Re: Taxes: Taxonomy and Evaluation

From: Jeff Bone (
Date: Thu Mar 29 2001 - 12:44:19 PST

Dave Long wrote:

> are immoral.
> Income taxes are not confiscated up-front; they
> are only collected after one has done something
> (a taxable event) to incur a tax liability.

Semantics. Bottom line: I never have the *option* of having the use of that
part of my own funds which the government claims as tithe. I have no
discretion in this matter, aside from simply not earning the income in the
first place. If you assume that I am *entitled* to earn whatever income I'm
capable of, then (post facto) involuntary surrender of a portion of that income
is theft.

> Furthermore:
> Individuals have just as much control over their
> income as they do over their spending.

What a line of bull! "Don't want to pay taxes? Just don't make any money!"

Dave, your argument may be valid but it has no value in the conversation. If
you assume that people are entitled to the fruits of their labor --- an
assumption I make but failed to call out --- then any involuntary taxation of
those fruits is theft.

> As much as I like FAIRness:
> > FAIR. (F) In evaluating tax systems, we'd like to ask "is this
> > fair?" For our purposes, Fair will be defined to mean that (given
> > the Assumptions above) no person receives a disproportional benefit
> > (i.e. provided services) from the system relative to their input into
> > it.
> this goes against CAPITALISM.

Dave, the notions of taxation, government-facilitated wealth redistribution,
and government-provided bundles of services go against CAPITALISM. The fact
that we're even discussing taxes and gov't services means we're already down
that slippery slope.

BTW, my definition of FAIR is pretty poor, and I've been regretting it almost
since I hit "send." I'm trying to come up with a better definition, but
informally the concept is that you get as well as you give.

> Simplified Framework

This is fine, but it does not address the issues that concern me --- these
slippery notions of the moral basis of taxation, fairness, political
practicality, etc. We can synthesize tax systems all day long which satisfy
(or don't satisfy) your simplified framework, but without discussing the
results along more dimensions we perhaps do not address key considerations in
evaluating taxes.

> Application
> --------------
> In the case of a consumption tax, high wealth individuals
> have incomes that are not significant fractions of their
> wealth, and furthermore consume at a rate about half that.
> Low wealth individuals have incomes that are as high or
> higher than their wealth, and (for an average 30K earner)
> consume nearly all of that.*
> We take 23% as sufficient to fund the government, and
> move on to the second question: what happens to wealth?
> If the low wealth individual faces the full 23% rate on
> consumption, which would be ~23% of income and perhaps 46%
> or more of wealth, and the high wealth individual faces
> a rate of 23% on consumption which maps to only 12% on
> income, and perhaps 6% or less of wealth, it is clear the
> wealth distribution will be flattened into the corner,
> so consumption taxes fail the second test.

This is a reasonably convincing argument. I'm sort of torn, here: on the one
hand, you can consider --- as Dave does --- that this redistribution of wealth
is *purely* an artifact of the way a consumption tax is structured, which makes
it a poor choice if you believe --- as I do, and as Dave apparently does ---
that one criterion for a tax system is that it *should not* change the
distribution of wealth by itself.

Okay, retraction based on analysis with equations coming up.


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