Robber barons, in reverse
April 22, 2011 6:36 AM
What is the moral obligation that the wealthy have towards the less-well-off?
Let me preface this by saying that I'm a left-of-centre social liberal, insofar as free or subsidised healthcare, social welfare and social safety nets are concerned. However, I am not a US citizen, and so some of its cultural mores may have escaped me.
I believe that the government has a role to play in redistributing wealth from the top to the bottom of the income pyramid. This is done through higher tax rates on the rich and using that income to pay for social programs like Social Security.
What I cannot understand, however, is the implicit expectation that most social liberals I know have. They expect the wealthy to donate their money to the less fortunate and pay significantly higher taxes on their income (as opposed to higher rates, but not prohibitively so). It feels rather opportunistic, as though saying, "Hey, thanks for your hard work in earning that money, now we'll take it."
I understand the need to redistribute income, but sky-high taxation rates and voluntary donations are, to me, a nice gesture on the part of the rich, but certainly I feel there is no moral obligation to do so. I'm not sure I understand this obligation. Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not? It has been argued that because it will hurt them in the pocket less (because they can't spend that much anyway), but it seems patently unfair to me that they are being asked to do contribute significantly more, and are castigated if they refuse, even though they earned that money (in this instance I'm thinking along the lines of self-made men like Bill Gates, Warren Buffett, Steve Jobs et al).
P.S. Mods, I'm not sure if this strays too much towards chatfilter, but if it does, please feel free to delete it. No hard feelings, promise.
Let me preface this by saying that I'm a left-of-centre social liberal, insofar as free or subsidised healthcare, social welfare and social safety nets are concerned. However, I am not a US citizen, and so some of its cultural mores may have escaped me.
I believe that the government has a role to play in redistributing wealth from the top to the bottom of the income pyramid. This is done through higher tax rates on the rich and using that income to pay for social programs like Social Security.
What I cannot understand, however, is the implicit expectation that most social liberals I know have. They expect the wealthy to donate their money to the less fortunate and pay significantly higher taxes on their income (as opposed to higher rates, but not prohibitively so). It feels rather opportunistic, as though saying, "Hey, thanks for your hard work in earning that money, now we'll take it."
I understand the need to redistribute income, but sky-high taxation rates and voluntary donations are, to me, a nice gesture on the part of the rich, but certainly I feel there is no moral obligation to do so. I'm not sure I understand this obligation. Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not? It has been argued that because it will hurt them in the pocket less (because they can't spend that much anyway), but it seems patently unfair to me that they are being asked to do contribute significantly more, and are castigated if they refuse, even though they earned that money (in this instance I'm thinking along the lines of self-made men like Bill Gates, Warren Buffett, Steve Jobs et al).
P.S. Mods, I'm not sure if this strays too much towards chatfilter, but if it does, please feel free to delete it. No hard feelings, promise.
This is done through higher tax rates on the rich and using that income to pay for social programs like Social Security.
That's not how Social Security works. Social Security is funded by a flat-rate payroll tax that is actually capped at the first $106,800 in earned income. So proportionally the rich pay less of their income into Social Security than the poor and middle class.
posted by jedicus at 6:52 AM on April 22, 2011
That's not how Social Security works. Social Security is funded by a flat-rate payroll tax that is actually capped at the first $106,800 in earned income. So proportionally the rich pay less of their income into Social Security than the poor and middle class.
posted by jedicus at 6:52 AM on April 22, 2011
I'm not sure it can be wholly traced back to Teddy Roosevelt, but this is a great quote (longish) about his views on taxes and the inheritance tax and so on.
Generally, and I'm drawing on my history education here, TR was supposed to have been raised on the "old money" ideas that your money is not yours to squander and be a jerk about, it's yours to take care of and pass on, and more over, (and this is sort of implied in the quote above) that inherited wealth is not earned and so you should be generous with people who are less FORTUNATE, because in your inheritance, you are truly fortunate, as opposed to hard-working.
posted by Medieval Maven at 6:54 AM on April 22, 2011
Generally, and I'm drawing on my history education here, TR was supposed to have been raised on the "old money" ideas that your money is not yours to squander and be a jerk about, it's yours to take care of and pass on, and more over, (and this is sort of implied in the quote above) that inherited wealth is not earned and so you should be generous with people who are less FORTUNATE, because in your inheritance, you are truly fortunate, as opposed to hard-working.
posted by Medieval Maven at 6:54 AM on April 22, 2011
Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not?
Your question is overly vague. You say that you agree with a progressive tax system but claim that most social liberals advocate "significantly higher" or "prohibitively" high taxes. Without numbers these terms are meaningless. Currently, mainly due to the fact that long term capital gains taxes are lower than most of the higher tax brackets, very wealthy people in the US generally pay a lower effective tax rate than the middle class (see Warren Buffett on this issue). Also, the current highest marginal income tax rate is historically low. Regardless of what most liberals advocate, most of the realistic proposals for tax rate changes are only a few percentage points, which would only cost the very wealthy a small fraction more of their total income, and will not put the rates anywhere near where they were as recently as the 1970s.
posted by burnmp3s at 6:56 AM on April 22, 2011
Your question is overly vague. You say that you agree with a progressive tax system but claim that most social liberals advocate "significantly higher" or "prohibitively" high taxes. Without numbers these terms are meaningless. Currently, mainly due to the fact that long term capital gains taxes are lower than most of the higher tax brackets, very wealthy people in the US generally pay a lower effective tax rate than the middle class (see Warren Buffett on this issue). Also, the current highest marginal income tax rate is historically low. Regardless of what most liberals advocate, most of the realistic proposals for tax rate changes are only a few percentage points, which would only cost the very wealthy a small fraction more of their total income, and will not put the rates anywhere near where they were as recently as the 1970s.
posted by burnmp3s at 6:56 AM on April 22, 2011
implicit expectation that most social liberals I know have
Do people actually think this? I'm quite socially liberal, and all I want (I know better than to expect) is for the very wealthy to adhere to the same tax laws as the rest of us.
posted by oinopaponton at 6:58 AM on April 22, 2011
Do people actually think this? I'm quite socially liberal, and all I want (I know better than to expect) is for the very wealthy to adhere to the same tax laws as the rest of us.
posted by oinopaponton at 6:58 AM on April 22, 2011
This is a matter of political ideology and social ethics, more so than morality.
As far as a I understand it, the argument on why the wealthy individuals should pay more in taxes contains the following main points:
1. It is a fallacy that people who are more wealthy work harder than people who are less wealthy.
2. The United States is built on a social agreement to come together for a better united good. Those who have more have an ethical obligation to contribute more to help power the system of government because they are more capable of doing so. This idea comes into conflict with the other agreement for having freedom. Conservatives, as a generalization, consider freedom to also include freedom from government intrusion into their lives, which includes excessive taxation.
3. There is an idea that the majority of wealthy individuals are not "self-made" men, but rather inherit their wealth or increase their wealth due to extreme advantages in socio-economic status compared to other people. Wealth breeds wealth so-to-speak. This leads to concentration of wealth in a few individuals, shrinking/lack of growth in the middle class, which doesn't fall in line with more progressive platforms.
4. Wealthy individuals often make massive amounts of wealth based on capital gains rather than straight income. These two things are managed differently by the tax system, which breeds a lot of resentment and unfairness from individuals who are not able to dream of acquiring even simple levels of similar business incentives in their day-to-day jobs.
posted by seppyk at 6:59 AM on April 22, 2011
As far as a I understand it, the argument on why the wealthy individuals should pay more in taxes contains the following main points:
1. It is a fallacy that people who are more wealthy work harder than people who are less wealthy.
2. The United States is built on a social agreement to come together for a better united good. Those who have more have an ethical obligation to contribute more to help power the system of government because they are more capable of doing so. This idea comes into conflict with the other agreement for having freedom. Conservatives, as a generalization, consider freedom to also include freedom from government intrusion into their lives, which includes excessive taxation.
3. There is an idea that the majority of wealthy individuals are not "self-made" men, but rather inherit their wealth or increase their wealth due to extreme advantages in socio-economic status compared to other people. Wealth breeds wealth so-to-speak. This leads to concentration of wealth in a few individuals, shrinking/lack of growth in the middle class, which doesn't fall in line with more progressive platforms.
4. Wealthy individuals often make massive amounts of wealth based on capital gains rather than straight income. These two things are managed differently by the tax system, which breeds a lot of resentment and unfairness from individuals who are not able to dream of acquiring even simple levels of similar business incentives in their day-to-day jobs.
posted by seppyk at 6:59 AM on April 22, 2011
Anyway, you seem to be asking about the morality of progressive taxation. I'll quote myself from a recent thread:
Another way to look at it from a moral point of view is the social contract. Progressive taxation is part of the US social contract. If wealthy people don't like it they can try to persuade (a majority of) the rest of us to abandon it (which they are trying very hard to do) or they can leave the country (they certainly have the resources to do so).
posted by jedicus at 6:59 AM on April 22, 2011
1. The utility of money is not linear.Another reason is that, quite frankly, that's where the money is. If we're going to have a government capable of undertaking large projects (be they social, infrastructural, military, or what-have-you), then we're going to have to take large amounts of money from the wealthy. You can't squeeze blood from a stone. So one way to look at it is this: which is less moral: doing without those projects or taking more money from the wealthy?
2. The utility of government services is not linear.
As to the first point: psychology and economics tell us that, for example, $100,000 is worth far more to someone who has nothing than to someone who already has a billion dollars. So, it's okay for marginal tax rates to go up as a person's income increases. The higher percentage is offset by the diminishing utility of increased income.
As to the second point: the public goods and services provided by government (e.g. defense, health care, infrastructure, financial regulations, the court system, police) are worth far more to someone who has a lot than to someone who has very little. As you have more to lose, the value of these protections go up. Therefore it is reasonable to expect the wealthy to pay a larger proportional share of the cost because they derive more proportional utility from the public goods and services.
Another way to look at it from a moral point of view is the social contract. Progressive taxation is part of the US social contract. If wealthy people don't like it they can try to persuade (a majority of) the rest of us to abandon it (which they are trying very hard to do) or they can leave the country (they certainly have the resources to do so).
posted by jedicus at 6:59 AM on April 22, 2011
The wealthy benefit disproportionately from the infrastructure and institutions provided by taxes. For example: imagine you work at a factory on the outskirts of town. Without tax-payer funded maintenance of the roads you use to get to work, you would have to quit that job and find something closer. To you, that tax only means keeping your job. To your employer, it means keeping his entire freaking business. Why shouldn't he pay more?
It's not that the wealthy are expected to pay "more", it's that they're expected to pay a fair share. They are excoriated because no one likes a freeloading cheapskate.
posted by logicpunk at 7:00 AM on April 22, 2011
It's not that the wealthy are expected to pay "more", it's that they're expected to pay a fair share. They are excoriated because no one likes a freeloading cheapskate.
posted by logicpunk at 7:00 AM on April 22, 2011
"Hey, thanks for your hard work in earning that money, now we'll take it."
Yeah, not so sure about this statement. While you can point to quite a lot of self-made millionaires of the digital age, isn't most of the seriously big money inherited? Does that give me any more right to it? Of course not. But this idea that the super rich all (or even most) got that way because of hard work is a tired and inaccurate myth.
Yeah, I think they have a moral/ethical/what-have-you obligation, if they have sixteen houses in nine countries and they make money simply by having lots of money - and there are whole communities down the road without heat in winter or money for shoes. IMO they have an obligation to contribute to programs that help those people who, whether by birth or circumstance, lack not only decent nutrition and housing, but but also lack access to quality education and other things that would help them help themselves.
But I don't know how to 1. convince them of that, as they live in another world, really, or 2. legislate that, since they are the puppet-masters. : /
On preview, what seppyk said.
posted by Glinn at 7:01 AM on April 22, 2011
Yeah, not so sure about this statement. While you can point to quite a lot of self-made millionaires of the digital age, isn't most of the seriously big money inherited? Does that give me any more right to it? Of course not. But this idea that the super rich all (or even most) got that way because of hard work is a tired and inaccurate myth.
Yeah, I think they have a moral/ethical/what-have-you obligation, if they have sixteen houses in nine countries and they make money simply by having lots of money - and there are whole communities down the road without heat in winter or money for shoes. IMO they have an obligation to contribute to programs that help those people who, whether by birth or circumstance, lack not only decent nutrition and housing, but but also lack access to quality education and other things that would help them help themselves.
But I don't know how to 1. convince them of that, as they live in another world, really, or 2. legislate that, since they are the puppet-masters. : /
On preview, what seppyk said.
posted by Glinn at 7:01 AM on April 22, 2011
@randomkeystrike: Could you elaborate more on the moral obligation, please? Are you saying that because they won't miss it, they should then give more?
@Medieval Maven: then what about those self-made men like Warren Buffett, who built his fortune through his own work?
@burnmp3s: I acknowledge that my question (specifically re. tax rates) is vague, but that's because I'm not sure what the current prevailing tax rates in the US are. But in conversations with other socialists it feels like the tax rates they're proposing are punitive rather than constructive in nature.
@logicpunk: Let's say I accept your argument about them paying higher taxes (I'm still trying to process it slowly), but what about voluntary (but expected) donations?
posted by titantoppler at 7:03 AM on April 22, 2011
@Medieval Maven: then what about those self-made men like Warren Buffett, who built his fortune through his own work?
@burnmp3s: I acknowledge that my question (specifically re. tax rates) is vague, but that's because I'm not sure what the current prevailing tax rates in the US are. But in conversations with other socialists it feels like the tax rates they're proposing are punitive rather than constructive in nature.
@logicpunk: Let's say I accept your argument about them paying higher taxes (I'm still trying to process it slowly), but what about voluntary (but expected) donations?
posted by titantoppler at 7:03 AM on April 22, 2011
People who are rich like to attribute their wealth primarily to their own hard work. What they often do not take into account is that they have benefited enormously from, for lack of a better word, luck.
To be born healthy and intelligent to parents capable of providing sufficient food, medical care, education, and other forms of nurturance is just pure luck. The random meeting of sperm and egg is just luck. The ancestors who survived plagues and other disasters are luck. The fact that one is born a certain sex at a particular time and place in human history is luck.
Others have worked just as hard but have not benefited from random luck.
