, pornography, and smoking anything you want from useful to outright immoral, but it's not theft. By definition, it's the exact opposite of crime.

Oh, gottabefunky, that's just the simplest thing ever said.
Too easy.
Sorry, dude, you lose.

On a side note, perhaps you could wait for someone to actually say something offensive before you justify having such a shitty attitude here? Thanks.
posted by XQUZYPHYR at 10:23 AM on April 11, 2003

This article sheds some light on the actual numbers regarding the racial and income disparities between the military and the rest of the population. The conclusion of the article is that the disparities are largely exaggerated. With respect to income disparities in particular, white soldiers come from families slightly below the white median, while black soldiers come from families slightly above the black median. The variations above and below the median, however, are relatively small.

The real problem we should be focusing on with respect to taxation is not the individual income tax, but rather the corporate income tax. While many wealthy individuals do manage to significantly reduce their tax burden through sneaky financing manouvers, doing so is much harder now than in years past. On the other hand, many corporations continue to be able to avoid most or all of their tax liability. Forty-one companies actually paid less than zero in federal income taxes in at least one year from 1996 to 1998. The estimated three year total for tax refunds to corporations between 1996 to 1998 is 97 billion dollars. That amount alone would pay for the war.
posted by monju_bosatsu at 10:25 AM on April 11, 2003

Poor little rich people.
My heart bleeds for them.
Perhaps we can get a celebrity endorsement for a fund to help them out a little.
I've noticed many seem emaciated and probably don't have sufficient nutrition.
How about another "We Are the World" fund raiser?

But seriously now, Mars Saxman, TallGuy and PinkStainlessTail cover the issue very well.
posted by nofundy at 10:28 AM on April 11, 2003

You know, for people who love to argue, you guys sure hate to argue.
posted by jon_kill at 10:29 AM on April 11, 2003

The estimated three year total for tax refunds to corporations between 1996 to 1998 is 97 billion dollars.

Sorry, that should read tax breaks, not tax refunds. However, the 41 companies which received refunds during that period got 3.2 billion dollars from the government, as opposed to paying taxes on any of their 25 billion dollars in pre-tax profits. Whatever you think about a progressive income tax structure, the loopholes for corporations are simply absurd.
posted by monju_bosatsu at 10:30 AM on April 11, 2003

People who live a middle class life have trouble comprehending what poverty is really like. Imagine not being able to spend $3 on a cheap sandwich, because you don't have the money in your pocket. Think about not being able to afford $1/day on a cup of coffee on your way to work. And then tell me that I should be upset that someone earning ten million dollars a fucking year only gets to keep 8 million dollars of it. As long as there are people in this country who don't have the $2 copay for some meds, it's hard for me to by sympathetic about someone not being able to buy their third McMansion with cash rather than credit.

There are major structural anomolies in compensation and income distribution in this country. Certain people are sitting at pressure points where they can convince other cronies that they should get paid a million or ten million or fifty million dollars a year. This is graft, extortion. They're not adding fifty million dollars of value to the economy. They're taking advantage of their position.

The tax system is one small way that society has to move some of this money around. If it wasn't there, we'd have about a thousand people living real nice in this country and the rest of us living in work hostels.
posted by alms at 10:30 AM on April 11, 2003

I'm sorry pinkstainlesstail, but what do those two things have to do with each other?

I was mainly just playing off the author's "magmanimous" admission that income inequality is a problem in this country. I probably should have included the whole passage that VeGiTo posted above:"Conventional wisdom holds, correctly, that income inequality has been increasing in recent years, though it still isn't as great now as in some past periods." It's rather simplistic on my part I suppose, but it seems that progressive taxation is a good balance to artifical income inequality. When income inequality stops being an issue progressive taxation stops being necessary.

What justification could you possibly have for disincenting people to achieve in a free market society by burdening them with the cost of paying their own fair share of the costs plus some portion of the costs of other people who don't achieve in a free market society?

I've been a "victim" of progressive taxation myself and find it fair. I couldn't get where I am now without the resources I used when I couldn't pay the "fair share" that a flat tax would require. Many people who do achieve in a free market society do so because of the leg up. In the long run this only benefits society, no? More productive members and such?
posted by PinkStainlessTail at 10:31 AM on April 11, 2003

... can you really justify stealing such a disproportionate amount from the rich? Hell yes, although I have a problem with the words stealing and disproportionate; I'd prefer to call it appropriating and leave disproportionate out entirely. Why? What Mars Saxman said. (*applauds Mars Saxman.*)
posted by Lynsey at 10:33 AM on April 11, 2003

jon_kill, living in the US and enjoying the resulting benefits (and drawbacks, of course) is not a "contract you're forced into".

Sure, I hate paying taxes too, and I don't agree with lots - even most - of where it goes [pat pacifist self on back]. But to call it "theft" is just too much.

And I didn't mean to imply you were dumb, of course, just the anology.

Gad, now I sound like one of those love-it-or-leave-it folks...but still
posted by gottabefunky at 10:34 AM on April 11, 2003

One of the things I love about the United States is the willingness the challenge things that are taken as gospel elsewhere. Even when I disagree with the way things are (the lack of universal health care for instance), it seems to me a debate worth having. But I've never understood the argument against taxes that always seems to come down to "if I can't personally choose what my tax contributions are applied to, it's unfair". What is the alternative? Is there a workable system where one person can choose not to contribute a cent to defense and prisons, and another can choose not to contribute anything to welfare and medicare? I genuinely don't get it.
posted by Armitage Shanks at 10:37 AM on April 11, 2003

Don't forget that if you have a lot of money, you probably have a few more options for hiding your money from being taxed. The estimates for $13,000 paid by the top 1% is assumed that all of there income is taxable.
posted by destro at 10:42 AM on April 11, 2003

What's criminal is not that the rich pay more in taxes, but that the tax system is so complicated by special interest breaks -- yes, including the mortgage interest deduction, that great sop to the middle class -- that knowing a person's income level, or even their tax bracket, actually tells you next to nothing about what they actually pay in taxes.

I've always supported the idea of a perfectly flat tax, which would cause thousands of CPAs and lawyers, as well as Intuit and Microsoft, to lose millions in revenue, and which would allow us all to do our taxes on a postcard. Drunk. Beat that!
posted by luser at 10:43 AM on April 11, 2003

Paying taxes is part of being a citizen.

Not sure its got anything to do with citizenship.
Some of us live, work and pay thousands of dollars in taxes annually in the US, but aren't allowed to vote.
posted by normy at 10:46 AM on April 11, 2003

The poor? Lucky Duckies.
posted by riviera at 10:46 AM on April 11, 2003

"If you don't like it, get yourself elected [...] and then change the system."

This is a bit out of context, but......

The problem with this concept is that most of us, perhaps almost all of us, have no chance of being elected to a position where we could effect a meaningful change on tax law. The system has a high barrier to change such that you have to be part of the system to change the system. See the problem?

To get elected you need money, and to get the money you need to appear "electable". To appear electable you need to not seem like a threat to the established political structure so that they will endorse you. To appear electable you need to not seem like a loud mouth trouble maker. It also helps if you've lived a fairly boring life.

