[FoRK] Re: Limeys can't comprehend US tax law? ;-)

[Jeff Bone]

On Apr 25, 2008, at 2:17 PM, bill stoddard wrote:

> Humm..... "1% of the country pays 33% of the bill".  Not exactly  
> sure why the statement makes you go hyperbolic... guess I'm an idiot  
> because  I don't see enough information in the statement to know  
> whether it's fair or not.  What % do you think is fair?

Cf. discussion of "fairness" in the context of taxation on FoRK circa  
10 years or so ago, where I thrashed around with several formal models  
of the "fair tax" proposal and concluded among other things that for  
several reasonable definitions of fair you could clearly argue that  
flat or consumption taxes were (or weren't, depending on the  
formulation) "fair."  Note that that doesn't necessarily mean the  
present form of progressive taxation is fair for any reasonable  
definition of fair, though.  "Fair" isn't an easy concept.

I would say, though, that even IF you favor a progressive system on  
the notion that it's more "fair," then even so it's reasonable to  
expect that there should be parity in the total fraction of the wealth  
owned by one group of taxpayers and the total amount of the tax burden  
shouldered.  I.e., even most progressives don't think tax should be  
*punitive* of wealth, therefore most progressives should agree that  
the total amount of the tax burden you shoulder should match the total  
amount of the wealth you've got.

If you buy that, then you can clearly see that the present system is  
generally "fair" but specifically (though not greatly) unfair both at  
the top *and* the bottom.  From the numbers I posted yesterday from  
Wikipedia:

	the top 1% pay 36.9% of federal tax (wealth 32.7%)
	the bottom 50% pay 3.3% (wealth 2.8%)

As you can see, both the top 1% and the bottom 50% pay a greater  
portion of the taxes than they own of the wealth, though it's more  
significant in the former case.  (The above data notwithstanding,  
Kevin's comments about the bill being "gone" by the time you get to  
the bottom 50 is approximately correct anyway, as 3.3% is essentially  
epsilon.)

And that's if you buy into the desirability and "fairness" of  
progressive taxation in the first place.

Net-net, most folks who favor progressive taxation today should more  
or less be happy with the present system.  Those who feel that the  
system should be even *more* progressive are, IMHO, just being assholes.

;-)

jb