Furthermore, can you think of any great wealth that is not based to some extent on the exploitation of people and/or natural resources? Could Bill Gates have amassed the kind of wealth he did if the miners who mined the minerals necessary for computer chips didn't work in sub-human conditions, if the sweat shop workers in other countries hadn't worked for peanuts putting together computer components, etc. etc.
posted by mareli at 7:05 AM on April 22, 2011
To be born healthy and intelligent to parents capable of providing sufficient food, medical care, education, and other forms of nurturance is just pure luck. The random meeting of sperm and egg is just luck. The ancestors who survived plagues and other disasters are luck. The fact that one is born a certain sex at a particular time and place in human history is luck.
Others have worked just as hard but have not benefited from random luck.
Furthermore, can you think of any great wealth that is not based to some extent on the exploitation of people and/or natural resources? Could Bill Gates have amassed the kind of wealth he did if the miners who mined the minerals necessary for computer chips didn't work in sub-human conditions, if the sweat shop workers in other countries hadn't worked for peanuts putting together computer components, etc. etc.
posted by mareli at 7:05 AM on April 22, 2011
My friend, let me introduce to John Rawls - the most eminent political scientist and political philosopher, arguably ever, his theory of social justice, and the veil of ignorance.
More personally, as a kind of quasi-socialist, I find the premise that rich people deserve their money, or significantly more money etc than poor people to be essentially the same as argument that rich people are a better type of people than poor people. If, truly, we are all, give or take, fairly equal, I don't see why we should treat people differently. The sewage worker is just as important to society as the ceo.
As a somewhat of a realist, it has also been conclusively proven that inequality has vast negative ramifications for the unequal society as a whole. So everybody is better with more equality. :)
There are lots of different arguments - moral, practical etc one can make for such an approach.
posted by smoke at 7:06 AM on April 22, 2011
More personally, as a kind of quasi-socialist, I find the premise that rich people deserve their money, or significantly more money etc than poor people to be essentially the same as argument that rich people are a better type of people than poor people. If, truly, we are all, give or take, fairly equal, I don't see why we should treat people differently. The sewage worker is just as important to society as the ceo.
As a somewhat of a realist, it has also been conclusively proven that inequality has vast negative ramifications for the unequal society as a whole. So everybody is better with more equality. :)
There are lots of different arguments - moral, practical etc one can make for such an approach.
posted by smoke at 7:06 AM on April 22, 2011
You don't seem to understand how Social Security works. The burden is disproportionately on lower-income people. See jedicus' comment. Moving on:
Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not?
...are castigated if they refuse, even though they earned that money
Some would argue that a manager/owner/capitalist who receives 1,000 times or 1,000,000 as much compensation as a minimum-wage worker did not actually earn that money, in the sense that they did not produce 1,000 times as much value as the minimum-wage worker. Essentially, someone with a high salary or accumulated wealth has power to extract more money from society than the true value they created. So some would argue that "redistributing" wealth is actually correctly distributing wealth in line with the value that each person provides to society.
While the owner of a restaurant chain may produce 100 times as much value by investing in the business and by organizing across the chain's many locations. But by owning the chain and accumulating money, the owner now has power to multiply his earnings beyond what he created. If one of his poorer workers leaves to start a new restaurant chain, the old owner has accumulated wealth that he can use to out-market his rival. The marketing doesn't create a new product of value, but it results in the old owner receiving greater profits. So simply having money means a person has power, which allows the wealthy person to extract more value than they created. Progressive taxation is a way of saying "In a capitalistic system, owning capital allows you to extract money out of proportion with the value you provide. We will take some of that additional money and use it to create things of real values - schools instead of yachts, roads instead of hedge funds."
The unresolved argument, of course, is whether owners of capital actually do receive money out of proportion with the value they contribute. As an owner of capital, my answer is "yes, it is out of proportion." But obviously not everyone is convinced.
posted by Tehhund at 7:06 AM on April 22, 2011
Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not?
...are castigated if they refuse, even though they earned that money
Some would argue that a manager/owner/capitalist who receives 1,000 times or 1,000,000 as much compensation as a minimum-wage worker did not actually earn that money, in the sense that they did not produce 1,000 times as much value as the minimum-wage worker. Essentially, someone with a high salary or accumulated wealth has power to extract more money from society than the true value they created. So some would argue that "redistributing" wealth is actually correctly distributing wealth in line with the value that each person provides to society.
While the owner of a restaurant chain may produce 100 times as much value by investing in the business and by organizing across the chain's many locations. But by owning the chain and accumulating money, the owner now has power to multiply his earnings beyond what he created. If one of his poorer workers leaves to start a new restaurant chain, the old owner has accumulated wealth that he can use to out-market his rival. The marketing doesn't create a new product of value, but it results in the old owner receiving greater profits. So simply having money means a person has power, which allows the wealthy person to extract more value than they created. Progressive taxation is a way of saying "In a capitalistic system, owning capital allows you to extract money out of proportion with the value you provide. We will take some of that additional money and use it to create things of real values - schools instead of yachts, roads instead of hedge funds."
The unresolved argument, of course, is whether owners of capital actually do receive money out of proportion with the value they contribute. As an owner of capital, my answer is "yes, it is out of proportion." But obviously not everyone is convinced.
posted by Tehhund at 7:06 AM on April 22, 2011
I think the perspective you describe of expecting tax and charitable donations is quite a US one. An expectation of charitable giving on a large scale is not so much of an expectaion elsewhere.
Personally, I would be happy to bang the tax rates up for the rich and not be bothered whether they give to charity or not. Why? Because they can afford it.
posted by biffa at 7:06 AM on April 22, 2011
Personally, I would be happy to bang the tax rates up for the rich and not be bothered whether they give to charity or not. Why? Because they can afford it.
posted by biffa at 7:06 AM on April 22, 2011
What is the moral obligation that the wealthy have towards the less-well-off?
Arguably the moral question is not about money. Or at least, not just about money. It's more fundamentally about altruism, which, in most cultures, is considered a virtue. Taxation, at least as regards social welfare, is an altruistic behaviour built into the rules by which society is run. Deciding on exactly how taxation and social welfare are enacted is a tug-of-war between a range of vested interests, and between the individual and the society.
posted by le morte de bea arthur at 7:07 AM on April 22, 2011
Arguably the moral question is not about money. Or at least, not just about money. It's more fundamentally about altruism, which, in most cultures, is considered a virtue. Taxation, at least as regards social welfare, is an altruistic behaviour built into the rules by which society is run. Deciding on exactly how taxation and social welfare are enacted is a tug-of-war between a range of vested interests, and between the individual and the society.
posted by le morte de bea arthur at 7:07 AM on April 22, 2011
None. No moral obligations are truly known. We cannot test for moral obligations or verify which of the various sets of moral obligations people postulate are correct.
What's the best argument you've heard, what's the worst argument you've heard, what's your religion, what's your upbringing, what is the year, what country are you in right now? All of these are factors in what a given individual will perceive as the most reasonable moral obligation.
At some places and times, people feel that they are under no moral obligation to not kill other people.
Rather than moral obligation, you might want to look through history to look for various situations and the outcomes possibly connected to them. Which outcomes did you find pleasing?
posted by adipocere at 7:09 AM on April 22, 2011
What's the best argument you've heard, what's the worst argument you've heard, what's your religion, what's your upbringing, what is the year, what country are you in right now? All of these are factors in what a given individual will perceive as the most reasonable moral obligation.
At some places and times, people feel that they are under no moral obligation to not kill other people.
Rather than moral obligation, you might want to look through history to look for various situations and the outcomes possibly connected to them. Which outcomes did you find pleasing?
posted by adipocere at 7:09 AM on April 22, 2011
Christian teaching holds that all people - not just the wealthy - have an obligation to aid those who are less fortunate. Christ taught that "whatever you did not do for one of the least among you, you did not do for me."
So, for those folks who would identify themselves as followers of Christ's teachings (I'm not going to engage in a "Who is a Christian?" derail, thankyouverymuch), there is a significant moral incentive to use their blessings to bless others.
posted by DWRoelands at 7:10 AM on April 22, 2011
So, for those folks who would identify themselves as followers of Christ's teachings (I'm not going to engage in a "Who is a Christian?" derail, thankyouverymuch), there is a significant moral incentive to use their blessings to bless others.
posted by DWRoelands at 7:10 AM on April 22, 2011
It's not that the wealthy are expected to pay "more", it's that they're expected to pay a fair share. They are excoriated because no one likes a freeloading cheapskate.
posted by logicpunk at 7:00 AM on April 22
Exactly. Also, by consuming more than other classes (both through their own consumption and the consumption of their industries), the wealthy create negative externalities (e.g., air pollution, global warming) which it is fair to expect them to pay for.
Let's say I accept your argument about them paying higher taxes (I'm still trying to process it slowly), but what about voluntary (but expected) donations?
I'm not sure why the morality question turns on whether they are paying their fair share through taxes or voluntary donations? They should pay what they owe; doesn't matter how.
posted by yarly at 7:11 AM on April 22, 2011
posted by logicpunk at 7:00 AM on April 22
Exactly. Also, by consuming more than other classes (both through their own consumption and the consumption of their industries), the wealthy create negative externalities (e.g., air pollution, global warming) which it is fair to expect them to pay for.
Let's say I accept your argument about them paying higher taxes (I'm still trying to process it slowly), but what about voluntary (but expected) donations?
I'm not sure why the morality question turns on whether they are paying their fair share through taxes or voluntary donations? They should pay what they owe; doesn't matter how.
posted by yarly at 7:11 AM on April 22, 2011
If you think of wealth as the inevitable result of hard work, then of course you'd argue that the wealthy should get to keep all their money. If you think of wealth as the product of hard work plus a good dose of luck, then you'd say it's unfair that some should have so much while others should suffer due to the lack of basic necessities.
To people who think wealth is the inevitable result of hard work, I would say: there are plenty of coal miners in this country. They work incredibly hard, dangerous, backbreaking hours for a barely-middle-class income. Don't you think if they could all be CEOs by working really hard, they'd do it?
posted by miyabo at 7:13 AM on April 22, 2011
To people who think wealth is the inevitable result of hard work, I would say: there are plenty of coal miners in this country. They work incredibly hard, dangerous, backbreaking hours for a barely-middle-class income. Don't you think if they could all be CEOs by working really hard, they'd do it?
posted by miyabo at 7:13 AM on April 22, 2011
@smoke: So what you're saying is that they should donate and pay more for the greater good of society's advancement?
@jedicus and Tehhund: I freely admit that I do not really grasp how Social Security works, given that I'm not in the US and all. My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
@yarly: The distinction I was trying to make between (justified) higher tax rates and donations was that donations are meant to be voluntary, but there is a certain expectation that the rich have to give more to charity, whereas this same burden of expectation is not placed upon the shoulders of others.
posted by titantoppler at 7:14 AM on April 22, 2011
@jedicus and Tehhund: I freely admit that I do not really grasp how Social Security works, given that I'm not in the US and all. My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
@yarly: The distinction I was trying to make between (justified) higher tax rates and donations was that donations are meant to be voluntary, but there is a certain expectation that the rich have to give more to charity, whereas this same burden of expectation is not placed upon the shoulders of others.
posted by titantoppler at 7:14 AM on April 22, 2011
It might be a valuable point to ask: Who are the "rich"?
If we're going to have a conversation about what their responsibilities and obligations are, isn't there some value in defining the term?
What's the criteria?
posted by DWRoelands at 7:19 AM on April 22, 2011
If we're going to have a conversation about what their responsibilities and obligations are, isn't there some value in defining the term?
What's the criteria?
posted by DWRoelands at 7:19 AM on April 22, 2011
Shitty life lesson #7: Not everybody who works hard gets what they deserve.
Redistribution of wealth is trying to make life a little bit more fair and tolerable. We're all in this together, ya know. (Also, I'd *love* to meet these people who are excoriating rich people for not giving more. We need to hang. All I seem to meet in this slave state are the 'i ain't givin' my money to no poor people' variety.)
posted by Green Eyed Monster at 7:19 AM on April 22, 2011
Redistribution of wealth is trying to make life a little bit more fair and tolerable. We're all in this together, ya know. (Also, I'd *love* to meet these people who are excoriating rich people for not giving more. We need to hang. All I seem to meet in this slave state are the 'i ain't givin' my money to no poor people' variety.)
posted by Green Eyed Monster at 7:19 AM on April 22, 2011
My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
Nope. FICA is a flat tax with a cap, including both SS and Medicare. If you make more than the cap, the SS is not deducted from the incremental income.
posted by chesty_a_arthur at 7:20 AM on April 22, 2011
Nope. FICA is a flat tax with a cap, including both SS and Medicare. If you make more than the cap, the SS is not deducted from the incremental income.
posted by chesty_a_arthur at 7:20 AM on April 22, 2011
The rich have gotten that way by necessarily immoral means. Raping the planet, exploiting their workers, taking advantage of their customers and governments, ruining their competitors, and then using the proceeds to invest in others' efforts to do the same.
From that standpoint, the money shouldn't belong to them in the first place.
posted by Jon_Evil at 7:22 AM on April 22, 2011
From that standpoint, the money shouldn't belong to them in the first place.
posted by Jon_Evil at 7:22 AM on April 22, 2011
At lot of what the government does and spends money on actually disproportionately advantages the wealthy and upper-middle class. Property laws and their enforcement, for instance, only help you if you have property. IP law pretty much exclusively benefits educated professionals (or their corporate bosses).
My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
Nope. Social Secuirty is only minimally redistributive.
posted by spaltavian at 7:22 AM on April 22, 2011
My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
Nope. Social Secuirty is only minimally redistributive.
posted by spaltavian at 7:22 AM on April 22, 2011
I freely admit that I do not really grasp how Social Security works, given that I'm not in the US and all. My impression was that it came out of general payroll taxes, of which the rich pay a higher tax rate in the upper income brackets.
The thing about Social Security is that it's designed to reward you based on what you put in. The rate of return on does drop off over three legs, and at like 105k per year it phases out though. The high earners prefer it that way mainly because they'd rather invest in higher risk, higher return assets. People sometimes argue it's regressive, but taxes are something you pay to get something in return, and social security is unusually transparent about it.