That is, people who painted themselves orange and wandered around nude at Burning Man will never get elected. No matter what else they may have done, no matter how smart they might be, no matter what great ideas they might have, the pictures of them on "Am I hot or not" will ensure they never have a chance to get elected.

At the end of the day, people like me, and you, have no chance to get elected.
posted by y6y6y6 at 10:46 AM on April 11, 2003

The richest 1% of families will pay $13,000 for the war, vs. $33 for the poorest 20%.

I suggest to do the opposite: make those fucking poor people pay 13k, 33 bucks for the rich. In fact, as Paul Krugman pointed out before packing his bags for Guantanamo,
Emboldened by the midterm election, key conservative ideologues have now declared their support for tax increases — but only for people with low incomes.
The public debut of this idea came, as such things often do, on the editorial page of The Wall Street Journal. The page's editors, it seems, are upset that some low-income people pay little or nothing in income taxes. Not, mind you, because of the lost revenue, but because these "lucky duckies" — The Journal's term, not mine — might not be feeling a proper hatred for the government.


John Rawls and the Lucky Duckies:
A Wall Street Journal editorial recently lamented the favorable treatment that some "lucky duckies" -- as the paper called them -- get by not paying what the Journal editors think are their fair share of taxes. They weren't talking about the billionaires who can hire expensive accountants to find mythical shelters and deductions. They weren't talking about the corporations that take up a phony residence offshore to avoid paying any taxes at all. And they weren't talking about the corporations that receive more in corporate welfare than they pay in taxes, thereby gaining a negative tax rate.
No, the Journal was criticizing those "lucky duckies" who make $12,000 a year and who the Journal thinks should be shelling out more in taxes. Apparently, the idea is that this will help them climb more readily aboard the tax-cut bandwagon. While you can certainly argue what we owe the worst-off, I think that labeling them "lucky" is cynical beyond comprehension. These are the working poor, who often try to scrape together a meager living against tremendous odds and without the benefits -- health care comes to mind -- of either higher-paid workers or welfare recipients.
Call me crazy, but I'll stick with Rawls when considering ethical principles. I think his theory of justice has a lot more behind it, and while it's open to criticism, I think it has withstood the test of time.

EJ Dionne's take on the WSJ editorial board interesting idea
posted by matteo at 10:47 AM on April 11, 2003

GottaBeFunky: You do sound like one of those love it or leave it people. And the US is making it more of a forced contract on a daily basis.

XQUZYPHYR: Check the comments I was replying to. I was perfectly justified in my rather tame responses. GottaBeFunky was using some sort of strange entitlement reasoning. He called my analogy dumb. Goethaen invoked Hitler, which is just sort of sad. Since when does having an opinion count as having a shitty attitude?

Jragon: I guess all of these arguments we have day after day come down to adopting some line of reasoning. Are you dismissing the need for discussion? That seems a little bleak to me. If I agreed with you, would you still tell me to go away? You might not think that I have much more to add, but that is because you may have already closed your mind to me.
posted by jon_kill at 10:48 AM on April 11, 2003

Is there a workable system where one person can choose not to contribute a cent to defense and prisons, and another can choose not to contribute anything to welfare and medicare? I genuinely don't get it.

Yes, Armitage. I think that with the blog revolution, the entire U.S. economy will restructure into a gigantic PayPal system.

Users who enjoy various aspects of the infrastructure will donate to support that, while throwing in a few extra bucks to any pork-barrel projects that "have really cool design." Healthcare HMOs will be renamed "premium services" and strangely no one will notice a difference. The only major changes will be in the public education system which will suddenly contain vast areas of the curriculum devoted Team Deathmatch strategy, how great Linux is, and what everyone wishes they could buy from Amazon.

The system will work beautifully for about 18 months, until a trade deal with Europe goes awry causing Luxembourg to default on it's loan, and consequentially PayPal suspends the entire account.
posted by XQUZYPHYR at 10:49 AM on April 11, 2003

JollyWanker: I submit that taking 10% from someone with $100 has more impact in real terms than taking 10% from someone with $100,000.

That's the point of progressive taxation. If you don't get it, you've never been really poor.
posted by Cerebus at 10:50 AM on April 11, 2003

The government is not a bunch of aliens who come down and steal our money, it is a bunch of people that we hire to administer the public trust and take care of the things that belong to all of us. This can get pretty expensive even when it's done right, which of course it never is. If you don't like the way they're keeping the books or how the money is spent, you can hire somebody else. It's called voting.

They are your employees. You are their boss. They try very hard to make you forget that. Remind them.
posted by George_Spiggott at 10:52 AM on April 11, 2003

The average family is being asked to pay $625 for the war. If we assume the cost will come from federal tax receipts one way or another, then average families in the poorest quintile by income would pay not $625, but just $33 each. By contrast, families in the richest 5% would pay, on average, $4,700 each. Families in the richest 1% would pay $13,000 each.

Oh boo hoo. It's the govt. that decides how to spend the tax money once they acquire it by the system they've designed. Replace "war" with "the reviatlization of public schools" and the rich would be gloating that they saved the school system because they paid disproportionately more in taxes compared to the poor.
posted by archimago at 10:52 AM on April 11, 2003

Armitage Shanks, you have a good point, but I'm not sure those arguing against it are going beyond emotion. It takes a big man/woman to say "I'm in a higher tax bracket, but I have a duty to support the society around me."

It's much easier to climb the ladder, then bitch about the ladder being placed there in the first place.
posted by jragon at 10:53 AM on April 11, 2003

The system will work beautifully for about 18 months, until a trade deal with Europe goes awry causing Luxembourg to default on it's loan, and consequentially PayPal suspends the entire account.

this is a good pitch, just add a back story and you could write a novel about it in about two months (3 weeks for a screenplay)
posted by matteo at 10:56 AM on April 11, 2003

jragon: A fair number of the people today were born at the top of the ladder to begin with.
posted by gramcracker at 11:01 AM on April 11, 2003

Goethean - I second your "L Curve" link.

According to the World Bank, there is a correlation between high levels of income inequality and political instability.

But to address the post more directly: thefts for which people are imprisoned in the US are, on average, for tiny amounts of money. Meanwhile, thefts committed by people in the top 1% of income levels (or above) do not generally result in jail terms even though the amounts being stolen (sometimes directly, sometimes through quasi legal or quasi illegal fraud schemes, such as with Enron or WorldCom) are vastly greater - by factors of tens, hundreds, thousands, even millions of times - than the petty sums stolen by the average US citizen imprisoned for theft.

So: the existing power structure implicity endorses the ongoing massive upward wealth transfer in US society [ which has been ongoing in US society since the GINI index began to rise again, towards greater inequality in 1968-1970 ], for there are no real penalties, penalties with teeth, for this sort of behavior on the part of Corporate executives and CEO's -- even when this upward wealth transfer [ I chose to call it theft ] is accomplished by criminal or fraudulent means, or by means highly deceptive (if legal).

