Romney pays 15% tax rate

[Bri]

What's the difference between benefited more and consumed more? Does someone paying ten times the amount of property taxes get 10 times the amounts of benefits from society, or are they getting so much more that they should be progressively property taxed so that they are paying 20 times the amount as someone else?

Government programs set up a society with rules in which we can prosper. Some prosper more from our society than others. Therefore, those who prosper more are benefiting more from the government programs.

A variation of the argument is that someone with more to lose arguably benefits more from police and fire protection. Someone who makes more money from commerce benefits more from public highways and infrastructure. Someone who benefits financially from the relative stability of our economy benefits more from military protection.

-Bri

 

[Francesca R]

I didn't say the rich consume more public spending. I said that they have benefited more from it.

What's supposed to be the difference there?

A problem with saying "the rich benefit more from public spending" is that it follows that--if one wanted to reduce inequality of welfare (a benefit is, I assume, an increase in welfare)--one could just slash public spending across the board, as the political right wants to do. Because this would reduce welfare for the rich by more than for the poor according to your rationale.

Yet when the political right advocates this, the rest immediately say--correctly--that it mostly harms the poor.

Can't really have this both ways.

 

[TheAnachronism]

The property taxes on a $500,000 home are ten times that of a $50,000 home, yet in all likelihood, the family of the $50,000 home is larger, thus using more school resources, is in a higher crime area, thus uses more police services, etc. Note that this is an example of a flat % and shows that even at a flat % there is no rationale to say that the $500,000 home should be tax at a higher %, in fact the opposite is true. Lower income people tend to use disproportionately MORE government services/resources.

The use of police services funded by the public at large to protect the public at large is hardly an example of a service that is beneficial to only a certain segment of the population, and so I somewhat wonder at your usage of the verb "to use" in the context of public services.

 

[Bri]

What's supposed to be the difference there?

See my reply to Neally above.

A problem with saying "the rich benefit more from public spending" is that it follows that--if one wanted to reduce inequality of welfare (a benefit is, I assume, an increase in welfare)--one could just slash public spending across the board, as the political right wants to do.

I don't understand what you're saying here.

The rich benefit more from not just public spending, but government in general (laws and society set up by the government). Therefore, they should pay more in taxes.

ETA: It can be also argued that helping the poor creates a more stable society, which in turn helps the rich.

-Bri

 

[A Laughing Baby]

Call me a hopeless Keynesian, but I had always imagined that the idea of a social safety net is that society benefits as a whole from not having an underclass in a permanent state of privation. If you imagine the rich as producers, they benefit from having more consumers, who benefit from having more liquidity to service their own demand. In that way, consumers have more money to provide more money to producers, who (ostensibly) put that money back into the economy through better/more production/hiring, etc.

 

[Francesca R]

I have also heard the argument you stated, that those more able to pay for public goods and the welfare system should do so.

This is the egalitarian rationale which is rooted in the moral philosophy of Rawlsian distributive justice, and also (IMO) in the original Smithian model of true capitalism.

(There is a trend recently to paint it as ulitarian too on the basis that most mandatory reductions in inequality increase net happiness--see "The Spirit Level"--IMO this justification is very much weaker)

 

[A Laughing Baby]

(There is a trend recently to paint it as ulitarian too on the basis that most mandatory reductions in inequality increase net happiness--see "The Spirit Level"--IMO this justification is very much weaker)

This also presupposes constant levels of marginal utility gained through consumption, which is shaky at best, no?

ETA: I mean this cross-sectionally, not in a diminishing returns sense. I'm arguing for variable utility at the individual level, not through time.

 

[Francesca R]

See my reply to Neally above.

Government programs set up a society with rules in which we can prosper. Some prosper more from our society than others. Therefore, those who prosper more are benefiting more from the government programs.

This is reverse logic as far as I can tell. You measure someone's wealth and deduce that this is the value of the benefit they receive from the state. As I mentioned on an earlier page, that seems to presume that all private wealth is somehow the providence of the state, or society in general, and not due to individual achievement.

A variation of the argument is that someone with more to lose arguably benefits more from police and fire protection. Someone who makes more money from commerce benefits more from public highways and infrastructure. Someone who benefits financially from the relative stability of our economy benefits more from military protection.

In reality, if the public police/fire and associated infrastructure were withdrawn, those with very high wealth could far more easily hire private agents to protect/serve them than anybody else less wealthy could, and they would therefore be affected least. So "more to lose" is not really a viable metric IMO. In addition, you will be aware that losing your last $100 is probably more of a utility loss than losing $5m when you start with $10m. This also upsets the "more to lose" idea.

I don't understand what you're saying here.

That if you want to reduce inequality (unfairness), you can just cut public spending everywhere according to the rationale you have offered, and this will hit the rich harder than the poor because the rich are the ones who were benefitting most. Few people would agree with that.

 

[JoeTheJuggler]

The argument for progressive taxes is usually something along the lines of people who benefit more from society's resources should pay more for them.

That's not the one I usually make. I say it's because lower income people spend proportionately much more of their income just for the basics (rent, food, utilities, etc.) On the other end, proportionately more is discretionary income.