In theory "old age insurance" could be done via the market, but I think the common expectation is that participation rates would be far lower, returns would be even worse, and we'd once again have old working poor unable to find work or food. In essence it's a nationally prescribed savings plan.
posted by pwnguin at 7:35 AM on April 22, 2011
The thing about Social Security is that it's designed to reward you based on what you put in. The rate of return on does drop off over three legs, and at like 105k per year it phases out though. The high earners prefer it that way mainly because they'd rather invest in higher risk, higher return assets. People sometimes argue it's regressive, but taxes are something you pay to get something in return, and social security is unusually transparent about it.
In theory "old age insurance" could be done via the market, but I think the common expectation is that participation rates would be far lower, returns would be even worse, and we'd once again have old working poor unable to find work or food. In essence it's a nationally prescribed savings plan.
posted by pwnguin at 7:35 AM on April 22, 2011
titantoppler, I sent you a MeMail with a quick explanation of why SS tax is not an equal burden. And googling Social Security Progressive Tax turns up some articles.
I'd like to highlight another argument already made by spaltavian and logicpunk: the rich benefit disproportionately from the services provided by a stable government. Each worker who gets to work on time due to government-built roads benefits relative to his salary. But the owner who employs 100 workers benefits for each worker who can show up on time due to those roads. So it can be argued that the owner, who is probably earning many times (or many 1000s of times) as much as his employees, benefits many times (or many 1000s of times) as much as his employees from those roads. As a result, the owner should contribute many times (or many 1000s of times) as much as his employees.
Judging by the effective tax rates of the wealthy (see Warren Buffett's comments about his effective tax rate being lower than his secretary's due to low taxes on capital gains), highly progressive taxation seems to be the best way to make sure the wealthy person pays their fare share.
posted by Tehhund at 7:37 AM on April 22, 2011
I'd like to highlight another argument already made by spaltavian and logicpunk: the rich benefit disproportionately from the services provided by a stable government. Each worker who gets to work on time due to government-built roads benefits relative to his salary. But the owner who employs 100 workers benefits for each worker who can show up on time due to those roads. So it can be argued that the owner, who is probably earning many times (or many 1000s of times) as much as his employees, benefits many times (or many 1000s of times) as much as his employees from those roads. As a result, the owner should contribute many times (or many 1000s of times) as much as his employees.
Judging by the effective tax rates of the wealthy (see Warren Buffett's comments about his effective tax rate being lower than his secretary's due to low taxes on capital gains), highly progressive taxation seems to be the best way to make sure the wealthy person pays their fare share.
posted by Tehhund at 7:37 AM on April 22, 2011
I acknowledge that my question (specifically re. tax rates) is vague, but that's because I'm not sure what the current prevailing tax rates in the US are. But in conversations with other socialists it feels like the tax rates they're proposing are punitive rather than constructive in nature.
Well let's learn about US tax rates, then. There are three major parts to federal taxation of individuals: FICA, ordinary income tax, and capital gains tax.
FICA is broken into two parts: Medicare and Social Security. Medicare is 1.45% of an employee's income, plus an equal 1.45% contribution from the employer. This applies to all earned income (no cap). Social Security is 6.2% plus a 6.2% employer contribution, but it only applies to the first $106,800 of earned income. Special for 2011: the employee's Social Security contribution has been reduced to 4.2%. By the way, all of these come right off the top of gross compensation.
Things are more complicated for the self-employed: they pay both the employee and employer contributions but get to deduct (not credit) half of it from their income tax.
In theory at least, Social Security and Medicare are funded pretty much entirely by these payroll taxes. In the medium to long term that will not be sustainable, but there are ways to fix it without fundamentally destroying either program.
So, now, income tax. There are six income tax brackets in the US right now: 10%, 15%, 25%, 28%, 33%, and 35%. However, these are marginal tax rates. The first $8,375 is taxed at 10%, the next $25,625 is taxed at 15%, and so on up to $373,651 where the 35% bracket starts. Thus, someone who earns $500,000 will pay an effective federal income tax of about 30% despite the majority of their income being in the 35% bracket. (All of these numbers are for an unmarried person).
But, those tax rates do not apply to income derived from capital gains (roughly speaking, a capital gain is a realized increase in the value of an investment). The current capital gains taxes are based on one's ordinary income tax rate and then divided into two groups: tax on short-term investments (i.e. held for a year or less) and long-term investments (i.e. held longer than one year). You'll note from the linked chart that while short-term capital gains tax rates mirror ordinary income tax rates, long-term capital gains tax rates are much lower, capping out at 15%. For comparison, the 15% ordinary income tax bracket caps out at $34,000.
This, together with a bunch of tax avoidance schemes that are only worth the trouble if you make a lot of money, are why the very wealthy pay a lower share of their income in tax than the middle class or even some of the poor. There are people (hedge fund managers, for example) who make billions of dollars a year and pay a mere 15% on it.
Finally, it may help to look at historical income tax rates in the US. You'll see that the current top rate is extremely low by historical standards.
posted by jedicus at 7:39 AM on April 22, 2011
Well let's learn about US tax rates, then. There are three major parts to federal taxation of individuals: FICA, ordinary income tax, and capital gains tax.
FICA is broken into two parts: Medicare and Social Security. Medicare is 1.45% of an employee's income, plus an equal 1.45% contribution from the employer. This applies to all earned income (no cap). Social Security is 6.2% plus a 6.2% employer contribution, but it only applies to the first $106,800 of earned income. Special for 2011: the employee's Social Security contribution has been reduced to 4.2%. By the way, all of these come right off the top of gross compensation.
Things are more complicated for the self-employed: they pay both the employee and employer contributions but get to deduct (not credit) half of it from their income tax.
In theory at least, Social Security and Medicare are funded pretty much entirely by these payroll taxes. In the medium to long term that will not be sustainable, but there are ways to fix it without fundamentally destroying either program.
So, now, income tax. There are six income tax brackets in the US right now: 10%, 15%, 25%, 28%, 33%, and 35%. However, these are marginal tax rates. The first $8,375 is taxed at 10%, the next $25,625 is taxed at 15%, and so on up to $373,651 where the 35% bracket starts. Thus, someone who earns $500,000 will pay an effective federal income tax of about 30% despite the majority of their income being in the 35% bracket. (All of these numbers are for an unmarried person).
But, those tax rates do not apply to income derived from capital gains (roughly speaking, a capital gain is a realized increase in the value of an investment). The current capital gains taxes are based on one's ordinary income tax rate and then divided into two groups: tax on short-term investments (i.e. held for a year or less) and long-term investments (i.e. held longer than one year). You'll note from the linked chart that while short-term capital gains tax rates mirror ordinary income tax rates, long-term capital gains tax rates are much lower, capping out at 15%. For comparison, the 15% ordinary income tax bracket caps out at $34,000.
This, together with a bunch of tax avoidance schemes that are only worth the trouble if you make a lot of money, are why the very wealthy pay a lower share of their income in tax than the middle class or even some of the poor. There are people (hedge fund managers, for example) who make billions of dollars a year and pay a mere 15% on it.
Finally, it may help to look at historical income tax rates in the US. You'll see that the current top rate is extremely low by historical standards.
posted by jedicus at 7:39 AM on April 22, 2011
[OP the question is okay, but turning it into a debate is not.]
posted by jessamyn at 7:42 AM on April 22, 2011
posted by jessamyn at 7:42 AM on April 22, 2011
If morality is the prime consideration when deciding issues of taxation, the question arises, IS an income tax the most moral taxation scheme?
I offer for discussion that a carbon tax would be more moral, helping the earth, and disincentivizing the military-industrial complex and our worldwide empire.
posted by blargerz at 7:44 AM on April 22, 2011
I offer for discussion that a carbon tax would be more moral, helping the earth, and disincentivizing the military-industrial complex and our worldwide empire.
posted by blargerz at 7:44 AM on April 22, 2011
The way I look at it is: unless we're living in anarchy or want to live in anarchy, we need lots of tax revenues. They have to come from somewhere.
Now, everyone has good reason to hate paying taxes. I don't love the fact that anyone has to pay taxes. All other things being equal, it's better for people to keep money they earn, and I'd even apply this to the super-rich.
However, it isn't the case that "all other things" are "equal." Some people have an easier time paying taxes than others.
I remember seeing an article in Slate (can't find it now) about what it's like to have $100 million. The bottom line was that even if you tried, you'd have a really hard time spending all that money in your life (assuming you spent it all on goods and services for yourself, rather than charitable donations or endowments, which, of course, could easily use up $100 million in one day).
In The Economist Naturalist's Field Guide, the Cornell economist Robert H. Frank makes a case for progressive taxation (and other left-leaning policies) by describing, for instance, a family that spent $10 million on their kid's birthday party, including personal concerts by huge rock bands. The point here isn't that we might or might not find this to be distasteful on a gut level. I don't think it's too productive to try to villify this behavior and turn society against the rich. I don't even think it's terrible behavior. After all, they got rid of their money and gave it to other people, like those rock bands' roadies and sound tech people. But still, the whole thing didn't need to happen. The super-rich have a lot more excess money than a family earning $50,000 or $100,000 or even $200,000 a year. Again, the tax revenues need to come from somewhere; why not those with the most excess money?
Needless to say, the social programs you've mentioned are huge issues unto themselves. What government should do about health insurance, welfare, etc., are complex, controversial questions. The above is assuming you are fairly settled in your answers to these questions, so the only remaining question is where to get the tax revenues.
posted by John Cohen at 7:57 AM on April 22, 2011
Now, everyone has good reason to hate paying taxes. I don't love the fact that anyone has to pay taxes. All other things being equal, it's better for people to keep money they earn, and I'd even apply this to the super-rich.
However, it isn't the case that "all other things" are "equal." Some people have an easier time paying taxes than others.
I remember seeing an article in Slate (can't find it now) about what it's like to have $100 million. The bottom line was that even if you tried, you'd have a really hard time spending all that money in your life (assuming you spent it all on goods and services for yourself, rather than charitable donations or endowments, which, of course, could easily use up $100 million in one day).
In The Economist Naturalist's Field Guide, the Cornell economist Robert H. Frank makes a case for progressive taxation (and other left-leaning policies) by describing, for instance, a family that spent $10 million on their kid's birthday party, including personal concerts by huge rock bands. The point here isn't that we might or might not find this to be distasteful on a gut level. I don't think it's too productive to try to villify this behavior and turn society against the rich. I don't even think it's terrible behavior. After all, they got rid of their money and gave it to other people, like those rock bands' roadies and sound tech people. But still, the whole thing didn't need to happen. The super-rich have a lot more excess money than a family earning $50,000 or $100,000 or even $200,000 a year. Again, the tax revenues need to come from somewhere; why not those with the most excess money?
Needless to say, the social programs you've mentioned are huge issues unto themselves. What government should do about health insurance, welfare, etc., are complex, controversial questions. The above is assuming you are fairly settled in your answers to these questions, so the only remaining question is where to get the tax revenues.
posted by John Cohen at 7:57 AM on April 22, 2011
The distinction I was trying to make between (justified) higher tax rates and donations was that donations are meant to be voluntary, but there is a certain expectation that the rich have to give more to charity, whereas this same burden of expectation is not placed upon the shoulders of others.
Donations to tax exempt non-profits are tax deductible in the US, so there is a major financial incentive for people in general to donate. There is general social pressure for everyone at all income levels to donate to charity. If you are very wealthy you may get a call from a charity asking you to go to an expensive charity dinner, but if you are poor there are still organizations that will ask you to donate in other ways (on the street, in church, etc.). As a proportion of income, poor people actually donate more to charity than the wealthy. This is partially because people with lower income tend to be more familiar with what it's like to not have enough money to survive, and see giving to people in those situations as more of an obligation when they have more than enough to take care of themselves.
posted by burnmp3s at 8:01 AM on April 22, 2011
Donations to tax exempt non-profits are tax deductible in the US, so there is a major financial incentive for people in general to donate. There is general social pressure for everyone at all income levels to donate to charity. If you are very wealthy you may get a call from a charity asking you to go to an expensive charity dinner, but if you are poor there are still organizations that will ask you to donate in other ways (on the street, in church, etc.). As a proportion of income, poor people actually donate more to charity than the wealthy. This is partially because people with lower income tend to be more familiar with what it's like to not have enough money to survive, and see giving to people in those situations as more of an obligation when they have more than enough to take care of themselves.
posted by burnmp3s at 8:01 AM on April 22, 2011
The rich have gotten that way by necessarily immoral means.
well then. that's helpful. Its possibly to believe that the rich should pay a greater share of their income to support society without believing the utterly preposterous notion that to be rich is to have somehow benefited from something immoral.
Besides the fact that the benefits of a stable society accrue most to those with the most, and any sort of appropriate rawlsian sort of argument, one of the cases for progressive taxation has to do with the declining utility of money. The 500,000 dollar one makes in a year has a much smaller impact on quality of life then does the 50,000 dollar.
posted by JPD at 8:03 AM on April 22, 2011
well then. that's helpful. Its possibly to believe that the rich should pay a greater share of their income to support society without believing the utterly preposterous notion that to be rich is to have somehow benefited from something immoral.
Besides the fact that the benefits of a stable society accrue most to those with the most, and any sort of appropriate rawlsian sort of argument, one of the cases for progressive taxation has to do with the declining utility of money. The 500,000 dollar one makes in a year has a much smaller impact on quality of life then does the 50,000 dollar.
posted by JPD at 8:03 AM on April 22, 2011
Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not?
Part of this is due to the Diminishing marginal utility of money.
then what about those self-made men like Warren Buffett, who built his fortune through his own work?
He pays lower taxes than his secretary, and he thinks there's something significantly wrong with this.
I'm not sure what the current prevailing tax rates in the US are.
You should look into that before continuing this line of inquiry.
But in conversations with other socialists it feels like the tax rates they're proposing are punitive rather than constructive in nature.
Not that I necessarily agree with "punitive" rates, but one of the facts of life is that massive income inequality has significantly destructive effects on the economy and culture, so some people might be motivated out of a desire to blunt these distortions caused by income inequality via "punitive" rates.