The Savings and Loan "scandals" of the late 80's to early 90's in the US accomplished an upward wealth transfer on the order of hundreds of billions of dollars. The investment bubbl of the "Dot Com" years accomplished an upward waelth transfer on the order of trillions of dollars. Many of the victims of this wealth transfer were older workers due to retire soon who were laid off or fired, their retirement saving gutted. Many retirees also lost pension benefits from companies they had loyally worked for for decades. Now, many of these people work at McDonald's, or similar venues, for minimum wage. So much for the "Golden Years", eh?


The absurdity of the Fortune" piece linked to in this post can be shown by a simple thought experiment: imagine that wealth inequality in the US continues to increase over the next several decades. [ This is the economic trend currently being reinforced by GW Bush Administration policies. ] Eventually, the percentage of the overall US national wealth posessed by those in the top 1% of the American income scale will move from the current 40% or 50% (see below) to an even more absurd 80 or 90% - or even higher.

Following the "it's their money, they earned it" logic of Fortune Magazine, the US Federal Government and State Governments - as public entities - would shrivel into insignificance, and public government services will largely disappear - and the bottom 80 or 90% of Americans will devolve to developing world standards of living. All public functions currently carried through progressive (or unjust, according to Fortune) public taxation - police, fire, education, health care, social security, defense - will mostly disappear. In reality though, these public institutions which provided free government services to all will not exactly disappear. They will be sold off to corporations and run as private for-profit enterprises, on a fee-for-service basis.

The top 1% will be quite happy to buy the services they need, including the police and paramilitary forces necessary to protect their wealth, property and economic predominance - from the restive underclasses. The history of Guatemala in the last 50 years is instructive in terms of suggesting how these future economic realignments (implicity endorsed by Fortune, I suppose) would play out in political terms: through the repression of political dissent by extrajudicial killings carried out by paramilitary death squads.

Oh boy. I can hardly wait.

"If we divided the income of the U.S. into thirds, we find that the top ten percent of the population gets a third, the next thirty percent gets another third, and the bottom sixty percent get the last third. If we divide the wealth of the U.S. into thirds, we find that the top one percent own a third, the next nine percent own another third, and the bottom ninety percent claim the rest. (Actually, these percentages, true a decade ago, are now out of date. The top one percent are now estimated to own between forty and fifty percent of the nation's wealth, more than the combined wealth of the bottom 95%.)" - Davis Schweikart, Political Philosopher and mathematician, Loyola University.
posted by troutfishing at 11:02 AM on April 11, 2003

boo fucking hoo

That is all...
posted by Windopaene at 11:25 AM on April 11, 2003

From Bartlett & Steele's America: Who Really Pays the Taxes, p. 46:

"More than 1,000 individuals and familiies paid not one dollar in federal income tax that year [1989] -- this even though their incomes exceeded $200,000. Their effective tax rate: 0 percent. During the same year, 9 million individuals and families with income between $20,000 and $25,000 paid $18.2 billion in income tax. Their average tax bill amounted to $1,983. Their effective tax rate: 8.9 percent.

"More than 5,000 individuals and famililes with incomes over $200,000 paid some federal income tax in 1989 -- but at an effective rate of less than 5 percent. During that same year, 7.5 million individuals and families with income between $25,000 and $30,000 paid federal income taxes at an effective rate of 10 percent -- double the rate levied on the most affluent citizens.

"More than 6,000 individuals and families with incomes over $200,000 paid some federal income in 1989 -- but at an effective rate of between 5 and 10 percent. During the same year, 8.6 million individuals and families with income between $40,000 and $50,000 paid federal income taxes at an effective rate of 11.5 percent -- from one to several percentage points above the rate levied on the most affluent citizens."
posted by ed at 11:28 AM on April 11, 2003

Above and beyond the simple fact that the wealthy benefit infinitely more from the services of government than do the less wealthy (and thus, should pay for that vastly increased benefit), there is an overarching political justification for redistribution of wealth.

The accumulation of wealth and power in the hands of the few is detrimental to the many.

Hell, it even debauches, debases, demeans, and rots the wealthy (and those who fawn after wealth), although many don't see that simple fact for years....if not generations.
posted by fold_and_mutilate at 11:32 AM on April 11, 2003

A fair number of the people today were born at the top of the ladder to begin with.

The majority of millionaires+ are self-made it is a myth that most rich people were born with it, in America. In most other places your are right.
posted by stbalbach at 11:38 AM on April 11, 2003

I can't believe the Hilton sisters aren't participating here, probably busy with "work"! Hah, not me.

Nicky, Paris, we need your perspective on the social impact of tax policy! And your coke!
posted by luser at 11:42 AM on April 11, 2003

but can you really justify stealing such a disproportionate amount from the rich?

Yes, for their own safety and security. Unhappy societies where the poor are ridden all over by the rich end up rebellious, with the aristocracy hanging from the lampposts.

Oh, and the author is playing word games:

"Conventional wisdom holds, correctly, that income inequality has been increasing in recent years, though it still isn't as great now as in some past periods."

That "conventional wisdom" sounds awfully squishy, something that can be challenged by radical new thinking. But alas, it is not just "conventional wisdom." It is a documented observation.

I'd also like to know what "past periods" he is referring to. Feudal Europe?
posted by moonbiter at 11:48 AM on April 11, 2003

biffa: A democracy without a "none of the above" checkmark on the ballot is hardly a democracy at all, in my opinion. In effect, you're just electing one gang of thugs or another, who will take your money in exactly the same way.

Its where they spend the money they take that bothers me, eg tax cuts for the already loaded or trying to reinstitute a working health service.

In the UK we had a third party at the last general election who made it quite clear that they would raise taxes if they were elected and got a significant fraction of the vote.
posted by biffa at 11:49 AM on April 11, 2003

A fair number of the people today were born at the top of the ladder to begin with.

The majority of millionaires+ are self-made it is a myth that most rich people were born with it, in America.

I see a difference between "a fair number" and "most rich people," don't you? Can you provide evidence to back up your assertion? Not that I necessarily disagree, just interested what you base the statement upon.

Great contributions troutfishing and ed!
posted by nofundy at 12:00 PM on April 11, 2003

...it is a myth that most rich people were born with it, in America. (my emphasis added).

Really? I'd love to see some figures that back that statement up. From my observations so far most rich people I know started out that way. Some managed to make it themselves, but the number that I know has dwindled drastically in the past few years of our economic downturn.

I do believe that it is a myth that anyone can become rich in this country if they work hard for it.
posted by aaronscool at 12:06 PM on April 11, 2003

pinkstainlesstail: I've been a "victim" of progressive taxation myself and find it fair. I couldn't get where I am now without the resources I used when I couldn't pay the "fair share" that a flat tax would require. Many people who do achieve in a free market society do so because of the leg up. In the long run this only benefits society, no? More productive members and such?

What bothers me about progressive taxation I guess is: who does the determining of relative value? Is it as simpleminded as someone or other suggested above, that we just accept that 10% of a $10,000 salary is orders of magnitude greater than 10% of a $100,000 or $1,000,000 salary? Should we accept at face value the oft-repeated truism that "the wealthiest use the greater proportion of services provided by tax dollars", and, therefore, should pay more?

