Monday, March 14, 2005

Progressive Taxation is Good

The question of taxation relates, at least in part, to meritocracy: should a just or democratic society allow individuals of equal talents and abilities--say a smart high school math teacher and a Bill Gates--to have hugely disproportionate incomes? Let's assume the small-town math teacher and Gates (or whatever IT baron you care to instantiate) earn similar scores on an objective, quantitative skills test. Should the math teacher thus have the same income as Gates? (Or in other words, shouldn't wealth have something to do with measurable worth)? I think not--it's Gates whose income and wealth should be limited, i.e., readjusted and/or seized.

Pure capitalism leads to a society of speculators and gamblers, where the individual's fate depends on the whims of the market and of other wealthy (or their henchmen, ie, management). Progressive taxation thus is justified not only to protect public services but to keep the playing field from tilting towards plutocracy. Raising capital gains taxes and allowing taxes on luxury items, second homes, SUVs, etc, is more than justified to correct the imbalances of power ( i.e wealth) that the free market leads too. Even small increases in taxation on the very wealthy bracket could substantially reduce deficits, budget crisis, create better schools, etc. etc. Indeed the argument should be at what point does the govt. step in and seize the assets and funds of the uber wealthy such as a Gates, Ellison, Allen.

Some "classical" economists (i.e. Ricardo and Keynes) argued for high taxation on estates and those who inherited large pieces of property. A high tax would keep the inheritors from becoming the types of aristocratic or feudal "rentiers" who earn large sums of money for simply inheriting or obtaining large pieces of property. The same argument applies to speculation--while you and I are grading scantrons or papers or administering networks or even slamming nails into drywall or digging ditches, the speculator or rentier derives far more capital simply for doing nothing but for being fortunate enough to have inherited an estate or win big on the stock market (or for that matter having succeeded in organized crime). Marx obviously had a solution to that, but barring Marx it seems quite prudent to implement a tax system that would prevent the resurgence of a landed aristocracy.

And let's be honest: the average academic economist, like the average successful conservative, is pretty much of the Hamiltonian-aristo-protestant variety; he views the poor and probably even the middle class, especially minorities, as deserving of their fate. Higher taxes mean punishing the successful, the noble and the Good, and giving their hard -earned cash (even if from stocks or rents) to the rabble. The protestant sort of economist thus also is a Social Darwinist to some extent. To be poor or unsuccessful in neo-puritan America entails that you are somehow not fit, morally or intellectually, not that the market and corporate America or the bureaucratic state (including its universities) might have exploited you for years.

No comments:

Custom Search

Blog Archive