More rationally, one motivation is that the entire country is supposed to experience the higher living standards that an expanding economy benefiting the wealthy offers. One of the reasons we allow free markets to exist is because the "promise" is that even though some people may do a lot better than others, is that "a rising tide lifts all boats"-- the idea that if the Walton family makes a lot of money, this is better for the entire country. To keep this belief "true," taxes are raised in order to improve living standards, opportunities, and quality of life across the entire country.
posted by deanc at 8:06 AM on April 22, 2011
Part of this is due to the Diminishing marginal utility of money.
then what about those self-made men like Warren Buffett, who built his fortune through his own work?
He pays lower taxes than his secretary, and he thinks there's something significantly wrong with this.
I'm not sure what the current prevailing tax rates in the US are.
You should look into that before continuing this line of inquiry.
But in conversations with other socialists it feels like the tax rates they're proposing are punitive rather than constructive in nature.
Not that I necessarily agree with "punitive" rates, but one of the facts of life is that massive income inequality has significantly destructive effects on the economy and culture, so some people might be motivated out of a desire to blunt these distortions caused by income inequality via "punitive" rates.
More rationally, one motivation is that the entire country is supposed to experience the higher living standards that an expanding economy benefiting the wealthy offers. One of the reasons we allow free markets to exist is because the "promise" is that even though some people may do a lot better than others, is that "a rising tide lifts all boats"-- the idea that if the Walton family makes a lot of money, this is better for the entire country. To keep this belief "true," taxes are raised in order to improve living standards, opportunities, and quality of life across the entire country.
posted by deanc at 8:06 AM on April 22, 2011
I'm not certain I have the vocabulary to explain this quite clearly, but I'll give it a go.
One of the fundamental principles of American--if not all--democracy is that there is no legitimate rationale for a permanent aristocracy; i.e. that people are not entitled to be in a ruling class by sheer accident of birth.
One of the fundamental principles cited by folks who oppose progressive taxation is that it is wrong for the government to punish hard work and success. A corollary is that is is wrong for anyone--particularly those who are for some reason incapable of earning money in their own right--to expect that they are entitled to a handout from the rich, or for the government to enforce such a handout.
These two principles are both at odds with the current American system of taxation, but not for the reasons that you'll hear about on Fox News. What are the Koch brothers, if not a manifestation of a moneyed, ruling class with an undue influence on the politics of the nation through sheer force of--inherited--money? They cannot possibly have any conception of what it is like not to have endless resources or the kind of political access it takes to make your personal interests the law of the land. Nor will their children or their children's children.
What are the Hilton sisters, if not the otherwise-valueless recipients of handouts from hardworking, successful, ultimately wealthy people? When have they worked hard, marshaled their resources at personal risk, and put together a business that does anything at all? What, then, is the difference between David Koch and a 18th-century French marquis? Or between Williamsburg trust-fund kid and a welfare queen?
So then, beyond the generation of the person who earns it, what is the value of accumulated wealth to a democratic society? Why does a democratic society--one whose very existence precedes the minting of the money being accumulated in any of the examples, not to mention the ready supply of consumers who fill the coffers with that money or the law enforcement agencies that see that the money remains there--owe unending wealth and its accompanying political influence to the likes of Mark Zuckerberg and the generations of Zuckerbergs to follow?
posted by willpie at 8:10 AM on April 22, 2011
One of the fundamental principles of American--if not all--democracy is that there is no legitimate rationale for a permanent aristocracy; i.e. that people are not entitled to be in a ruling class by sheer accident of birth.
One of the fundamental principles cited by folks who oppose progressive taxation is that it is wrong for the government to punish hard work and success. A corollary is that is is wrong for anyone--particularly those who are for some reason incapable of earning money in their own right--to expect that they are entitled to a handout from the rich, or for the government to enforce such a handout.
These two principles are both at odds with the current American system of taxation, but not for the reasons that you'll hear about on Fox News. What are the Koch brothers, if not a manifestation of a moneyed, ruling class with an undue influence on the politics of the nation through sheer force of--inherited--money? They cannot possibly have any conception of what it is like not to have endless resources or the kind of political access it takes to make your personal interests the law of the land. Nor will their children or their children's children.
What are the Hilton sisters, if not the otherwise-valueless recipients of handouts from hardworking, successful, ultimately wealthy people? When have they worked hard, marshaled their resources at personal risk, and put together a business that does anything at all? What, then, is the difference between David Koch and a 18th-century French marquis? Or between Williamsburg trust-fund kid and a welfare queen?
So then, beyond the generation of the person who earns it, what is the value of accumulated wealth to a democratic society? Why does a democratic society--one whose very existence precedes the minting of the money being accumulated in any of the examples, not to mention the ready supply of consumers who fill the coffers with that money or the law enforcement agencies that see that the money remains there--owe unending wealth and its accompanying political influence to the likes of Mark Zuckerberg and the generations of Zuckerbergs to follow?
posted by willpie at 8:10 AM on April 22, 2011
why should they pay more than their fair share?
This is not the right way to frame the issue. When you say they pay more than what's "fair," you're assuming they should not pay that much. You're stacking the deck against progressive taxation through your rhetoric.
I assumed your question was why progressive taxation makes sense. I was trying to answer that. If that's not your question, then I'm not sure what you're asking.
People throw around words like "fair" (and "equal" and "justice," etc.) without clarifying what they mean by them. To be blunt, I literally don't know what you're talking about.
Deanc correctly pointed out that Warren Buffett -- who makes 66 million dollars a year -- "pays lower taxes than his secretary, and he thinks there's something significantly wrong with this." But he doesn't just give himself as an example; he has offered a million dollars to anyone in the Forbes 400 richest Americans list (all billionaires) who can prove they pay more in taxes than their support staff:
posted by John Cohen at 8:27 AM on April 22, 2011
This is not the right way to frame the issue. When you say they pay more than what's "fair," you're assuming they should not pay that much. You're stacking the deck against progressive taxation through your rhetoric.
I assumed your question was why progressive taxation makes sense. I was trying to answer that. If that's not your question, then I'm not sure what you're asking.
People throw around words like "fair" (and "equal" and "justice," etc.) without clarifying what they mean by them. To be blunt, I literally don't know what you're talking about.
Deanc correctly pointed out that Warren Buffett -- who makes 66 million dollars a year -- "pays lower taxes than his secretary, and he thinks there's something significantly wrong with this." But he doesn't just give himself as an example; he has offered a million dollars to anyone in the Forbes 400 richest Americans list (all billionaires) who can prove they pay more in taxes than their support staff:
Tom [Brokaw]: You've talked about in your office, for example, you pay a much lower tax rate with all of your wealth than, say, a receptionist does.OP, you have a long way to go if you want to convince that the super-rich are shouldering "more than their fair share" in America. I recommend getting clear on your concepts and your facts.
Warren: That's exactly right, Tom. And I-- I think the only way to do it is with specifics, and-- and - and in our office, 15 people cooperated in a survey out of 18. I didn't make anybody do it. And my total taxes paid-- payroll taxes plus income tax-- and the payroll tax is an income tax. It's based on income.
Tom: Yeah.
Warren: Mine came to-- 17.7 percent. That-- that was the-- that was line 61 I think-- or, no, line 43-- is the percent of taxable income, plus payroll taxes, 17.7 percent. The average for the office was 32.9 percent. There wasn't anybody in the office from the receptionist on that paid as low a tax rate. And I have no tax planning. I don't have an-- I don't have a-- an accountant. I don't have tax shelters. I just follow what the U.S. Congress tells me to do.
Tom: Why do you think that there's not more outrage about that?
Warren: I-- I don't think people understand it. For one thing, you'll see a lot of surveys that say the rich, the top one percent pay this much of the income tax. Now I think what people don't realize is that almost one third of the entire budget comes from payroll taxes. And payroll taxes on income, just like income taxes are taxes on income.
And the payroll tax is over $800 billion out of two and a trillion, or something like that. And people don't understand-- they-- they-- that the rich pay practically no payroll tax. I mean, I paid payroll tax last year on $90 odd thousand, whatever the number is. I paid income tax on $66 million. But my double income tax, one of 'em quits at $90,000. And the remaining $66 million does not get taxed with payroll tax. So, the person who makes $60,000 in our office gets ta-- taxed in full on the payroll tax, and taxed in full on the income tax. And-- and all the statistics you read, particularly the one don't like taxes, well now, they totally ignore the payroll tax. And it's huge now. ...
Most of my income is taxed at 15 percent, and-- and doesn't pay a payroll. Mainly it’s dividends and capital gains. And if you look at the ... Forbes 400, a bunch of my fellow rich guys-- ... their tax rate overall to the federal government will be less than that of their receptionist. And I challenge anybody. If they want to make me a bet on that, and I've urged Congress, both the Senate and the House, to get the figures anonymously from the IRS. Just look at that Forbes 400. Takes a billion three to get on the Forbes 400 this year. And the aggregate wealth is just staggering. And those people are paying less percentage of their total income to the federal government than their receptionists are.
Tom: Will you put some money on the table on this one?
Warren: What--
Tom: You said-- you said you'd pay a million dollars to somebody.
Warren: I'll-- I'll bet-- I'll bet a million dollars against any member of the Forbes 400 who challenges-- me that the average for the Forbes 400 will be less than the average of their receptionists. So, I'm-- I'm-- I'm-- I'll give 'em an 800 number. They can call me. And the million will go to whichever charity the winner-- designates.
Tom: How much are you hearing from your fellow rich fellows, as you describe them?
Warren: I don't hear anything. They're happy. They are not paying the tax rate their receptionists are.
posted by John Cohen at 8:27 AM on April 22, 2011
The simple answer to your actual question is that many people think "the rich" don't deserve what they have. Because they don't deserve it, the "logic" is that it is OK to take it and give it to the more deserving. It's just Robin Hood thinking.
But two wrongs don't make a right. The supposed immorality of being rich stems from the theory that one cannot amass wealth like that without some form of theft or manipulation going on. The solution is not to re-steal it back. If Joe Robber-Baron amassed his wealth by underpaying his workers, overcharging his customers and manipulating the political system to his benefit, it is just as bad (and worse (*)) to also manipulate the political system to tax some of his wealth away to give back to the workers and customers somehow. It is the same act, and perpetuates an unfair system.
(*) Worse, because they know better. They have judged the act as wrong, and then gone ahead and done the same thing.
The failure of all of this stems from the faulty presumption that wealth is the de facto result of immoral behavior. It is not necessarily that. Over-taxing the rich to equalize out bad behavior is a second order solution that can be more efficiently solved. It punishes the innocent to get to the guilty.
The solution to inequality is to confront it where it happens, not to continue to allow it to happen so you can tax the results.
posted by gjc at 8:29 AM on April 22, 2011
But two wrongs don't make a right. The supposed immorality of being rich stems from the theory that one cannot amass wealth like that without some form of theft or manipulation going on. The solution is not to re-steal it back. If Joe Robber-Baron amassed his wealth by underpaying his workers, overcharging his customers and manipulating the political system to his benefit, it is just as bad (and worse (*)) to also manipulate the political system to tax some of his wealth away to give back to the workers and customers somehow. It is the same act, and perpetuates an unfair system.
(*) Worse, because they know better. They have judged the act as wrong, and then gone ahead and done the same thing.
The failure of all of this stems from the faulty presumption that wealth is the de facto result of immoral behavior. It is not necessarily that. Over-taxing the rich to equalize out bad behavior is a second order solution that can be more efficiently solved. It punishes the innocent to get to the guilty.
The solution to inequality is to confront it where it happens, not to continue to allow it to happen so you can tax the results.
posted by gjc at 8:29 AM on April 22, 2011
Let me put it to you this way. I'm walking down the street with my friend. We've just come from the hardware store, where I bought a new fire extinguisher for my house.
We encounter a guy who's on fire.
Would you describe putting him out as "a nice gesture" on my part? Do I have a moral obligation to put the guy out? If so, is it fair that I have to do significantly more than my friend does? Should I be castigated if I just keep walking and install the fire extinguisher in my own house, as I'd originally planned?
posted by escabeche at 8:30 AM on April 22, 2011
We encounter a guy who's on fire.
Would you describe putting him out as "a nice gesture" on my part? Do I have a moral obligation to put the guy out? If so, is it fair that I have to do significantly more than my friend does? Should I be castigated if I just keep walking and install the fire extinguisher in my own house, as I'd originally planned?
posted by escabeche at 8:30 AM on April 22, 2011
. . . sky-high taxation rates and voluntary donations are, to me, a nice gesture on the part of the rich, but certainly I feel there is no moral obligation to do so. I'm not sure I understand this obligation.
I do not think the rich have any such moral obligation. I believe that we, the majority, the poor and middle class, have an opportunity to coerce the rich to give up some of their wealth in the interest of social stability.
Just as freedom is not "God's gift to humanity" as a recent U.S. politician put it, but in fact is a prize won by the courage and determination of people to wrest it from the king's selfish hands, the redistribution of wealth is a Good Thing best accomplished by forcing the wealthy to go along with it.
Otherwise the rest of us will get hungry and frustrated. And it would be a pity if something were to happen to that nice civilization you've got there.
posted by General Tonic at 8:31 AM on April 22, 2011
I do not think the rich have any such moral obligation. I believe that we, the majority, the poor and middle class, have an opportunity to coerce the rich to give up some of their wealth in the interest of social stability.
Just as freedom is not "God's gift to humanity" as a recent U.S. politician put it, but in fact is a prize won by the courage and determination of people to wrest it from the king's selfish hands, the redistribution of wealth is a Good Thing best accomplished by forcing the wealthy to go along with it.
Otherwise the rest of us will get hungry and frustrated. And it would be a pity if something were to happen to that nice civilization you've got there.
posted by General Tonic at 8:31 AM on April 22, 2011
This is not a moral response - but the rich do have a greater interest in social stability.
Revolution, riot, and chaos benefit the poor the most. When revolution occurs, the class structure of the society comes into play. Since the poor have no where to go but up, the revolutionary gamble is best for them. Since the rich have no where to go but down, that same gamble is dangerous for them.
It is in the interest of the rich to do whatever it takes to stabilize the poor and prevent revolution.
posted by Flood at 8:32 AM on April 22, 2011
Revolution, riot, and chaos benefit the poor the most. When revolution occurs, the class structure of the society comes into play. Since the poor have no where to go but up, the revolutionary gamble is best for them. Since the rich have no where to go but down, that same gamble is dangerous for them.