Or, maybe we should treat every adult member of society as just that: an adult whose contributions to and benefits from the social good should be considered equal to the contributions and benefits of every other adult member of society. Nobody gets more, nobody's taxed more. Beyond that, I always seem to see this debate degeneratinh into a model not at all unlike this thread: lots of whiny, spiteful wealth-hating without regard for the work that went into generating that wealth or the benefits, direct and indirect, the whiners may have enjoyed because an economic environment that rewards those who do that work.

(And no, aaronscool, it's not a myth. You may not personally know how to achieve this, but I know several people who have - quite a few of whom thrived throughout the dot.com blaze by simply avoiding it...)
posted by JollyWanker at 12:14 PM on April 11, 2003

well, we would need to define 'self-made' is that, share-cropper parents to billionaire CEO? or is that, son of an investment banker becoming billionaire CEO?

upward mobility is tied into generations of education and savings. [slowing rising lateral mobility]
posted by th3ph17 at 12:24 PM on April 11, 2003

Okay, heres how I look at it:

$626 dollars is somewhere around 21% of my monthly take home income.

$13,000 dollars is 31% of the monthly take home of someone that makes $500,000 a year after taxes.

Anybody who has to pay 10% more of their monthly take home income (than I do) to pay for the war and takes home almost 14 times what I do every year is simply not going to get any sympathy from me.

Some more numbers:

It takes me 151.2 hours of my life to earn $626 dollars take home. (That is how much of my lifespan has to go on for me to make that much money. This is figured on a 30 day month.)

It takes a 1 percenter 10.8 hours of their life to earn the same amount.

I make 6.94 cents a minute of my life.

A 1 percenter makes 96 cents for every minute of theirs.
posted by Wong Fei-hung at 12:26 PM on April 11, 2003

Really? I'd love to see some figures that back that statement up. From my observations so far most rich people I know started out that way. Some managed to make it themselves, but the number that I know has dwindled drastically in the past few years of our economic downturn.

Read The Millionaire Next Door. I've just started it but this is precisely their claim. I think they say something like 80% of American millionaires are first-generation wealthy. They distinguish between wealth and income, saying that a majority of millionaires don't necessarily have a super-high income but rather live well below their means and put a lot of time into planning their budget, savings, and investments. The rich people that you know may not really have that much wealth despite/because of their rich lifestyle.

I'm not sure if I buy everything they say but they seem to have their numbers backed up by quite a bit of reasearch.

Of course I think this thread needs to distinguish between millionaires and billionaires...as the L-Curve link makes clear, the difference between a millionaire and a billionaire is the same as that between someone who's net worth is $1000 (a guy who lives in a van down by the river??) and a millionaire.
posted by jacobsee at 12:28 PM on April 11, 2003

Actually JollyWanker it takes a number of factors to become wealthy that lie outside of one's own control.

Things like intelligence, education, innovation and opportunity are not available to every citizen of the US. I or you may have some or all of these qualities but does everyone?

Certainly people have ample opportunity in our country to improve their status and wealth through hard work and perseverance but can all attain the subjective level of "wealthy" if they so chose? Personally I think not.
posted by aaronscool at 12:28 PM on April 11, 2003

Here's a little food for thought on income mobility in the US. [ I'm posting big chunks of text because this material is now archived ]. Krugman, as usual, comes out swinging, while Krueger is more circumspect, noting that there are many variables contributing to the "apple falls close to the tree" phenomenon:

Paul Krugman [ November 22, 2002 NYT ]

"It has always been good to have a rich or powerful father. Last week my Princeton colleague Alan Krueger wrote a column for The Times surveying statistical studies that debunk the mythology of American social mobility. "If the United States stands out in comparison with other countries," he wrote, "it is in having a more static distribution of income across generations with fewer opportunities for advancement." And Kevin Phillips, in his book "Wealth and Democracy," shows that robber-baron fortunes have been far more persistent than legend would have it.

But the past is only prologue. According to one study cited by Mr. Krueger, the heritability of status has been increasing in recent decades. And that's just the beginning. Underlying economic, social and political trends will give the children of today's wealthy a huge advantage over those who chose the wrong parents.

For one thing, there's more privilege to pass on. Thirty years ago the C.E.O. of a major company was a bureaucrat — well paid, but not truly wealthy. He couldn't give either his position or a large fortune to his heirs. Today's imperial C.E.O.'s, by contrast, will leave vast estates behind — and they are often able to give their children lucrative jobs, too. More broadly, the spectacular increase in American inequality has made the gap between the rich and the middle class wider, and hence more difficult to cross, than it was in the past.

Meanwhile, one key doorway to upward mobility — a good education system, available to all — has been closing. More and more, ambitious parents feel that a public school education is a dead end. It's telling that Jack Grubman, the former Salomon Smith Barney analyst, apparently sold his soul not for personal wealth but for two places in the right nursery school. Alas, most American souls aren't worth enough to get the kids into the 92nd Street Y.

Also, the heritability of status will be mightily reinforced by the repeal of the estate tax — a prime example of the odd way in which public policy and public opinion have shifted in favor of measures that benefit the wealthy, even as our society becomes increasingly class-ridden."

"The Apple Falls Close to the Tree [ November 14, 2002 NYT ]
By ALAN B. KRUEGER

It seems increasingly apparent that the secret to success is to have a successful parent. Consider some prominent examples: George H. W. Bush and George W. Bush; Bobby Bonds and Barry Bonds; Henry Fonda and Jane Fonda; Estée Lauder and Ronald Lauder; Julio Iglesias and Enrique Iglesias; Sam Walton and Jim, John, S. Robson and Alice Walton.

As more recent and better data have become available, economists have marked up their estimate of the impact of parents' socioeconomic status on their children's likelihood of economic success.

It turns out that the famous line attributed to Andrew Carnegie — "from shirt-sleeves to shirt-sleeves in three generations" — is an understatement. Five or six generations are probably required, on average, to erase the advantages or disadvantages of one's economic origins.

This represents a marked departure from past thinking. In the 1980's, when Gary S. Becker of the University of Chicago pioneered the economic theory of intergenerational transmission of economic status, it was believed that the correlation between a father's and son's income was only around 0.15 — less than half the correlation between fathers' and sons' heights.

The early studies suggested that if a father's income was twice the average, his son's expected income would be 15 percent above average, and his grandson's just 2 percent above average. This is fast "regression to the mean," a concept Sir Francis Galton used to describe the progression of offspring toward the average height.

Landmark studies published by Gary Solon of the University of Michigan and David J. Zimmerman of Williams College in The American Economic Review a decade ago, however, led economists to revise substantially upward the estimate of the similarity of fathers' and sons' incomes. They noted that income fluctuated for idiosyncratic reasons from year to year — an employee could lose a job, for example — so estimates that depended on a single year were based on "noisy" data. Also, the samples previously analyzed represented only a narrow slice of the population at different points in individual careers. These factors caused the correlation in annual incomes to understate the correlation in "lifetime" incomes.

