by Doctor Science
Herman Cain has lured all the flat-tax advocates out into the open again, and I'm trying to find a more effective way to reply to them than banging my head against the wall and chanting "regressive! regressive!"
Here's a typical specimen, taken from the comments to Paul Krugman's blog:
Why should taxes be at a higher rate for higher income individuals?Here's the metaphor I'm working on to try to explain how wrong this is.
In fact, why should taxes be based on income at all, if the services offered by government are not received based on income.
Largely, our taxes should be paid relatively equal amongst everyone, if we're so sure government should be doing what it's doing now.
Paul, if economics is not a morality play, explain to me why the objectives of your economic solutions are always to help the parasites of society while pretending that we're somehow MISTREATING them if we choose not to hold a gun to the rest of society's head to collect taxes.
The top 1% could pay far less % in taxes for all I care, as long as they're not withdrawing services directly from government, and not infringing on my freedoms.
Imagine a group of five people. They're in a room on the third floor of a building with no elevator, and they have 1000 pounds of assorted stuff to bring downstairs and stack outside the building. What's the fair way to do this?
The simplest solution, but only works in highly-specialized cases. Part of Defenestration, an ongoing installation by Brian Goggin at the corner of 6th and Howard St. in San Francisco. Photo by KayVee.Inc.
1. Everyone could bring down their own stuff. If the stuff is such that it's really easy to tell what belongs to whom, then maybe that would be the fair thing to do. This doesn't correspond to taxation at all, but to purchasing. No-one's life is easier, there are no burdens shared or economies of scale, but it's easy and fair.
2. Now suppose the group is a band: 2 guitarists, bassist, drummer with a full kit, and the guy who plays the harmonica.
Ron Woods' painting of the Stones performing in 1975, by which point they definitely didn't have to carry their own equipment.
Clearly the equipment burden is distributed very unevenly, and they'll never get to the gig on time if everyone is only responsible for their own instrument. So they decide that each person takes down about 200lbs of stuff, to distribute the work more evenly than the burden. This is the flat tax: one-fifth of the population (by wealth) takes down one-fifth of the stuff, the taxes. It looks fair: the burden is equally shared, everyone pulls their own weight.
3. But now, suppose the five people are a family:
- grandma, age 75
- dad, age 45
- mom, age 45
- son, age 20
- daughter, age 10
[I couldn't find a good picture to illustrate this scenario -- suggestions wanted!]
The 20-year-old son is probably *much* stronger than anyone else. Grandma may have trouble getting down with much more than herself, and while the 10-y.o. is pretty bouncy, she can't really take all that much in any one trip. The parents fall in between.
Is it fair if the son ends up bringing down 600lbs of the stuff, while Grandma brings only 30lbs and the others divide up the rest? Yet I assume we'd all agree that this would be the *reasonable* thing to do, even though it means everyone doesn't "pull their own weight".
In this metaphor, the strong healthy young son represents the wealthy, the people with the most money=strength. This is *progressive taxation*: we're all on this trip together, so we help each other out.
The fact is, speaking as someone who's been poor and who's been well-off, when you're poor each dollar and each percent of income going to taxes *hurts more*. For both poor and wealthy to pay 20%, say, in taxes is *not the same thing*, because it's not the proportion of your income that makes the difference, it's how much it changes the kind of life you can live. When I was making only $10K/year (30 years ago), $1,000 was a monstrous expense, more than I could bear to think about. When we had an income of $80K, $8K was a *lot*, but not more than we could afford for something like a new roof. It had to be budgeted, but it wasn't a catastrophe. I'm not sure what we're going to take in this year, but 10% would make me sweat -- yet not *panic*, as it did when I was truly poor.
Maybe that should be the metric: If you merely *resent* your taxes, you're not paying too much. It's only when they make you at least break a sweat that you might deserve some relief.
A flat tax is like crushing Grandma and little sister under a burden you could bear, because "it's fair!" and "everyone should carry their own weight".