It is in the interest of the rich to do whatever it takes to stabilize the poor and prevent revolution.
posted by Flood at 8:32 AM on April 22, 2011
The simple answer to your actual question is that many people think "the rich" don't deserve what they have. Because they don't deserve it, the "logic" is that it is OK to take it and give it to the more deserving. It's just Robin Hood thinking.
Another thing is that in some societies, historically, the rich have been rich simply because they owned lots of land and were able to profit from rents paid by tenants. How did he get that land? He probably inherited it or was granted it by the government. If he gets more land, giving him more income, it is literally the case that someone else now has less land and less opportunity to acquire land, making the non-land-holder less wealthy and less free. In societies where this was the historical economic norm, there is going to be a tendency to hold the wealthy in suspicion and they will be approached with the presumption that their wealth is coming at the expense of everyone else, even if this isn't actually true.
But even in modern economies this plays itself out where income inequality causes certain distortions like a large flood of wealth acquired by a few drives up rents and costs for the less-well-off, disrupting their lives. The natural demands from those who get the short end of the stick in this case is that taxes should be used to blunt the effects of those economic disruptions.
posted by deanc at 8:36 AM on April 22, 2011
Another thing is that in some societies, historically, the rich have been rich simply because they owned lots of land and were able to profit from rents paid by tenants. How did he get that land? He probably inherited it or was granted it by the government. If he gets more land, giving him more income, it is literally the case that someone else now has less land and less opportunity to acquire land, making the non-land-holder less wealthy and less free. In societies where this was the historical economic norm, there is going to be a tendency to hold the wealthy in suspicion and they will be approached with the presumption that their wealth is coming at the expense of everyone else, even if this isn't actually true.
But even in modern economies this plays itself out where income inequality causes certain distortions like a large flood of wealth acquired by a few drives up rents and costs for the less-well-off, disrupting their lives. The natural demands from those who get the short end of the stick in this case is that taxes should be used to blunt the effects of those economic disruptions.
posted by deanc at 8:36 AM on April 22, 2011
Let me also try to answer "Why are they expected to do significantly more" as an empirical question, rather than trying to make a normative moral argument. I can think of at least four major sources of moral intuitions that Americans often draw from.
1. Popular religions, especially Christianity. The popular religions I'm familiar with do indeed assert a moral obligation to give money and goods to the poor.
2. Some soft version of utilitarianism. It's hard for me to think of a version of this that doesn't impose a moral obligation on the rich to give money to the poor, since the same amount of money has greater utility for the poor person than the rich one, and the transfer thus creates a net utility gain.
3. Some soft version of libertarianism/propertarianism. This holds that there is no moral obligation to give up any property that you acquired through legal means.
4. Allegiance to a political party. If you are a committed Democrat, you're attached to the stance that rich people are obligated to give charity, and moreover that their taxes should return to the higher levels of previous decades. Committed Republicans believe that rich people should pay lower tax rates, but I think in the large tend to endorse the idea that these lower taxes will and should be "made up for" by voluntary contributions -- this is presumably related to the ties between Republican party politics and one of the popular religious traditions mentioned in point 1.
So by my score, it's 3 against 1 in favor of "rich people are morally obligated to give charity."
posted by escabeche at 8:44 AM on April 22, 2011
1. Popular religions, especially Christianity. The popular religions I'm familiar with do indeed assert a moral obligation to give money and goods to the poor.
2. Some soft version of utilitarianism. It's hard for me to think of a version of this that doesn't impose a moral obligation on the rich to give money to the poor, since the same amount of money has greater utility for the poor person than the rich one, and the transfer thus creates a net utility gain.
3. Some soft version of libertarianism/propertarianism. This holds that there is no moral obligation to give up any property that you acquired through legal means.
4. Allegiance to a political party. If you are a committed Democrat, you're attached to the stance that rich people are obligated to give charity, and moreover that their taxes should return to the higher levels of previous decades. Committed Republicans believe that rich people should pay lower tax rates, but I think in the large tend to endorse the idea that these lower taxes will and should be "made up for" by voluntary contributions -- this is presumably related to the ties between Republican party politics and one of the popular religious traditions mentioned in point 1.
So by my score, it's 3 against 1 in favor of "rich people are morally obligated to give charity."
posted by escabeche at 8:44 AM on April 22, 2011
Rich people don't get rich in Somalia.
Oh sure, some people get rich in Somalia: the most bloodthirsty warlords.
Not people like Bill Gates or Warren Buffet or Steve Jobs or (much as the might like to posture) most Wall Street Wankers.
People like that get rich because they live in a country with a robust middle class that can turn their vision in to reality and buy their products. An middle class which provides them employees educated largely at public expense by public school teacher.
These rich get rich using roads, bridges, telephone lines, shipping lanes and railroads built by immigrant labor, paid for by the state or by corporations chartered under those civil laws, and well-regulated. They get rich employing people who come to
In a country with strong borders secured by poor young enlisted men. With stable civil laws and a more-or-less consistent judiciary guaranteed by cops, lawyers, judges and yes, bureaucrats. And most of all by a respect for the Law instilled in middle class hearts.
Moral obligation? No, a very practical and utilitarian one.
posted by orthogonality at 8:55 AM on April 22, 2011
Oh sure, some people get rich in Somalia: the most bloodthirsty warlords.
Not people like Bill Gates or Warren Buffet or Steve Jobs or (much as the might like to posture) most Wall Street Wankers.
People like that get rich because they live in a country with a robust middle class that can turn their vision in to reality and buy their products. An middle class which provides them employees educated largely at public expense by public school teacher.
These rich get rich using roads, bridges, telephone lines, shipping lanes and railroads built by immigrant labor, paid for by the state or by corporations chartered under those civil laws, and well-regulated. They get rich employing people who come to
In a country with strong borders secured by poor young enlisted men. With stable civil laws and a more-or-less consistent judiciary guaranteed by cops, lawyers, judges and yes, bureaucrats. And most of all by a respect for the Law instilled in middle class hearts.
Moral obligation? No, a very practical and utilitarian one.
posted by orthogonality at 8:55 AM on April 22, 2011
But even in modern economies this plays itself out where income inequality causes certain distortions like a large flood of wealth acquired by a few drives up rents and costs for the less-well-off, disrupting their lives.
You've made a good point, and I've often noticed that most economic thought (especially socialist and libertarian) seems to make more sense when you have an actual king and aristocracy.
But I would suggest that "the rich" cannot out-consume and drive up prices in any significant manner. There just aren't enough of them. Certainly not more than is already made up for via taxation. It isn't like someone who makes 1000x minimum wage is going to own 1000 houses or eat 1000x more food.
There are a few places where real estate can be troublesome, but more often than not, the *problem* is taxation, not the solution. A poor or middle class person has a property that they can afford in an area of increasing property values is more likely to be driven out by high property taxes, than are property taxes (or income taxes) likely to keep prices down.
posted by gjc at 8:58 AM on April 22, 2011
You've made a good point, and I've often noticed that most economic thought (especially socialist and libertarian) seems to make more sense when you have an actual king and aristocracy.
But I would suggest that "the rich" cannot out-consume and drive up prices in any significant manner. There just aren't enough of them. Certainly not more than is already made up for via taxation. It isn't like someone who makes 1000x minimum wage is going to own 1000 houses or eat 1000x more food.
There are a few places where real estate can be troublesome, but more often than not, the *problem* is taxation, not the solution. A poor or middle class person has a property that they can afford in an area of increasing property values is more likely to be driven out by high property taxes, than are property taxes (or income taxes) likely to keep prices down.
posted by gjc at 8:58 AM on April 22, 2011
The following is a controversial alternative view. Some people believe that there truly exists a moral imperative to give to the less fortunate, but that this imperative must not be backed by force of law. In this view, for an electorate in a democracy to "vote themselves more money" with ultimate enforcement by men with guns is a polite form of coercion, but coercion nonetheless, and therefore morally bankrupt. So long as the money was earned without coercion, it cannot be morally taken by coercion.
Well-intentioned people truly believe this, and can argue for it more cogently than I. This only illustrates why arguing dogmatically with the opposition over "moral first principles" is a dead-end, if you care at all about reaching solid public policy.
posted by blargerz at 9:00 AM on April 22, 2011
Well-intentioned people truly believe this, and can argue for it more cogently than I. This only illustrates why arguing dogmatically with the opposition over "moral first principles" is a dead-end, if you care at all about reaching solid public policy.
posted by blargerz at 9:00 AM on April 22, 2011
"(in this instance I'm thinking along the lines of self-made men like Bill Gates, Warren Buffett, Steve Jobs et al)."
A key point is that there are essentially no self made men. Maybe some hunter gather in the amazon qualifies, if he happens to not belong to even a family unit but otherwise the concept that anyone made their wealth without the assistance of their group or government is naive. Bill Gates for example besides having all the advantages of growing up in the US during some of the best times to do so comes from a wealthy and well connected family. Microsoft's big deal with IBM (which is essentially the only thing differentiating MS from dozens of other software companies started at the time) was possible in part because of his family connections. Warren Buffet has an excellent examination of this in the form of a hypothetical:
posted by Mitheral at 9:00 AM on April 22, 2011
A key point is that there are essentially no self made men. Maybe some hunter gather in the amazon qualifies, if he happens to not belong to even a family unit but otherwise the concept that anyone made their wealth without the assistance of their group or government is naive. Bill Gates for example besides having all the advantages of growing up in the US during some of the best times to do so comes from a wealthy and well connected family. Microsoft's big deal with IBM (which is essentially the only thing differentiating MS from dozens of other software companies started at the time) was possible in part because of his family connections. Warren Buffet has an excellent examination of this in the form of a hypothetical:
Now people who think they do it all themselves, I pose to them the problem of let’s just assume they were in the womb as one of two identical twins—same DNA, same wiring, everything the same—and a genie came along and said one of you is going to be born in Bangladesh and one of you is going to be born in the United States. All the human qualities are the same. Which one will bid the higher percentage of the income they earn during their life to be the one born in the United States? The bidding would get very spirited. I mean, all these qualities of luck and pluck and all these things that are supposed to take us to the top—you know, like Horatio Alger—would not work as well in Bangladesh as here. This society delivers huge opportunities to people who happen to have the right wiring. And it delivers a pretty damn good result to people who could function here compared to the rest of the world and compared to a hundred years ago; but the disparity will widen absent the taxation system. That’s one of the things you need government for in my view -- Warren Buffett."I'm practically a commie canadian but I'd have no problem paying 60, 70, or even 80% of my income over say 100K a year to be born in Canada rather than Bangladesh. Especially if it means the guys across the street or across town isn't forced to eat uncooked no-name kraft dinner for a week (including the box it comes in) in order to see his doctor about his shortness of breath. Heck I pay more tax to live in Canada instead of the US already which is something I could change at anytime.
posted by Mitheral at 9:00 AM on April 22, 2011
I don't think of it as a special moral obligation of the rich. I think we don't exist in a vacuum. Society on the whole has a few obligations, in my mind:
1. We have a practical duty, as a society, to pay for the things that society on the whole needs and to conserve the commons.
2. We believe human beings on the whole, or at least certain human beings like children and the disabled, deserve certain things and they need to be paid for.
So. #1 and #2 are things that both cost money. Even if you believe they don't make up much, they're not zero. Public funds are required. So then we get to the progressive part, which comes down to two things:
A. The people who can't pay for food/shelter/etc on their own are just going to cause inefficiencies if we tax them and then pay for services for them. It makes more sense just to not take the money from them in the first place.
B. A dollar is not the same to everybody. A dollar is what a dollar buys at the margin. The utility goes down as incomes go up. With your first few dollars, you're buying vital necessities. As you earn more, they shift more towards luxury spending. Your millionth dollar, at the margin, has less utility than your first. Not none, but less. Talking about dollars and percentages in terms of what we pay means nothing, but a sacrifice of equal utility falls evenly on all.
So, if we need a certain number of dollars, we should all sacrifice the same level of marginal utility for them, and we should just skip asking for money from the people who already can't get by. What does that structure look like in the end? A progressive tax. As you make more dollars, the marginal utility of those dollars for you decreases, and the tax on those marginal dollars should increase. It doesn't look like "how do we tax you as a rich person" but "how do we tax the top of your income". Rich people pay the same taxes as poor people on the first $10k they earn.
I happen to believe that social spending should encompass quite a lot because I believe human life and the environment and the community are all massively more precious than dollars could ever be. But even if you don't believe they make up much, progressive taxation is still more sensible. If I say that social spending should make up a lot, I'm not saying that the rich are obligated to do those things, though. I'm saying we all are, as a society.
posted by gracedissolved at 9:01 AM on April 22, 2011
1. We have a practical duty, as a society, to pay for the things that society on the whole needs and to conserve the commons.
2. We believe human beings on the whole, or at least certain human beings like children and the disabled, deserve certain things and they need to be paid for.
So. #1 and #2 are things that both cost money. Even if you believe they don't make up much, they're not zero. Public funds are required. So then we get to the progressive part, which comes down to two things:
A. The people who can't pay for food/shelter/etc on their own are just going to cause inefficiencies if we tax them and then pay for services for them. It makes more sense just to not take the money from them in the first place.
B. A dollar is not the same to everybody. A dollar is what a dollar buys at the margin. The utility goes down as incomes go up. With your first few dollars, you're buying vital necessities. As you earn more, they shift more towards luxury spending. Your millionth dollar, at the margin, has less utility than your first. Not none, but less. Talking about dollars and percentages in terms of what we pay means nothing, but a sacrifice of equal utility falls evenly on all.
So, if we need a certain number of dollars, we should all sacrifice the same level of marginal utility for them, and we should just skip asking for money from the people who already can't get by. What does that structure look like in the end? A progressive tax. As you make more dollars, the marginal utility of those dollars for you decreases, and the tax on those marginal dollars should increase. It doesn't look like "how do we tax you as a rich person" but "how do we tax the top of your income". Rich people pay the same taxes as poor people on the first $10k they earn.