Averaging earnings over five years produced a correlation of around 0.40 for fathers' and sons' earnings — the same as the correlation between their heights. If people's incomes were represented by their heights, the similarity in income between generations would resemble the similarity observed in the heights of fathers and sons.

New studies by Bhashkar Mazumder of the Federal Reserve Bank of Chicago suggest that the similarity in income is even greater. Using Social Security records, he averaged fathers' earnings over 16 years (1970 through 1985) and sons' earnings over four years (1995 through 1998), and found that around 65 percent of the earnings advantage of fathers was transmitted to sons. The wider window provides a better reflection of lifetime earnings.

The relationship between fathers' and daughters' earnings was just as strong.

So that grandson (or granddaughter) mentioned previously could expect to earn 42 percent more than average. After five generations, the earnings advantage would still be 12 percent.

Furthermore, the degree of persistence across generations is strong for both rich and poor. Thomas Hertz of American University finds that a child born in the bottom 10 percent of families ranked by income has a 31 percent chance of ending up there as an adult and a 51 percent chance of ending up in the bottom 20 percent, while one born in the top 10 percent has a 30 percent chance of staying there and a 43 percent chance of being in the top 20 percent.

In another study, David I. Levine of Berkeley and Dr. Mazumder found that the impact of parental income on adult sons' income increased from 1980 to the early 1990's.

Why is there such a strong connection between parents' socioeconomic status and their children's? A large part of the answer involves intergenerational transmission of cognitive ability and educational level.

But these factors can "explain at most three-fifths of the intergenerational transmission of economic status," Samuel Bowles and Herbert Gintis of the University of Massachusetts wrote in the latest issue of The Journal of Economic Perspectives. They suggest that the intergenerational transmission of race, geographical location, height, beauty, health status and personality also plays a significant role.

Arthur S. Goldberger of the University of Wisconsin has long questioned whether knowledge of the "heritability" of income is of much use. Even if the father-son correlation is high because traits that affect earning power are inherited, well-designed interventions could still be cost effective and improve the lot of the disadvantaged.

To take an extreme example, the correlation in incomes between fathers and sons was high in South Africa under apartheid because race is an inherited trait. The abolition of apartheid reduced the correlation. The organization of society matters.

Perhaps the only legitimate use of the intergenerational correlation in income is to characterize economic mobility. The data challenge the notion that the United States is an exceptionally mobile society. If the United States stands out in comparison with other countries, it is in having a more static distribution of income across generations with fewer opportunities for advancement.

Anders Björklund of Stockholm University and Markus Jäntti of the University of Tampere in Finland, for example, find more economic mobility in Sweden than in the United States. Only South Africa and Britain have as little mobility across generations as the United States.

Luke Skywalker and Darth Vader are an unusual father-son pair; in most families, the apple does not fall so far from the tree."
posted by troutfishing at 12:36 PM on April 11, 2003

On inherited vs. earned wealth [note: this does not disprove stbalbach's assertion - which I think may be correct - that most US millionaires earned rather than inherited their money. The study I quote from below concerns the extremely rich, those with hundred of millions or billions of dollars ]

"Many Forbes 400 members made their money the old-fashioned way. They inherited it. "Born on Third Base," a study by the Boston-based United for a Fair Economy, shows that a majority of the Forbes 400 inherited their way onto the roster, inherited already substantial and profitable companies, or received key start-up capital from a family member.

According to United for a Fair Economy, 42 percent of the Forbes 400 were Born on Home Plate. They inherited sufficient wealth not just to make them rich, but rich enough to make the Forbes 400 lineup. These include older billionheir dynasties like the Rockefellers and duPonts, and newer family fortunes from companies like Wal-Mart and the Gap. The Waltons of Wal-Mart hold positions 9 through 13 on the Forbes 400, with a combined $32 billion.

Multimillionheir Steve "flat tax" Forbes can relate. He inherited the leadership and majority stock in Forbes, Inc. from his father. The Forbes family is conspicuously absent from the 400, but Fortune magazine pegged Forbes’s personal wealth at $439 million in 1996, enough to make that year’s cut." [ Link to a piece on this study ]
posted by troutfishing at 12:43 PM on April 11, 2003

What is the alternative? Is there a workable system where one person can choose not to contribute a cent to defense and prisons, and another can choose not to contribute anything to welfare and medicare? I genuinely don't get it.
Ultra minimal government. It seems to me that bitching that the rich benefit from the services that they themselves have paid for is putting the cart before the horse. Remove the services down to a basic level and you can have a government that is fair for everyone. No one can really convince someone else that they are not being cheated. If they feel that way, they probably are. If I offend you through what I consider to be a non-offensive act that that mean you have no right to feel put upon?

If you support taxes the way they are, you may as well support the war. The taxes make it all possible. A rich government is going to be immoral everytime.
posted by thirteen at 12:48 PM on April 11, 2003

If you support taxes the way they are, you may as well support the war. The taxes make it all possible. A rich government is going to be immoral everytime.

I might amend your point slightly...Any government is going to be immoral, or perhaps amoral. A government, by definition almost, should be working for the benefit of it's people. So whether it is right or wrong to preemptively attack another country doesn't really come into the decision. (I'm trying to ignore whether the war is good/bad for the American people). However, a rich government that is far more rich and powerful than any other government in the world is going to be able to act unilaterally every time. So just like an individual or corporation with orders of magnitude more wealth than average can take unfair advantage of her society, a nation with orders of magnitude more wealth than everyone else can take advantage of the world.

My little diatribe...anyways, if you're suggesting that the way to make our government is to make it orders of magnitude smaller, I definitely don't think that would be good...for many reasons already stated in this thread. I would rather that the balance of world power be brought back to healthier levels...I'm so un-American eh?
posted by jacobsee at 1:12 PM on April 11, 2003

All the people who've suggested that the rich should leave the US if they don't like it are hinting at one thing:

Despite the proportionally higher taxes that rich Americans pay, you can still become richer, more cheaply, in the US than anywhere else.

The infrastructure, markets, labor pool, and culture provide business advantages worth payting a premium for. If the final cost analysis is postive for the rich, they'll stay and keep doing business here. The choice is always theirs, and some of them do leave. What could be more capitalist than letting them choose?

Anyone remember when it came out that Bill Gates is worth more than the bottom 40% of the US combined? Do we really think that's just a matter of personal pluck and good business decisions? Come on...
posted by scarabic at 1:21 PM on April 11, 2003

Let's not forget George W.

Third rate student. Fourth rate soldier. Fifth rate businessman.

Thank God someone came along to lower the bar for everyone. You too can fall ass backward into the Presidency, as long as you were lucky enough to be born into a political dynasty.
posted by mark13 at 1:41 PM on April 11, 2003

Lucky Ducky always wins!
posted by damehex at 1:41 PM on April 11, 2003

aaronscool: Certainly people have ample opportunity in our country to improve their status and wealth through hard work and perseverance but can all attain the subjective level of "wealthy" if they so chose? Personally I think not.

