Tuesday, November 11, 2003

Whither progressive income tax?

On the face of it, it’s pretty difficult to argue against the progressive income tax without seeming like a jaded jerk. The most handy argument for it is that a flat tax would mean way higher taxes for you (millionaires don’t read this blog so it’s safe to say that). Though it is the actual reason we don’t have a flat tax there is something deeply unsatisfying about this argument. Heck! I could just as easily argue that everyone who reads this blog should get free money from the government, but I think it too would assault our basic sense of fairness.

Of course, every single flat tax proposal made by conservative leaders (it comes up in congress almost every year) aren’t really flat at all. They aim to levy a flat tax on earned income (the kind of money you and I make at pizza hut) and lift all taxes on unearned income (the kind of money the rich make off of us when they use out student loan interest to buy homes in the south of France). Furthermore, even Republican leaders aren’t heartless enough to tax the homeless and those not making a living wage. Again, being “two-tiered” their flat tax isn’t really flat at all. Clearly then, you could easily argue against any given “flat tax” plan, but still, the platonic ideal of a flat tax is still there, floating in space: Wrong… But why?

It’s an issue of fairness. Sure, Bill Gates is a better programmer than me. Heck, he’s probably even a better salesman then me. But is he really 43,150,080.03* times better than me at anything? Even at darts, which I am exceedingly bad at? No, although it is plain that Bill Gates should rightly own far more than I do, we can also freely admit that what he does own is due in some part to good fortune. Of course, Bill Gates is a particularly deserving case. What about flat tax proponent Steve Forbes? His main talent is the ability to be born to outstandingly rich parents. Quite a skill. Then again, I’m a really good whistler but our society has decided that this particular talent, though also inheritable, does not merit multimillion dollar rewards.

The flip side is less dramatic but probably more common. While it’s difficult to get rich without deserving it (barring accidents of birth like our sitting president), it is very easy to not get rich even though you totally do deserve it. If you see Philo Taylor Farnsworth in heaven, thank him for inventing television, since no one ever did down here.

Of course, this doesn’t even take into account the people who are rich specifically because they are jerks (see John D. Rockefeller civil-war profiteering) and those who are poor exactly because they were good Samaritans (all the George Baileys of the world).

In the end, a progressive tax is (amongst other things) really just a luck tax. It asks of the most probably lucky ducks sitting on their piles of gold to kick back a little to us unfortunates. Until we invent that magical machine that can tell us how much each person’s soul is worth, we’re just going to have to trust to the law of averages.

* Ratio of my current bank account balance to Bill Gates’ net worth. Including my student loans this number is negative.


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