I happen to believe that social spending should encompass quite a lot because I believe human life and the environment and the community are all massively more precious than dollars could ever be. But even if you don't believe they make up much, progressive taxation is still more sensible. If I say that social spending should make up a lot, I'm not saying that the rich are obligated to do those things, though. I'm saying we all are, as a society.
posted by gracedissolved at 9:01 AM on April 22, 2011
orthogonality: All of that stuff is not free. Almost every one of those things is subsidized by the rich users of them. Do you know how much a license plate for a truck costs? How much the port fees are for ports? Fuel taxes may not cover all of road building and maintenance costs, but it certainly covers a significant portion of it, and rises with usage. Our landlines aren't "cheap" because that's what it costs, they are cheap because business users pay a lot more, plus taxes and fees.
Just look at federal expenditures. Most of it is not the things you relate. Most of it is social security and medicare. We spend a majority of our tax dollars taking care of poor-ish people. Not fattening cats.
posted by gjc at 9:13 AM on April 22, 2011
Just look at federal expenditures. Most of it is not the things you relate. Most of it is social security and medicare. We spend a majority of our tax dollars taking care of poor-ish people. Not fattening cats.
posted by gjc at 9:13 AM on April 22, 2011
This subject in moral and political philosophy is called distributive justice, that is, how should money and other social "goodies" be distributed in a just society, and what powers should government have to enforce that distribution. There have been a lot of answers to the question and a lot of debate among the different schools of thought.
In particular, there is a political philosopher called Robert Nozick who wrote extensively on an idealized view of the free market + libertarian state (that is, a state that collects as few taxes as possible to provide only the bare minimum of services, like enforcing contracts made in the free market, but none of the social services, education, etc). Undergraduate students often find his view immediately appealing, so it's a nice place to start. You read up on Nozick and think, hey, he has a point.
A lot of people have critiqued Nozick in various ways over the years. For your question you might enjoy reading up on those critiques.
One main critique is that the picture Nozick paints does not take into account the way the true cost of economic activities is spread out (a term for this is "externalities" since they are factors being treated as external to the cartoon picture of the free market activity). That is, when someone builds a factory and brings in raw materials to turn into widgets, or whatever, those activities have costs that the factory owner doesn't pay directly in the building, material and transport costs: environmental damage when the materials are extracted, use of roads, use of the state's police force to create a stable social order where goods can travel freely without being attacked by roving warlords, a public education system that gives him literate employees, heavily subsidized medical system to keep his workers healthy, heavily subsidized university basic science departments that do the background research that his R+D people rely on, pollution downstream from the factory leading to economic losses to others, etc. Those costs need to be figured in somehow to get a truer picture of what they "really" owe.
posted by LobsterMitten at 9:19 AM on April 22, 2011
In particular, there is a political philosopher called Robert Nozick who wrote extensively on an idealized view of the free market + libertarian state (that is, a state that collects as few taxes as possible to provide only the bare minimum of services, like enforcing contracts made in the free market, but none of the social services, education, etc). Undergraduate students often find his view immediately appealing, so it's a nice place to start. You read up on Nozick and think, hey, he has a point.
A lot of people have critiqued Nozick in various ways over the years. For your question you might enjoy reading up on those critiques.
One main critique is that the picture Nozick paints does not take into account the way the true cost of economic activities is spread out (a term for this is "externalities" since they are factors being treated as external to the cartoon picture of the free market activity). That is, when someone builds a factory and brings in raw materials to turn into widgets, or whatever, those activities have costs that the factory owner doesn't pay directly in the building, material and transport costs: environmental damage when the materials are extracted, use of roads, use of the state's police force to create a stable social order where goods can travel freely without being attacked by roving warlords, a public education system that gives him literate employees, heavily subsidized medical system to keep his workers healthy, heavily subsidized university basic science departments that do the background research that his R+D people rely on, pollution downstream from the factory leading to economic losses to others, etc. Those costs need to be figured in somehow to get a truer picture of what they "really" owe.
posted by LobsterMitten at 9:19 AM on April 22, 2011
Just look at federal expenditures. Most of it is not the things you relate. Most of it is social security and medicare. We spend a majority of our tax dollars taking care of poor-ish people
As was pointed out up above, social security is a "capped" tax on your first $100k-ish worth of income and 0% on the rest. Medicare is uncapped but a flat tax. SS taxes are relatively high in order to produce a tax surplus so that progressive taxes on upper-income-earners can be kept lower than what they would otherwise be to fund the rest of modern civilization.
posted by deanc at 9:22 AM on April 22, 2011
As was pointed out up above, social security is a "capped" tax on your first $100k-ish worth of income and 0% on the rest. Medicare is uncapped but a flat tax. SS taxes are relatively high in order to produce a tax surplus so that progressive taxes on upper-income-earners can be kept lower than what they would otherwise be to fund the rest of modern civilization.
posted by deanc at 9:22 AM on April 22, 2011
B. A dollar is not the same to everybody. A dollar is what a dollar buys at the margin. The utility goes down as incomes go up. With your first few dollars, you're buying vital necessities. As you earn more, they shift more towards luxury spending. Your millionth dollar, at the margin, has less utility than your first. Not none, but less. Talking about dollars and percentages in terms of what we pay means nothing, but a sacrifice of equal utility falls evenly on all.
Minor quibble, but marginal utility really isn't a good way to plan taxation or convince people of anything. Just as a millionaire's last dollar isn't as useful as his first, one millionaire's last dollar isn't as useful as some other millionaire's. I mean, someone who makes $50,000 in Manhattan and someone who makes the same in Montana pay the same fed taxes. One of them for sure has a different marginal utility for their last dollar.
Progressive taxation should be looked at in the other direction. The tax rate is 35%, and lower income earners get discounts. Because looking at it like a way to get back at the rich to soak grandma for fun money isn't going to make for the happy society people claim to want.
posted by gjc at 9:28 AM on April 22, 2011
Minor quibble, but marginal utility really isn't a good way to plan taxation or convince people of anything. Just as a millionaire's last dollar isn't as useful as his first, one millionaire's last dollar isn't as useful as some other millionaire's. I mean, someone who makes $50,000 in Manhattan and someone who makes the same in Montana pay the same fed taxes. One of them for sure has a different marginal utility for their last dollar.
Progressive taxation should be looked at in the other direction. The tax rate is 35%, and lower income earners get discounts. Because looking at it like a way to get back at the rich to soak grandma for fun money isn't going to make for the happy society people claim to want.
posted by gjc at 9:28 AM on April 22, 2011
The simple answer to your actual question is that many people think "the rich" don't deserve what they have. Because they don't deserve it, the "logic" is that it is OK to take it and give it to the more deserving. It's just Robin Hood thinking.
This is a strawman argument that you have set up to easily dismiss. While there may exist some people that believe what you claim, that is not the argument for progressive taxation generally accepted by economists or politicians.
posted by JackFlash at 9:28 AM on April 22, 2011
This is a strawman argument that you have set up to easily dismiss. While there may exist some people that believe what you claim, that is not the argument for progressive taxation generally accepted by economists or politicians.
posted by JackFlash at 9:28 AM on April 22, 2011
gjc, you seem to be conflating the personal incomes of the wealthy with the incomes and expenditures of their businesses. By the time we're talking about personal income from which personal income taxes are paid, we're only talking about the cream skimmed off the top of the businesses' profits.
As an aside, this same conflation comes into play frequently in the personal income tax discussion under the they use that money to create jobs banner. No, they don't. Well, excepting the odd maid, gardener, or driver. The jobs are created way farther up the ledger sheet in the businesses from whose profits the wealthy draw some fraction of their income. Very few people who are employed by Warren Buffett are actually paid for that employment out of the $66 million in personal income he was talking about in the interview cited upthread.
You're not alone in that conflation by a long stretch--indeed, entire news networks seem to exist to perpetuate it--but it bears pointing out.
posted by willpie at 9:29 AM on April 22, 2011
As an aside, this same conflation comes into play frequently in the personal income tax discussion under the they use that money to create jobs banner. No, they don't. Well, excepting the odd maid, gardener, or driver. The jobs are created way farther up the ledger sheet in the businesses from whose profits the wealthy draw some fraction of their income. Very few people who are employed by Warren Buffett are actually paid for that employment out of the $66 million in personal income he was talking about in the interview cited upthread.
You're not alone in that conflation by a long stretch--indeed, entire news networks seem to exist to perpetuate it--but it bears pointing out.
posted by willpie at 9:29 AM on April 22, 2011
The libertarian view of society is based on the work of the utilitarian philosophers, starting with Jeremy Bentham, who formulated the idea that the aim of a healthy society is to achieve the greatest good for the greatest number, and culminating in the work of John Stewart Mill, who argued that this principle is reflected in the way that people treat their fellow human beings, among other things.
In particular, Mill argued that justice includes those duties to which others have correlative rights, “Justice implies something which it is not only right to do, and wrong not to do, but which some individual person can claim from us as his moral right.” Most readers interpret this part of his work as arguing that with each right comes a commensurate duty - if I have a right to enjoy my wealth, that right also involves a duty not to provoke suffering through that enjoyment of wealth. It is this interpretation that liberal thinkers have applied to support progressive taxation as a principle of social justice.
As Terry Pratchett (another of my favorite philosophers!) has frequently pointed out, the word "privilege" means private law. That is, the ability of the powerful and wealthy to direct the formulation of laws that protect their power and wealth. The utilitarians would argue that with that right to define "justice" comes a duty to ensure that justice is - well - just. Justice should involve all members of society, the poorest as well as the richest. Which means that the wealthy owe a moral duty to society to alleviate suffering. We see this sort of thinking in the private initiatives of people like Warren Buffet and William Gates (I and II). Where libertarians differ from liberal thinkers lies in deciding how this impulse for good is coordinated. Libertarians would argue that the way in which each privileged person performs that duty of care for others is a matter of personal choice. Liberals would argue that progressive taxation is simply the coordination of that impulse for social justice, to enable the greatest good for the greatest number, which would not occur if this was left to personal choice.
posted by Susurration at 9:29 AM on April 22, 2011
In particular, Mill argued that justice includes those duties to which others have correlative rights, “Justice implies something which it is not only right to do, and wrong not to do, but which some individual person can claim from us as his moral right.” Most readers interpret this part of his work as arguing that with each right comes a commensurate duty - if I have a right to enjoy my wealth, that right also involves a duty not to provoke suffering through that enjoyment of wealth. It is this interpretation that liberal thinkers have applied to support progressive taxation as a principle of social justice.
As Terry Pratchett (another of my favorite philosophers!) has frequently pointed out, the word "privilege" means private law. That is, the ability of the powerful and wealthy to direct the formulation of laws that protect their power and wealth. The utilitarians would argue that with that right to define "justice" comes a duty to ensure that justice is - well - just. Justice should involve all members of society, the poorest as well as the richest. Which means that the wealthy owe a moral duty to society to alleviate suffering. We see this sort of thinking in the private initiatives of people like Warren Buffet and William Gates (I and II). Where libertarians differ from liberal thinkers lies in deciding how this impulse for good is coordinated. Libertarians would argue that the way in which each privileged person performs that duty of care for others is a matter of personal choice. Liberals would argue that progressive taxation is simply the coordination of that impulse for social justice, to enable the greatest good for the greatest number, which would not occur if this was left to personal choice.
posted by Susurration at 9:29 AM on April 22, 2011
We spend a majority of our tax dollars taking care of poor-ish people. Not fattening cats.
Medicare is for old people, not poor people. Same with Social Security. Both are used by the middle class. Medicaid, yes, is for poor people, but it's not as expensive as Medicare.
The other big thing we pay for is the military, which is disproportinately beneficial for the wealthy and those with foreign bussiness interests. This is not, by the way, some lefty no-blood-for-oil boilerplate. But poor people do not benefit from global stability, freedom of the seas, and access to foreign markets the same way that the wealthy do.
Roads, courts, police, etc., theoretically benefit most people (except police, which is at best a wash for a lot of minority, youth and poor groups and a direct threat to people who committ victimless crimes), but for reasons articulated above, their value is still greater to the wealthy. (For example, if you and your 99 co-workers can make $x at work because you can get to work on public roads, you benefit. But if the owner makes greater than 100 times $x, he is benefitting disproportiantely.
Finally, those with things, have something to lose. Therefore, they benefit more from the costs associated with protecting life, liberty and property.
posted by spaltavian at 9:49 AM on April 22, 2011
Medicare is for old people, not poor people. Same with Social Security. Both are used by the middle class. Medicaid, yes, is for poor people, but it's not as expensive as Medicare.
The other big thing we pay for is the military, which is disproportinately beneficial for the wealthy and those with foreign bussiness interests. This is not, by the way, some lefty no-blood-for-oil boilerplate. But poor people do not benefit from global stability, freedom of the seas, and access to foreign markets the same way that the wealthy do.
Roads, courts, police, etc., theoretically benefit most people (except police, which is at best a wash for a lot of minority, youth and poor groups and a direct threat to people who committ victimless crimes), but for reasons articulated above, their value is still greater to the wealthy. (For example, if you and your 99 co-workers can make $x at work because you can get to work on public roads, you benefit. But if the owner makes greater than 100 times $x, he is benefitting disproportiantely.
Finally, those with things, have something to lose. Therefore, they benefit more from the costs associated with protecting life, liberty and property.
posted by spaltavian at 9:49 AM on April 22, 2011
In the eighteenth century, the term used for this subject was "the use of riches". (Alexander Pope; Samuel Johnson.) While those essays touch upon the subject of duty to those less fortunate, the primary emphasis is on avoiding ostentation and frivolity, and the distinction between works for private and public benefit.
All of this pre-dates the emergence of the modern concept of redistributive justice on the back of massive, rapid industrialisation and urbanisation; the paternalistic model of moral obligation in the nineteenth century, seen in the building of model villages like Saltaire and Bournville, runs parallel to, and in partial response to, the beginnings of the trades union movement and organised Marxism.
So one way of framing moral obligation over the past, say, 150 years, is as a self-interested bulwark against more radical redistributive forces. I think that's a somewhat vulgar assessment, but it's certainly true that FDR considered the New Deal a means of protecting the US from the political extremism that washed across large portions of the world during the 1930s.
posted by holgate at 9:57 AM on April 22, 2011
All of this pre-dates the emergence of the modern concept of redistributive justice on the back of massive, rapid industrialisation and urbanisation; the paternalistic model of moral obligation in the nineteenth century, seen in the building of model villages like Saltaire and Bournville, runs parallel to, and in partial response to, the beginnings of the trades union movement and organised Marxism.