When you put it that way, no, they can't - but in your original posting, I realize I was already taking the pragmatic step of filtering out the people who wouldn't end up wealthy no matter what advantages were afforded them. Let's face it, some people are smarter than others, some people work harder, understand things more quickly, see connections others don't see - leaving another group of people who are just plain ol' not as smart, hard working, quick or intuitive. That's a basic human distinction that I believe really has no place in this debate, unless you really did mean "all" like "every single breathing human American" having the shot at wealth...

That aside, the other factors - education, innovation, opportunity - are available to "all." Unless you want to go to Duke, getting a college education these days is pretty much as easy as deciding you want one. Nobody can teach you to innovate, or to recognize opportunity, but then I d have always believed that innovation and opportunity are simply the 180 degree view of the basic skills of letting your imagination stay alive and keeping your eyes and ears open.

That said, I'll presume to say what I think you're getting at: there are social advantages enjoyed by some that are not available to all - wealthy family connections, for instance; memberships in clubs or organizations; even community or neighborhood connections. And that's true, there are - just ask George W. Bush. But among the acquaintances I mentioned before, there are some who did not have those advantages who managed to succeed despite that lack. Yes, it's harder, but no, it's not impossible.
posted by JollyWanker at 2:23 PM on April 11, 2003

It is true, I suppose, that the rich, by definition, have benefited more from society than the poor by a flat measure. However, they also give more back, and I don't just mean in taxes. Most of the fortunes of the rich are made by adding value to the system, not taking it away from others. The total value in our economy is not static, but ever increasing. If I take wood worth ten dollars and my time worth a hundred dollars and make a table worth five hundred dollars, I have added value to the system. If I do it on a mass scale, and people like my tables, I will become rich. Most of the value I have created (yes, created, from nothing) goes to me, but a good deal of it goes out to others in the community, through my paying employees, buying materials, and so on. The point is, businesses don't just take money from people, they trade goods and services. When someone gets rich they are not taking more than their fair share of a limited resource, they are adding value to the economy and keeping some for themselves.

Still, a flat tax is not the answer. It's just that you can't justify progressive taxation by saying that the rich get more out of the economy. They add, generally (obviously there are exceptions), more value than they remove. Progressive taxation is a good idea (if you're going to have income tax at all, which is another topic), not because it is fair, but because it is good and it helps those who need it without unduly burdening those who can afford to give.
posted by Nothing at 4:09 PM on April 11, 2003

JollyWanker: I come from one of those "hidden millionaire" families. My parents came from farming families in rural Ireland circa late 1930's/early 1940's. They had, respectively a 6th grade and 8th grade education. They were extremely frugal, hardworking and resourceful people. They made their money by buying a fixer-upper house in a relatively safe, but unglamorous working class neighborhoods in San Francisco, did most the repair work themselves, rented it out and used it as colleraterial to get a loan on a second fixer-upper in a working-class neighborhood, and so on. We almost always bought the majority of our clothes (except Sunday church clothes) at a thrift store, almost always ate at home, and went for walks as a family instead of going to movies or amusement parks. My father worked as a gardener and, when I was younger, washed dishes in a restaurant. All of that with a severe case of angina - he had to go on permanent disability by the time I was 10. It was pure luck in many ways i.e., the San Francisco real estate boom, that allowed him to generate the wealth that he did.

Imagine what he could have accomplished if he had a rich relative who could have lent him the money to buy the fixer-uppers instead of having to scrape and scrimp and continue working through excruciating chest pains. Or conversely had to pay less of his meager earnings to federal income and payroll taxes.

Sure, you could argue that he wouldn't have been so ambitious if he had been born to money. But judging by how bright he was despite his lack of higher education, with a little more money and a little less back-breaking work, he could have accumulated much more wealth and, as a result, generated much more tax money for the government. Hell, maybe he could have contributed more to the economy by having the ability to hire people to do the repairs on his property. Instead he went to an early grave worrying about losing everything he had.

Hey, it's a fact: money makes money. If you have enough money to sock away in investments it generates an income of it's own. Hell, if you inherit enough of it, you don't have to work; more precisely, you don't have to do backbreaking, menial jobs that suck the life out of you. You can get as advanced a degree as you want and work at whatever you want, provided that you are bright and ambitious enough.

It's not just money alone that make rich people rich - it's also a matter of having enough time and leisure to think up some truly innovative product or approach to doing business. Hard to do that when you're working two jobs and caring for your family. Those who do should be held up as exceptional cases, rather than as a standard that the rest of us could live up to, if we just tried hard enough.

So if the little guy has to pay less taxes, so what? Whatever money he has is going into putting food on the table, medical care for himself and his family, mortgages, car payments, home and auto repairs and maintenance, etc.. There isn't usually a lot left over for anything else. On the other hand, a person who, by virtue of birth, is uber mega-wealthy isn't going to be putting the bulk of his income and wealth toward these necessities. It will probably roll over into some investment account and generate even more money for them.

While equality and fairness are concepts that American's hold as their core values, they also strongly believe in giving the the underdog a break, too. Aside from being a lofty ideal, it can also be regarded as enlightened self-interest.

People who have a little more income left over after paying for the essentials and taxes will spend it, which helps the economy. That extra income also might be going to pay for night school or extra vocational training, enabling that person to eventually earn a bigger income. Tax relief for the working and lower middle classes, should be regarded by the government and the uber rich whiners as an investment. Sure, there will always be people who milk government services for all it's worth and don't contribute to the greater good, rich or poor. More often though, people who are working hard to keep body and soul together will use that extra money to improve their lot in life. Like I, said it's an investment in the future
posted by echolalia67 at 5:21 PM on April 11, 2003

Ultra minimal government

Ok, so let's say we're going to do this ultra minimal government thing. I say education is part of an ultra minimal government, you say a military is, we fight about it, and we're in the same boat.

I simply cannot understand when people think everything would be peachy if the damn government butted out completely. What if we got rid of the military and got invaded? What if we got rid of education and became even more stupid?

Trimming fat is one thing, libertarianism is another.
posted by jragon at 5:54 PM on April 11, 2003

It's not how much they take from you that counts, it's how much you have left.

That's why a person who pays 30% tax on $100,000 per year remains much better off financially than a person who pays 10% tax on $10,000 per year. $70,000 in the hand as opposed to $9,000 in the hand.

But maybe that's too obvious.
posted by aeschenkarnos at 6:25 PM on April 11, 2003

yeah the rich get soaked, but this article poorly illustrates that.
posted by ZupanGOD at 7:03 PM on April 11, 2003

Well, our president paid $268,719 in taxes on $811,100 in adjusted gross income. God knows what his unadjusted income was. No wonder he wants tax cuts for the rich at the expense of the poor. Why do I think dividends comprise a not insubstantial portion of his income?
posted by caddis at 7:16 PM on April 11, 2003

I simply cannot understand when people think everything would be peachy if the damn government butted out completely.

I do not understand why people think government is the solution to every problem.

What if we got rid of the military and got invaded? What if we got rid of education and became even more stupid?
I think we all have a pretty good idea what happens when you get invaded. Our government was not always the bloated horror it is today and people managed. Most function that government has assumed could survive privately if enough people supported it. You could have a system right now that provides everything that you might wish socialized medicine would if enough people were interested. If not enough people would be willing to support that, why should they be forced to do so through involuntary taxes? The vast majority of government falls under this category.