There's also the "you can't get blood from a turnip" idea. We could raise income taxes on lower income people to higher rates, and they simply wouldn't be able to pay. If we want to finance big spending (including military), we can only get the money from taxpayers that have the money!

In fact, I don't much like the idea that we should benefit from government spending in proportion to our tax contribution to it. (Or adjust taxes somehow proportional to the benefits we reap from public spending.)

In the realm of healthcare, for example, it's obvious that that approach is inhumane. Some people will have conditions that require medical treatment far more expensive than their ability to pay into the system (no matter what scheme we use).

 

[Bri]

This is reverse logic as far as I can tell. You measure someone's wealth and deduce that this is the value of the benefit they receive from the state.

Like I said, the state sets up the rules by which we live. The only way you can tell who has benefited the most from these rules is to see who is the wealthiest.

As I mentioned on an earlier page, that seems to presume that all private wealth is somehow the providence of the state, or society in general, and not due to individual achievement.

All private wealth is a combination of a lot of things, including individual achievement, the laws and society achieved by the state, and sometimes dumb luck.

Of course those who are more wealthy are already rewarded in our society -- they get to keep the majority of their wealth. It stands to reason that they have benefited more from the society, so they should put more back into it.

In reality, if the public police/fire and associated infrastructure were withdrawn, those with very high wealth could far more easily hire private agents to protect/serve them than anybody else less wealthy could, and they would therefore be affected least.

They couldn't have acquired their wealth to begin with without it. And I don't really think it's true that a single wealthy person could more cost-effectively set up an entire stable society than the government does. That's what government is for.

That if you want to reduce inequality (unfairness), you can just cut public spending everywhere according to the rationale you have offered, and this will hit the rich harder than the poor because the rich are the ones who were benefitting most. Few people would agree with that.

If you were to cut the ENTIRE government, we would have anarchy or perhaps another country would come in and take/destroy all our stuff. So yes the rich would lose far more than the poor. In addition, if there is no government, or if the government were significantly different than it is, it is questionable whether those who are currently rich would have been able to become rich.

-Bri

 

[Bri]

In fact, I don't much like the idea that we should benefit from government spending in proportion to our tax contribution to it. (Or adjust taxes somehow proportional to the benefits we reap from public spending.)

In the realm of healthcare, for example, it's obvious that that approach is inhumane. Some people will have conditions that require medical treatment far more expensive than their ability to pay into the system (no matter what scheme we use).

I think what's not being understood here is that I'm not saying that the wealthy use more resources (in other words I'm not saying that the wealthy receive more from government spending). I'm saying that they benefit more from government. They're benefiting from laws that create a stable society and that establish rules under which they have been able to gain wealth. If the rules were significantly different, they might not have their wealth.

The fact that they're more wealthy is evidence that they have benefited more than those who are poorer, so the fact that the wealthy have benefited more is an observable fact.

Yes, part of what lead them to have wealth is hard work, talent, intelligence, etc. But there are people who work hard and have talent and intelligence but are not wealthy. And the wealthy have been rewarded for their hard work already -- they're wealthy. It makes sense that they should put more back into the government which allowed them to leverage their hard work and turn it into wealth.

-Bri

 

[CosCos]

To see the Francesca vs. Bri point/counterpoint exchange is like watching a sumo wrestler fighting a blind kitten. With apologies to Francesca for my less than flattering portrayal of her as a sumo wrestler.

 

[joobz]

What good is increased investment if it decreases tax revenue and doesn't spur growth?[/COLOR]

This is the most important question.

It is the claim that if you tax the wealthy, they will have less money to invest and therefore you will have poor job growth. (e.g., don't tax the job creators)

Yet, we have had yearly 12+ years of lowered taxes to the job creators, with no obvious benefit in the form of new jobs.

Why is this? It is because the investor's goal ISN'T job creation. It is improved rate of returns. If this happens as a result of outsourcing, shrinking company size, investing in creative accounting to improve tax shelters, then that is what will happen.

Increasing taxes is another form of investment. One where the yields are felt by everyone and the "trickle down" occurs to the investors by providing improved infrastructure that facilitates business development.

 

[joobz]

That if you want to reduce inequality (unfairness), you can just cut public spending everywhere according to the rationale you have offered, and this will hit the rich harder than the poor because the rich are the ones who were benefitting most. Few people would agree with that.

This is the "cut your nose to spite your face" approach. So OF COURSE few would agree to that.

 

[DavidJames]

I think what's not being understood here is that I'm not saying that the wealthy use more resources (in other words I'm not saying that the wealthy receive more from government spending). I'm saying that they benefit more from government. They're benefiting from laws that create a stable society and that establish rules under which they have been able to gain wealth. If the rules were significantly different, they might not have their wealth.

The fact that they're more wealthy is evidence that they have benefited more than those who are poorer, so the fact that the wealthy have benefited more is an observable fact.

Yes, part of what lead them to have wealth is hard work, talent, intelligence, etc. But there are people who work hard and have talent and intelligence but are not wealthy. And the wealthy have been rewarded for their hard work already -- they're wealthy. It makes sense that they should put more back into the government which allowed them to leverage their hard work and turn it into wealth.