So one way of framing moral obligation over the past, say, 150 years, is as a self-interested bulwark against more radical redistributive forces. I think that's a somewhat vulgar assessment, but it's certainly true that FDR considered the New Deal a means of protecting the US from the political extremism that washed across large portions of the world during the 1930s.
posted by holgate at 9:57 AM on April 22, 2011
In the US amongst peers that believe the taxation rates for the wealthy should be raised (and loopholes closed) the general stance isn't that the wealthy should pay more out of moral obligation, but that the wealthy are not currently paying their fair share because they are writing the rules of the game (see lobbyists, govnt corruption, white collar crime, etc) to their advantage and the less wealthy people have no real power or say in any of it.
posted by WeekendJen at 10:26 AM on April 22, 2011
posted by WeekendJen at 10:26 AM on April 22, 2011
OP: Why are they expected to do significantly more, as a proportion of their income, than say, a middle-class family, and excoriated if they do not?
If you think the wealthy are paying a significantly higher proportion of their income than the middle-class, think again. Paul Krugman has a timely post today about exactly that misconception, under the appropriate title "Zombie Tax Lies" since they never seem to die. See here.
Everyone obsesses about income taxes but that distorts reality. When you combine total taxes -- income, payroll, state and local, the tax rate is almost completely flat. The rich don't pay a higher rate than the middle-class. The point of this chart is not the overall height of the bars for each bin because the bins are different sizes, so is not significant. The point is to compare the blue and gray bars for each bin. If the bars are the same height, then they are paying exactly their proportional share of income.
For example, the top 1% get about 20% of income and pay about 21% of all taxes. The middle-class 20% gets about 18% of income and pays 18% of all taxes. In other words, the blue and gray bars are almost equal in each bin meaning that each group pays the same flat rate proportional to their income. There is almost no progressiveness in the total tax rate at all except a small amount for the very poorest.
The middle-class and the wealthy both have almost the same tax rate so your original premise is incorrect.
posted by JackFlash at 10:50 AM on April 22, 2011
If you think the wealthy are paying a significantly higher proportion of their income than the middle-class, think again. Paul Krugman has a timely post today about exactly that misconception, under the appropriate title "Zombie Tax Lies" since they never seem to die. See here.
Everyone obsesses about income taxes but that distorts reality. When you combine total taxes -- income, payroll, state and local, the tax rate is almost completely flat. The rich don't pay a higher rate than the middle-class. The point of this chart is not the overall height of the bars for each bin because the bins are different sizes, so is not significant. The point is to compare the blue and gray bars for each bin. If the bars are the same height, then they are paying exactly their proportional share of income.
For example, the top 1% get about 20% of income and pay about 21% of all taxes. The middle-class 20% gets about 18% of income and pays 18% of all taxes. In other words, the blue and gray bars are almost equal in each bin meaning that each group pays the same flat rate proportional to their income. There is almost no progressiveness in the total tax rate at all except a small amount for the very poorest.
The middle-class and the wealthy both have almost the same tax rate so your original premise is incorrect.
posted by JackFlash at 10:50 AM on April 22, 2011
Very few people who are employed by Warren Buffett are actually paid for that employment out of the $66 million in personal income he was talking about in the interview cited upthread.
You're not alone in that conflation by a long stretch--indeed, entire news networks seem to exist to perpetuate it--but it bears pointing out.
willpie, I think the "rising tide" argument is that Buffett is likely to invest a great deal of his $66 million, and that that having that money working in a free market economy is a more efficient way of enriching a greater number of people than channeling it through government programs. would be.
(I have no idea of the validity of that argument; just wanted to say it's not the same thing as arguing that Buffett will be directly paying salaries with his personal wealth.)
posted by torticat at 11:11 AM on April 22, 2011
You're not alone in that conflation by a long stretch--indeed, entire news networks seem to exist to perpetuate it--but it bears pointing out.
willpie, I think the "rising tide" argument is that Buffett is likely to invest a great deal of his $66 million, and that that having that money working in a free market economy is a more efficient way of enriching a greater number of people than channeling it through government programs. would be.
(I have no idea of the validity of that argument; just wanted to say it's not the same thing as arguing that Buffett will be directly paying salaries with his personal wealth.)
posted by torticat at 11:11 AM on April 22, 2011
St Ambrose, 4th century Bishop of Milan and one of the four Fathers of the Church, did believe that God made things to be held in common and that private property was against nature. He continually denounced the rich. So that's a kind of fundamental morality, deriving from Scripture, from which later egalitarian philosophies such as communism and present-day social democracy descend. He didn't suggest seizing rich people's property by force, though.
posted by londongeezer at 11:44 AM on April 22, 2011
posted by londongeezer at 11:44 AM on April 22, 2011
The reason the rich have a moral obligation is because they would not be rich without the infrastructure provided by the nation in which they live. To put it another way, if Bill Gates were born in the Congo, he would have likely spent most of his life trying to find clean water.
Why is America so great? Because America once had values like Democracy and Freedom and Justice, not Me, Myself, and I. It still has people willing to die to protect those older values, and we are lucky to live a society that is supposed to not judge a person based on their race or religion, but by "the content of their character." We used to have this American dream, where not one child was left hungry, where every person had the education and freedom to better themselves, where the poor and sick and elderly could find compassion and care. Societies are not judged on how they treat the rich. They are judged on how they treat the most helpless.
A progressive tax system is also a recognition of our desire for equality in society. That's why third world nations are comprised largely of the have everythings who are corrupt and heartless, and a vast population of impoverished people who are stuck without a safe home, without education, without clean water and sanitation, and without any opportunity to better themselves. That's the sort of world a Libertarian dreams about, for some reason.
One of the main themes of the founding of our country is an absolute hatred of that sort of aristocracy, because one value of the Enlightenment is that we should be rewarded by the merits of our actions, not because of who our parents were. The only way to have a meritocracy is to get people to the same starting line. Paying a higher tax rate once you are able to take advantage of the opportunities available in your nation is a way of really saying thank you. You're helping to make sure that the society that freed you from the chains of aristocracy can continue to do so for future generations, by providing every man, woman, and child in your nation the opportunity to better themselves, and in turn make a better nation.
Now, there are some nouveau riche motherfuckers like the Kochs who are too fucking stupid to understand these values, or too greedy and morally vacuous to do the right thing. They have a lot of money, and since money is now speech, they are able to convince people to vote against their own interests under the laughable pretense that if we drastically cut social services, we will end up with a better society.
Well, you can't sell iPads to burger flipping servants who can't read; or who have just gone bankrupt because they were screwed by an insurance company and their hundred lawyers who found a loophole; or to angry, uneducated, disaffected youth whose futures are so fucking bleak that they have decided to sell drugs and take more chances than if they were shipped off to one of our wars.
The people who are trying to ditch the poor because they are too lazy and too greedy to help their fellow man should be singled out and shamed for such a pathetic, materialistic, and anti-American worldview. They love money more than they love their country. And a house divided and sold off to the Chinese for a better Q3 surely cannot stand.
posted by notion at 11:47 AM on April 22, 2011
Why is America so great? Because America once had values like Democracy and Freedom and Justice, not Me, Myself, and I. It still has people willing to die to protect those older values, and we are lucky to live a society that is supposed to not judge a person based on their race or religion, but by "the content of their character." We used to have this American dream, where not one child was left hungry, where every person had the education and freedom to better themselves, where the poor and sick and elderly could find compassion and care. Societies are not judged on how they treat the rich. They are judged on how they treat the most helpless.
A progressive tax system is also a recognition of our desire for equality in society. That's why third world nations are comprised largely of the have everythings who are corrupt and heartless, and a vast population of impoverished people who are stuck without a safe home, without education, without clean water and sanitation, and without any opportunity to better themselves. That's the sort of world a Libertarian dreams about, for some reason.
One of the main themes of the founding of our country is an absolute hatred of that sort of aristocracy, because one value of the Enlightenment is that we should be rewarded by the merits of our actions, not because of who our parents were. The only way to have a meritocracy is to get people to the same starting line. Paying a higher tax rate once you are able to take advantage of the opportunities available in your nation is a way of really saying thank you. You're helping to make sure that the society that freed you from the chains of aristocracy can continue to do so for future generations, by providing every man, woman, and child in your nation the opportunity to better themselves, and in turn make a better nation.
Now, there are some nouveau riche motherfuckers like the Kochs who are too fucking stupid to understand these values, or too greedy and morally vacuous to do the right thing. They have a lot of money, and since money is now speech, they are able to convince people to vote against their own interests under the laughable pretense that if we drastically cut social services, we will end up with a better society.
Well, you can't sell iPads to burger flipping servants who can't read; or who have just gone bankrupt because they were screwed by an insurance company and their hundred lawyers who found a loophole; or to angry, uneducated, disaffected youth whose futures are so fucking bleak that they have decided to sell drugs and take more chances than if they were shipped off to one of our wars.
The people who are trying to ditch the poor because they are too lazy and too greedy to help their fellow man should be singled out and shamed for such a pathetic, materialistic, and anti-American worldview. They love money more than they love their country. And a house divided and sold off to the Chinese for a better Q3 surely cannot stand.
posted by notion at 11:47 AM on April 22, 2011
I wonder if instead of higher taxation we upped payments for hard working low income people. There was a study done in a native american reservation community in which the people were very poor. Drug abuse, family violence, and poor outcomes for children were high. A casino opened up and families were able to earn significantly higher incomes quite suddenly. The study found the outcomes for the children, the rates of abuse and the quality of parenting rather suddenly seemed to be improved.
This is not necessarily the case for simply handing welfare checks. Meaning, EARNING a better income to support your family may have a better impact on well being than being given charity--- charity that you use even while believing you don't deserve, or that you believe you deserve but that feels crippling because it's a sign that you are not self sefficient enough to earn your own income.
My personal belief is that to help the poor, using a somewhat capitalistic form of social services that involve rewarding personal responsability and hard work as well as services dsigned to improve responsability and work related abilities are more meaningful than hand outs.
And I believe that all of us have a moral obligation to do what we can to make this happen, regardless of income.
posted by xarnop at 11:54 AM on April 22, 2011
This is not necessarily the case for simply handing welfare checks. Meaning, EARNING a better income to support your family may have a better impact on well being than being given charity--- charity that you use even while believing you don't deserve, or that you believe you deserve but that feels crippling because it's a sign that you are not self sefficient enough to earn your own income.
My personal belief is that to help the poor, using a somewhat capitalistic form of social services that involve rewarding personal responsability and hard work as well as services dsigned to improve responsability and work related abilities are more meaningful than hand outs.
And I believe that all of us have a moral obligation to do what we can to make this happen, regardless of income.
posted by xarnop at 11:54 AM on April 22, 2011
The libertarian view of society is based on the work of the utilitarian philosophers
This is not quite right. The classical libertarian view is based on Locke, who argued that individuals have basic natural rights (natural rights = rights that do not come from the government) including rights to what we might call the "fruits of their labor".
This is different from the utilitarians, who think people don't have rights except insofar as giving them rights leads to a better outcome. (The Lockean view would say people have these natural rights regardless of what outcome it leads to.) So, certain versions of utilitarianism would say that people have rights including property rights because giving them those rights leads to a better outcome overall.
Both are views that can underlie libertarian positions, but it's worth noting the differences between the underlying rationales.
posted by LobsterMitten at 12:10 PM on April 22, 2011
This is not quite right. The classical libertarian view is based on Locke, who argued that individuals have basic natural rights (natural rights = rights that do not come from the government) including rights to what we might call the "fruits of their labor".
This is different from the utilitarians, who think people don't have rights except insofar as giving them rights leads to a better outcome. (The Lockean view would say people have these natural rights regardless of what outcome it leads to.) So, certain versions of utilitarianism would say that people have rights including property rights because giving them those rights leads to a better outcome overall.
Both are views that can underlie libertarian positions, but it's worth noting the differences between the underlying rationales.
posted by LobsterMitten at 12:10 PM on April 22, 2011
b) why should they pay more than their fair share?
These are a bit of my personal thoughts on the matter, and they are affected by my upbringing in a sort of traditional Confucian household.
Let's say most of the rich have acquired their wealth though hard work, determination, and honesty. They have meritocratically earned their wealth. They have the money, because they are basically better than most people, and their wealth, professional rank, and other forms of recognition reflect this.
They are the modern-day "scholar gentry" (note this is the idealized history of Imperial China I'm speaking of. And interesting side-fact, merchant classes weren't looked upon very well back then). Ted Turner said that money is the only way to keep score, and let's say that most of the rich have earned the right to put their 3-letter initials on the hi-score board.
In a hierarchy, those of higher rank lead by example. Meaning, they communicate how lower rank should behave by their own behavior. By shirking payment of taxes, they are basically telling those lower in the chain that it's okay to pay low taxes, or even to not pay them.
In reality, I'm not sure how this works, but from what I've read, I do know that Japanese CEOs make much less than their Western counterparts. As for tax statistics, I don't have those on hand.
posted by FJT at 1:04 PM on April 22, 2011
These are a bit of my personal thoughts on the matter, and they are affected by my upbringing in a sort of traditional Confucian household.
Let's say most of the rich have acquired their wealth though hard work, determination, and honesty. They have meritocratically earned their wealth. They have the money, because they are basically better than most people, and their wealth, professional rank, and other forms of recognition reflect this.
They are the modern-day "scholar gentry" (note this is the idealized history of Imperial China I'm speaking of. And interesting side-fact, merchant classes weren't looked upon very well back then). Ted Turner said that money is the only way to keep score, and let's say that most of the rich have earned the right to put their 3-letter initials on the hi-score board.
In a hierarchy, those of higher rank lead by example. Meaning, they communicate how lower rank should behave by their own behavior. By shirking payment of taxes, they are basically telling those lower in the chain that it's okay to pay low taxes, or even to not pay them.