I think it would be pretty easy to determine what constitutes a UL government. What can't people arrange on their own + What is a requirement that benefits all.

If you need all the services that the current form of government provides, then how can anyone fault the rich from using that same service, especially since they paid for more of it.
posted by thirteen at 7:51 PM on April 11, 2003

I suggest that anyone who thinks that taking 10% of a poor person's income is unfair to the wealthy because they pay more taxes percentage-wise spend next year living on $9,000.

Keep in mind that you still have to pay rent, utility bills and put food on the table ... and keep clothing on your back adequate for a work environment. If you require health care, chances are very high that you will not have medical insurance, so it will be the local sliding scale clinic or paying full price at a regular facility (or ignoring your health problems). You might have to ignore that throbbing pain in your mouth caused by a cavity for a few months until you can save up some money to get it fixed, and you certainly won't run to the doctor every time you have the flu. Instead, you will go to work, because you can't miss a paycheck (additionally, you work all holidays for the extra pay, and never get vacations). You probably won't be able to afford cable TV or internet access, in fact ... you probably won't even own a computer. Cars are an expensive luxury, so get used to public transportation. Let's hope you are single and with no children ... kids are expensive. They need all those clothes and school supplies, and food, and they tend to get sick and injured more often than adults. And if you or the kids want to go to college, you better hope you get good at filling out financial aid forms, and that they have great grades, or forget it. Even a few classes at a community college would break your budget. Forget owning a house. No one will give you a loan, and you couldn't afford the mortgage anyway ... nor any repairs that might need to be made when say a water pipe breaks or the 'fridge goes out.

And don't forget to spend some hours worrying that the ten cent raise you got last year might have pushed you up into the next tax bracket, thus making you come up with cash out of pocket to pay the tax man come April 15th. Money that you won't have in the bank, because you live paycheck to paycheck.

I grew up with that. A family of three living on my dad's post tax $9,000. While it may not seem, to someone with more income, that $1,000 extra a year would make any sort of difference at all ... it does. It can mean the difference between eating rice and beans every day all year and occasionally getting to buy ground beef, or getting to go to the doctor when you need to instead of taking aspirin and hoping the problem goes away on its own.

Yeah, I have a LOT of sympathy for the wealthy. Can you tell?
posted by Orb at 8:48 PM on April 11, 2003

And don't forget to spend some hours worrying that the ten cent raise you got last year might have pushed you up into the next tax bracket, thus making you come up with cash out of pocket to pay the tax man come April 15th.

Strictly speaking, that doesn't happen -- income tax rates are marginal tax rates, so earning an extra dollar always causes you to owe less than another dollar in income taxes. When you bounce into a higher bracket, only the new in-the-bracket dollars are taxed at the higher rate.

What can happen is that you might bounce up out of eligibility for some program or another and make an extra buck and lose $1.20 in taxes and foregone benefits.

Which still sucks, but in a slightly different way.
posted by ROU_Xenophobe at 9:21 PM on April 11, 2003

"Yeah, I have a LOT of sympathy for the wealthy. Can you tell?"

It's good to see that class envy is alive and well. I would have hoped that most folks would think a little bit more about economic issues than "screw em! I'm poor!" but that's not going to happen.

I am also a little unsure why it's ok to take someone's property just because you don't perceive them to have "earned" it.

Have you ever given something to a family member? A child? And what if some cop came and took that car you handed down away because they didn't "earn it" themselves? would that make sense? of course not.

Let's say I make a million or five. I give it to my children, and then their lives don't have to suck. Why, exactly, is that a moral problem? Why would that justify someone else with NO CLAIM ont hat wealth taking it away from them?

So rich families tend to get richer - imagine that! Families, working to better their situation and that of future generations. I'm shocked!

Make sure you tax all those evil rich folks into oblivion - then they'll stop creating wealth and watch the economy collapse.

Many things need massive concentration of wealth to happen, and many of those things are GOOD things. Rich people, rich companies and rich families are the driving force for that.

So you can't start poor and become rich? Probably not - then again, most people aren't really equipped to add much value to society as a whole in a business sense so it doesn't matter much.

But if you ARE good, DO work hard and are above the norm... you absolutely can get stinking rich. And when you do - you can give your kids a head start unless the class envy the Democrats love to spread (you know, those poor little democrat political families) lets some government agency rob you blind.

Me? I like flat taxes. All people, corporations, charities and so on ... just flat the whole thing.
posted by soulhuntre at 9:41 PM on April 11, 2003

is there a workable solution to the problem of people paying taxes for stuff they don't agree with or in proportions they don't agree with (implicitly besides or in addition to representative democratic congressional or parlamentary politics)?

well, I have no idea whether this is workable, but here is my pipe dream solution:

- Every income tax form, paper or online, comes with a separate survey section.

-This survey would ask the taxpayer what they think about the spending levels for a variety of very large general areas such as healthcare, defense, scientific research, the arts, education, diplomacy, international aid, etc.

- The question would be formulated in the following way. Do you think that in the next year the government should spend a) more b) less or c) about the same on _________?

- A person who chooses to leave only certain questions blank would be counted as having chosen c) for those questions. Choice c) would be considered in all cases to be adjusted for inflation.

- A person who chooses not to complete the survey at all would have to pay an additional nominal yearly fee in taxes. Right now in my head I am thinking $30. For the purposes of the tabulation, they would be counted as giving c)s for every answer.

- When creating the annual budget, Congress would be required to take the survey results into consideration in the following manner: A majority for a) on a given question would result in a 10% increase in spending in that area, b) a 10% decrease, c) the same general spending as adjusted for inflation. If Congress were to deviate from this very general allotment, it would have to have 2/3 approval on any given question.

- I haven't completely thought it through, but right now I'm leaning towards: "This would not affect emergency spending, which would still follow the same budget procedures as in the past regarding the criteria for states of emergency."

- This is specifically intended to be general and not program specific, so as not to overly tie hands against the creation of new ideas or the elimination of old ones or bore anyone to tears. (Also hopefully it would make people feel that their taxes are indeed an investment in the things they care about at the time that the people have to go through the burden of paying them.)

But like I said, this is just a pipe dream. I'm not a politician, or even formally a student of politics. Just someone with grand schemes.
posted by jann at 9:50 PM on April 11, 2003

I am also a little unsure why it's ok to take someone's property just because you don't perceive them to have "earned" it.

Society decides what ownership means. "Someone's property" is that set of things and places that the rest of us agree to leave alone. It's easy to think of ownership as a fundamental concept, but the rules and expectations vary from place to place. For example, ownership of a piece of property is determined by having your name on the title in the county registrar's office. But in some places (including New York City, if I'm not misremembering) you can establish ownership of an abandoned building by moving into it and maintaining residence for some amount of time. The Homestead Acts granted land ownership under similar conditions during the 1800s and even up into the early 1900s.