-Bri

I understand completely what you're saying. My experience is that many capitalists (for lack of a better word) refuse to recognize the value of the government in society, preferring instead to think they alone are the reason for their success. Without getting to philosophical, I think it's the same ego which drives them and makes them think they can (and ultimately does) help them succeed, also blinds them to how they benefited from other circumstances.

How many brilliant successful entrepreneurs could repeat their success in Somalia.

 

[RandFan]

Some prosper more from our society than others.

This is reverse logic as far as I can tell. You measure someone's wealth and deduce that this is the value of the benefit they receive from the state.

Just a second here. Would the same people prosper as well in a third world nation? What is it about America and other industrialized nations that enable rich people to become richer? It doesn't happen in a vacuum.

 

[JoeTheJuggler]

I think what's not being understood here is that I'm not saying that the wealthy use more resources (in other words I'm not saying that the wealthy receive more from government spending). I'm saying that they benefit more from government.

Maybe so, but I don't think that's the rationale for progressive taxation.

I think it's a good idea if the wealthy appreciate that it's not all just rugged individualism, and that they are indeed part of a society that makes their wealth possible. (At least some of them do. Warren Buffet is in favor of the "Warren Buffet" tax. Barrack Obama and Bill Clinton are both on record as saying that they themselves should be taxed at higher rates.)

 

[BenBurch]

Apologies for the double post, but the way I read his assertion (namely the "just the opposite" comment with which you disagreed) was that he could provide examples of the poor using more services than the rich, fulfilling the "opposite" condition of the rich using more services than the poor. I don't see how providing an example of the poor using more services than the rich would fail to meet your standards? Do you expect him to provide evidence of the rich not doing something, or would him providing an example which fulfills the requirement by logical inference not suffice?

ETA: Of course, this is dependent on Neally actually providing the evidence, but it seems like evidence for what he's saying (in specific his third numbered claim) would not be too hard to find on his part. I'm not in ideological agreement with him, I'm just saying that you're claiming he's making a deflective argument when it certainly seems to me that he is not.

I'm saying; Enumerate the services of government, both direct and indirect, including externialities and environmental that the rich get per capita. Give me that as average, median, mode and extremes. And show me that isn't more than the poor get, per capita.

Remember;

If you are rich and own a business, your business likely benefits directly or indirectly from;

• Strong military
• A court system to enforce contracts
• Governmental trade agreements
• Contracts to provide services directly to government
• Every sort of infrastructure; Road, rail, air, canal, sewer, water, electrical, police, fire protection, coast guard
• Public schools (educated workforce)
• Social Security, Medicare, & Medicaid - Eliminate much of the need for a company pension plan, and where one is provided, it still benefits from not needing to be as large.

And I bet I could come up with a lot more.

And if you are rich, you personally get more services;

• Rich people & their properties require more police protection. (Robin Hood stole from the rich, duh! The poor have little to steal.)
• Rich people have more property that requires more fire protection.
• Rich people have more property that requires more supporting infrastructure. (For example, most po' folks don't own private aircraft and so do not require air traffic control services unless sharing those services with a few hundred other sardines.)
• Rich people have some pretty expensive problems for the courts to resolve.

And I bet I could also come up with a whole lot more.

So, show me real numbers on the benefits. It does nothing to point to poor folks when you make no representation with actual numbers to back it up about the opposite side of the greater-than sign.

 

[JoeTheJuggler]

That if you want to reduce inequality (unfairness), you can just cut public spending everywhere according to the rationale you have offered, and this will hit the rich harder than the poor because the rich are the ones who were benefitting most. Few people would agree with that.

That's a good refutation of the claim that the rich benefit more from government than the poor.

In fact, at the lower end the benefits, even though maybe lest costly per capita (I don't know if that's even so), is much more significant qualitatively: it's a safety net. It can be the difference between survival and starvation (or at least between subsisting on dog food or buying stuff that makes one more or less part of the mainstream society).

At the upper end it's the difference between having way more money than can affect the quality of life and having plenty enough. (How many large houses before one more large house fails to add any happiness/satisfaction or whatever?)

 

[JoeTheJuggler]

Just a second here. Would the same people prosper as well in a third world nation? What is it about America and other industrialized nations that enable rich people to become richer? It doesn't happen in a vacuum.

I agree, but I don't think that's what Francesca is arguing. I don't think she's arguing that the wealthy don't benefit at all from public spending. I think she's arguing against the idea the rich get more benefit.

Again, I don't think public spending should be proportional to wealth or even tax contribution. I think it should be based on need. And I think as a society we ought value humanitarian needs as being of the most important. (That is, we should make sure all people are fed, clothed, housed and have reasonable access to some minimum standard of healthcare before we worry about making it more possible to buy a second house or to donate a million dollars or so to a church.)

Now I understand the supply side take: that reducing taxes on people with higher incomes will stimulate the economy (and therefore provide more jobs so that the less fortunate are able to survive without the safety net). I just think the evidence weighs against this actually happening. And we certainly can spend that money (with a lot more control) if we do it as public spending.