In reality, I'm not sure how this works, but from what I've read, I do know that Japanese CEOs make much less than their Western counterparts. As for tax statistics, I don't have those on hand.
posted by FJT at 1:04 PM on April 22, 2011
I think your question incorrectly presumes there is one moral code. There's not. Some people derive their moral code from their religion and many religions require giving to the less fortunate. But that's not really helpful if you're an athiest. Nor does it really address your question about distributing money to the poor through taxes. I suppose if you are looking for a non-religious moral code there are humanist ethicists/civil leaders who promote an ethical code that includes giving to the poor, but I don't think that's really what your getting at either.
For me, this is a social policy question. And when collecting taxes or forming policy and thereby creating the social contract that forms the basis of our democracy, congress in theory is supposed to promote the best interest of the American people. And I think that some people and possibly some politicians believe that helping the poor is in the long-term interests of America. For example, kids don't learn as well if they're hungry. So having a school lunch program helps kids learn, which ultimately in theory, leads to a better educated more productive workforce. The same can be said of student loans. Workers who have health insurance are more productive and contribute more to the GDP. Having a workforce that can't access to education or health care puts us at a disadvantage when competing with other nations. So I don't know that there is any "moral obligation" per se but there are possibly sound policy reasons for using taxes to lift Americans out of poverty to create a more productive economy and better educated citizenry.
In terms of my own moral code, I volunteer and I give to charity and I vote for politicians who support raising taxes because I realize I didn't get here on my own. Without pell grants and Perkins loans and stafford loans, I wouldn't have gone to college or law school. Without social security, my mom who is disabled, would be without income which means I would be supporting her. So I don't harbor an illusion that my money is"mine" I'm only able to earn and keep my salary because I got help along the way. So it's only fair that I help others. And I think that makes me better off and society better off.
posted by bananafish at 1:35 PM on April 22, 2011
For me, this is a social policy question. And when collecting taxes or forming policy and thereby creating the social contract that forms the basis of our democracy, congress in theory is supposed to promote the best interest of the American people. And I think that some people and possibly some politicians believe that helping the poor is in the long-term interests of America. For example, kids don't learn as well if they're hungry. So having a school lunch program helps kids learn, which ultimately in theory, leads to a better educated more productive workforce. The same can be said of student loans. Workers who have health insurance are more productive and contribute more to the GDP. Having a workforce that can't access to education or health care puts us at a disadvantage when competing with other nations. So I don't know that there is any "moral obligation" per se but there are possibly sound policy reasons for using taxes to lift Americans out of poverty to create a more productive economy and better educated citizenry.
In terms of my own moral code, I volunteer and I give to charity and I vote for politicians who support raising taxes because I realize I didn't get here on my own. Without pell grants and Perkins loans and stafford loans, I wouldn't have gone to college or law school. Without social security, my mom who is disabled, would be without income which means I would be supporting her. So I don't harbor an illusion that my money is"mine" I'm only able to earn and keep my salary because I got help along the way. So it's only fair that I help others. And I think that makes me better off and society better off.
posted by bananafish at 1:35 PM on April 22, 2011
I really would like some clarification on what we mean by "rich" here.
For one thing, when I see the contentions like the rich are guilty of, "Raping the planet, exploiting their workers, taking advantage of their customers and governments, ruining their competitors, and then using the proceeds to invest in others' efforts to do the same..." I would tend to think we are talking about billionaires here.
Millionaires? Maybe. But since the cost of living varies, even there someone with 1 million dollars in, say, New York or San Francisco might not be considered as rich.
And I would argue that, when you get below a certain threshold, many of the affluent HAVE earned their money through hard work and careful planning, through saving and not running up credit, etc. and have not had a hand in doing any of those things "the rich" are accused of doing.
But we still have issues with taxing them, because people's perceptions of the actual wealth in this country and how it is dispersed are so far off the reality.
People still believe they can become millionaires some day in America. And those affluent people I referenced, the ones who make more than the "average" family income, may consider themselves rich, or very nearly so, as the average family income for the top 1-10% in the country is only $165 thousand. So they might vote against taxing "the rich" because they really don't understand that their incomes are a drop in the bucket compared to the top .01% in America, who control most of the wealth of the entire country, and who earn an average of $27 million annually per household.
posted by misha at 2:05 PM on April 22, 2011
For one thing, when I see the contentions like the rich are guilty of, "Raping the planet, exploiting their workers, taking advantage of their customers and governments, ruining their competitors, and then using the proceeds to invest in others' efforts to do the same..." I would tend to think we are talking about billionaires here.
Millionaires? Maybe. But since the cost of living varies, even there someone with 1 million dollars in, say, New York or San Francisco might not be considered as rich.
And I would argue that, when you get below a certain threshold, many of the affluent HAVE earned their money through hard work and careful planning, through saving and not running up credit, etc. and have not had a hand in doing any of those things "the rich" are accused of doing.
But we still have issues with taxing them, because people's perceptions of the actual wealth in this country and how it is dispersed are so far off the reality.
People still believe they can become millionaires some day in America. And those affluent people I referenced, the ones who make more than the "average" family income, may consider themselves rich, or very nearly so, as the average family income for the top 1-10% in the country is only $165 thousand. So they might vote against taxing "the rich" because they really don't understand that their incomes are a drop in the bucket compared to the top .01% in America, who control most of the wealth of the entire country, and who earn an average of $27 million annually per household.
posted by misha at 2:05 PM on April 22, 2011
The rich have gotten that way by necessarily immoral means ... ruining their competitors ...
It's far from clear that rich people or big corporations act immorally in hurting their competitors. If Company A succeeds while competitor Company B fails, this may be simply because Company A was giving consumers what they wanted -- for instance, by having lower prices. This will inure to the consumers' benefit.
As I said, there are very good reasons for progressive taxation, but we shouldn't just assume that when a company achieves success that this is "immoral" and must be penalized with taxes. In fact, this cartoonish view hurts the cause of those who would like to see more progressive taxation by creating the impression that we simply hate the rich or big corporations and we want to cause them as much pain as possible. That view will never prevail. There are perfectly sensible arguments for progressive taxation, as we can see in this thread, and those arguments are the ones that have a chance at winning the day.
posted by John Cohen at 2:34 PM on April 22, 2011
It's far from clear that rich people or big corporations act immorally in hurting their competitors. If Company A succeeds while competitor Company B fails, this may be simply because Company A was giving consumers what they wanted -- for instance, by having lower prices. This will inure to the consumers' benefit.
As I said, there are very good reasons for progressive taxation, but we shouldn't just assume that when a company achieves success that this is "immoral" and must be penalized with taxes. In fact, this cartoonish view hurts the cause of those who would like to see more progressive taxation by creating the impression that we simply hate the rich or big corporations and we want to cause them as much pain as possible. That view will never prevail. There are perfectly sensible arguments for progressive taxation, as we can see in this thread, and those arguments are the ones that have a chance at winning the day.
posted by John Cohen at 2:34 PM on April 22, 2011
Why does having particular virtues like hard work, intelligence, etc., make someone deserving of wealth? Does the biological fact of sweat production or expending mental effort create ownership?
I don't think the wealthy have a moral obligation to share their wealth, but that's because I don't accept they actually own it. It's available for their exclusive use because of certain temporary social conventions about property, but if there are more pressing concerns that it can be used for, we should simply change those conventions. For me, there's no question of asking the rich whether they would like to do this or not, we should just do it. I'm not at all concerned about their personal virtues or vices, and I think their belief in ownership of property is a delusion.
posted by AlsoMike at 3:08 PM on April 22, 2011
I don't think the wealthy have a moral obligation to share their wealth, but that's because I don't accept they actually own it. It's available for their exclusive use because of certain temporary social conventions about property, but if there are more pressing concerns that it can be used for, we should simply change those conventions. For me, there's no question of asking the rich whether they would like to do this or not, we should just do it. I'm not at all concerned about their personal virtues or vices, and I think their belief in ownership of property is a delusion.
posted by AlsoMike at 3:08 PM on April 22, 2011
The rich have an obligation to share because fairness is healthier and better for everyone. The greater the inequality in a society, the more crime, corruption, addiction, violence, heart disease, stroke, infant mortality, obesity and all manner of other bad things there are. Life expectancy *even for the rich* is lower in high inequality societies than in low inequality ones. Happiness is higher in low inequality societies—at the top and the bottom.
They also have an obligation to share because capitalism relies on trust and the rule of law. High inequality societies have low trust— and the lower the trust, the higher the cost there is of doing business (less trust requires more security, lawyers, locks, etc.) and the greater risk you wind up in a situation where there are 3 rich people living in an armed estate surrounded by chaos and corruption and devastation among millions of others.
Low trust economies are corrupt and dangerous because say, you hire someone to dispose of toxic waste, make drugs or build a nuke— they're going to cut corners and people will die. Low trust economies are basically like illegal drug markets—violent and unpredictable. Not good for rich or poor.
High inequality is unfair and unfairness creates chronic stress which shortens life. It's stressful on the top because you're scrambling to stay there in a tenuous minority facing great competition and stressful on the bottom because life is chaotic and dangerous.
We're hierarchical and perfect equality will never exist— but there's no reason for this.
posted by Maias at 6:41 PM on April 22, 2011
They also have an obligation to share because capitalism relies on trust and the rule of law. High inequality societies have low trust— and the lower the trust, the higher the cost there is of doing business (less trust requires more security, lawyers, locks, etc.) and the greater risk you wind up in a situation where there are 3 rich people living in an armed estate surrounded by chaos and corruption and devastation among millions of others.
Low trust economies are corrupt and dangerous because say, you hire someone to dispose of toxic waste, make drugs or build a nuke— they're going to cut corners and people will die. Low trust economies are basically like illegal drug markets—violent and unpredictable. Not good for rich or poor.
High inequality is unfair and unfairness creates chronic stress which shortens life. It's stressful on the top because you're scrambling to stay there in a tenuous minority facing great competition and stressful on the bottom because life is chaotic and dangerous.
We're hierarchical and perfect equality will never exist— but there's no reason for this.
posted by Maias at 6:41 PM on April 22, 2011
I pointed this out in another thread. The rich benefit the most from society, and taxes are the protection fees they pay for preventing the French Revolution from happening to them.
It might be a protection racket, but maybe that's not such a bad thing when the racket is being run to benefit 90% or more of the populace.
posted by DoctorFedora at 9:20 PM on April 22, 2011
It might be a protection racket, but maybe that's not such a bad thing when the racket is being run to benefit 90% or more of the populace.
posted by DoctorFedora at 9:20 PM on April 22, 2011
@randomkeystrike: Could you elaborate more on the moral obligation, please? Are you saying that because they won't miss it, they should then give more?
Several great points made in this thread - one of them, I think, was that morality isn't exactly teachable, if I'm paraphrasing it fairly. A philosopher I'm not, but I agree in a sense. If you don't buy the idea of moral obligation, I've got no way to prove it to you. I'd go so far as to say I can't really explain it that well. (not being combative here, nor saying that you don't personally believe in morality - just addressing your question, or rather, throwing in the towel on it. :-) )
Someone else mentioned a utilitarian argument, and I'm down with that, too. If you take and don't give back, eventually you don't have a reasonably prosperous base of consumers AND PRODUCERS.
To your specific question - "Are you saying that because they won't miss it..." not exactly, although I concede that I did say more or less that in my example about Bill Gates. I guess if I had to state my philosophy about it, I'd say "everyone should do what they can." There have been times in my life when I wasn't earning enough to even support my family. I don't feel that I COULD have done much to help others (I still had to pay taxes, though, so I guess I did. :-) ). Now that I'm doing better, I feel that I should give to others, and I do. But I'm not capable, either as a gross amount nor even as a percent of my income, of giving what an extremely wealthy person could.
But, while I believe the government has a right to tax, and should tax progressively, FORCING the wealthy to give extremely large percentages of their income has several problems. In short, I believe it doesn't work. Which goes along with another of my beliefs, which is that everyone pretty much has to work out for themselves what they can give, and in what ways.
posted by randomkeystrike at 11:41 AM on April 23, 2011
Several great points made in this thread - one of them, I think, was that morality isn't exactly teachable, if I'm paraphrasing it fairly. A philosopher I'm not, but I agree in a sense. If you don't buy the idea of moral obligation, I've got no way to prove it to you. I'd go so far as to say I can't really explain it that well. (not being combative here, nor saying that you don't personally believe in morality - just addressing your question, or rather, throwing in the towel on it. :-) )
Someone else mentioned a utilitarian argument, and I'm down with that, too. If you take and don't give back, eventually you don't have a reasonably prosperous base of consumers AND PRODUCERS.
To your specific question - "Are you saying that because they won't miss it..." not exactly, although I concede that I did say more or less that in my example about Bill Gates. I guess if I had to state my philosophy about it, I'd say "everyone should do what they can." There have been times in my life when I wasn't earning enough to even support my family. I don't feel that I COULD have done much to help others (I still had to pay taxes, though, so I guess I did. :-) ). Now that I'm doing better, I feel that I should give to others, and I do. But I'm not capable, either as a gross amount nor even as a percent of my income, of giving what an extremely wealthy person could.
But, while I believe the government has a right to tax, and should tax progressively, FORCING the wealthy to give extremely large percentages of their income has several problems. In short, I believe it doesn't work. Which goes along with another of my beliefs, which is that everyone pretty much has to work out for themselves what they can give, and in what ways.
posted by randomkeystrike at 11:41 AM on April 23, 2011
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But I think I'm exactly backwards from your philosophy in at least one key respect, though. I think it IS a moral obligation, and only that. For the government to try to be the instrument of making this happen is counter to human nature, common sense, etc., etc., at least beyond a certain point. Progressive taxation, for example, makes sense because of ability to pay, but to actively seek to "cut off the tall stalks of grass" by taxing the wealthy until they're not wealthy so as to give it to the poor fails in at least two respects:
- historically, the wealthy find a way around the taxes. If need be, they'll move their money to another country, if it gets bad enough.
- historically, the money raised doesn't seem to make it to the poor that well...
As to your immediate question, the rich are expected to do more as a % of their income because they can afford it. Someone who makes half what I do may be able to give nothing; my family may be able to give 10%; Bill Gates is giving away large chunks of his income, probably more money than I'll ever make in a lifetime, and he isn't missing it.
But, I repeat - this is a moral obligation, not something we seem to be able to legislate very well.
posted by randomkeystrike at 6:46 AM on April 22, 2011