Ownership is never absolute. If the city decides to build a new freeway through your neighborhood, they can take your property, knock down your house, and pave the whole thing flat. There's nothing you can do about it but cash the compensation check.

If you leave your bike on the street, it's still yours. If people agree that it's still yours, they won't touch it. But eventually the city will send out a crew to pick it up and haul it off to a warehouse. A month later, bam! society decrees that it's no longer yours. You worked for the money, you paid for the bike, but society says: you had your chance, now it's free to the first person who asks for it. I got my first ten-speed this way.

There aren't a lot of cases like this, because people generally respect the notion of ownership, and the laws - typically written by or for people with lots of property - tend to respect it even more. But the fact remains: ownership exists because the law grants it. It's only your money because the rest of us agree that you are entitled to it; if society, as encoded in law, decides that you need to pay up, then you need to pay up.
posted by Mars Saxman at 10:18 PM on April 11, 2003

mars saxman is my new hero.
posted by jann at 10:28 PM on April 11, 2003

Innumeracy is as bad as illiteracy.
posted by dglynn at 10:42 PM on April 11, 2003

"It's only your money because the rest of us agree that you are entitled to it; if society, as encoded in law, decides that you need to pay up, then you need to pay up."

In a technical sense? You're almost right :)

Legally? of course your right.

Societies decision of what I own is second only to my ability to use force to keep something if society decides to take it. In the end, power decides ownership.

Usually a society extends its power to cover personal property to avoid everyone having to have a fortress... but that is a convenience.

Funny though how many people will applaud your definition when it means soaking the rich, but would scream bloody murder about "innate rights" if the government decided to take a printing press from an alternative newspaper :)
posted by soulhuntre at 10:44 PM on April 11, 2003

Soulhuntre:It's good to see that class envy is alive and well. I would have hoped that most folks would think a little bit more about economic issues than "screw em! I'm poor!" but that's not going to happen.

I think I covered that in my post. The cliff notes version - people who have been struggling on a tight budget will, if given a break, use what little surplus cash they have left over to purchase goods and services that they strongly desire (like fixing leaky faucets or replacing an old refrigerator, for example) but couldn't immediately afford, thus bolstering the economy; or going and getting further vocational training/enrolling in night school to get a degree that will give them more earning power; thus eventually making more money and therefore contributing more money to federal & state taxes down the road.

If there is class resentment at all involved in this issue on the part of working class/ lower-to-middle class people, it is the perception that the uber-rich are so zealous about protecting and expanding *their own* wealth, that they are unable or flat out refuse to see how tax cuts that benefit people in the lower 1/3 - 1/2 will benefit the greater good in the present and, eventually, benefit themselves in the long run. After a while, despite attempts to give the mega-wealthy the benefit of the doubt; one strongly suspects that they really don't give a shit about the common good in the least.

Honestly, given the amount that I pay in state and federal income and payroll taxes, not to mention all the nickel and dime sales and sin taxes, I really wouldn't mind as much if I saw my money being directed towards causes I see as most deserving in my community - improving the public school and community college system, repairs and upgrades to the infrastructure, adequate, "living-wage" pay to policemen, firefighters, social/psychiatric workers, nurses & ER doctors, public health workers, sanitation workers, public school teachers ect.. - instead I send off approximately 10K yearly and don't see even remotely enough of that money going towards these things that I *know* would make my community a better place to live. I, for one, wouldn't mind at all if the bulk of what I pay in federal taxes were to go to state and county agencies, where I can put a face to the people responsible for spending my tax dollars and have the ability to rally members of my community to pressure these local bureaucrats to spend my money on addressing issues that affect my community/state. I think the Libertarians are half-right in sense, that members of a remote federal government on the other side of the continent, one that gets the bulk of my tax money, doesn't have too much of a problem putting my tax dollars towards programs that benefit the folks that put money in their re-election coffers, at the expense of the people that they supposedly represent.
posted by echolalia67 at 11:09 PM on April 11, 2003

For some reason, the name "Mars Saxman" reminds me of "Marxism"
posted by VeGiTo at 8:58 AM on April 12, 2003

Inheritence tax basically is the killer to wealth. With each generation there is a splitting up amoung the family plus a %50 or more tax. This is why great fortunes from the Robber Baron days the heirs mostly don't show up on the Forbes list anymore. It takes a lot of work and trickery to preserve wealth. Makeing it is hard, keeping it is even harder.
posted by stbalbach at 10:11 AM on April 12, 2003

Anyone promoting a flat tax needs to give their head a shake. It simply doesn't take a large amount of imagination to understand that flat taxes can not work.

The examples have been given a few times in this thread, but if it helps any, nudge the numbers to the extreme:

Poor paying extreme taxes: $10 000 income taxed at 90% leaves them with $1 000 cash to last the year. Not gonna work. Not enough to pay for food for the year, let alone shelter.

Rich paying extreme taxes: $1 000 000 income taxed at 90% leaves them with $100 000 cash to pay food and shelter. They're laughing all the way to the bank.

The extreme tax rate makes it very clear that flat taxes punish hell out of the poor, not the rich.
posted by five fresh fish at 9:37 PM on April 12, 2003

Flat income-based taxes punish the hell out of the poor, not the rich. But the purpose of taxation is, in the main, an honorable thing, and punishment of any segment of the populace, or "leveling" the playing field for anyone ought not be a part of it. Taxes are our means of providing for our common needs and should be viewed as such, not as an opportunity for social engineering experiments. A fair and flat consumption-based tax scheme, with an annual, equal, per-person exemption, removes any notions of punishment wholly out of any discussion of taxation. It also spares us, as a society, from the cost of maintaining a completely bloated revenue bureaucracy and as gravy, makes shysters like H&R Block and the fearmongering tax-accountant-and-lawyer cabal completely obsolete. (Now talk about a "class" that deserves denegration...)

ObLink: Americans for Fair Taxation.
posted by Dreama at 6:29 AM on April 13, 2003

I'd go with consumption-based, provided two things:

1) Consideration for not taxing "essential" items like basic foods, tampons, etc. I'm not entirely convinced that the destitute poor should be taxed for the basics of life.

2) Taxation of the consumption of services, including stocks trading and banking. A transaction tax, perhaps.
posted by five fresh fish at 2:47 PM on April 13, 2003

five fresh fish you're a fucking idiot.

If I made $1 million and I only get $100 000 out of it, I won't be laughing to the bank. I'd be crying bloody murder.

By the way, you may want to look to Hong Kong for an example of a working flat-tax system. Everybody pays 16% there. It is consistently ranked as one of the freeist economies in the world, and recent difficulties notwithstanding, it has also been a buzzingly successful one for many decades.
posted by VeGiTo at 2:26 PM on April 14, 2003

But at a 90% tax rate, Vegito, you'd still be a damn sight better off than everyone who made $100 000 and less.

Speaking of fucking idiots, it looks like you missed the fucking point: flat taxes punish the poor far, far more than the rich. You'll still live well on the $100 000 left over from your million dollar income. The guy who's earning the average $35 000 income is going to starve to death with the pittance he's left with.
posted by five fresh fish at 4:17 PM on April 14, 2003