Taxing the Rich

Taxing the Rich

317 days until classes start.

The Spring 2017 classes were posted today. I made a tentative schedule just to see what my days will be like when I return to school.

They will be very busy. Though I will not be taking classes until the fall, I used this information to create a hypothetical schedule. Once I start school, my days are going to be quite full. Up and out of bed at 3:45 to visit the gym, work, classes, and spare time commuting on the bus, reading, and writing. My days will be booked until 9:00 PM. There will be no real time for writing until the weekends, so that is when I will have to get my blog postings done.

I have finished William James' Pragmatism, and tried to get started again on Henry Sidgwick's Methods of Ethics.

However, I have been asked to consent to be interviewed for the podcast Atheistically Speaking. They wanted to talk about my posting on A Moral Philosopher's View of the 2016 Presidential Election.

I have been told that, "We wanted to discuss the idea of morality as it relates to the election and why people seem to be unable to be objective when assessing morality when it comes to political candidates."

Well, given the request for the interview I have been going over my arguments and my evidence to make sure that I can back up what I said.

Meanwhile, at the London School of Economics, I listened to a lecture on Everyday Sexism and listend to what a lot of women (and girls) have to put up with. I think that men would have learned better by now. Why is it so difficult to learn how to treat women with decent respect. Behavior like Trump's is just far too common. Anyway, it included some points that will be relevant to discussing attitudes that may be responsible for people seeing Clinton as "untrustworthy" and "dishonest" contrary to all available evidence.

In other news, I also listened to a podcast from the London School of Economics on Taxing the Rich: a history of fiscal fairness in the United States and Europe".

This proved interesting because it looked at the types of arguments that people have been accepting as good reasons to tax the rich over the past 150 years or so. They took speeches and other text from the period, coded them, and then looked for key words and phrases that would then be matched up with changes in the tax code, to determine which words and phrases might have been responsible for changes in the tax code.

The higher tax rates that we saw a few decades ago for the very rich turned out to be grounded on a type of fairness argument focusing on the war. Effectively, the argument that worked stated that in the same way that it was permissible to conscript labor (soldiers) to fight a war through a draft, it was also legitimate to conscript capital (money) to fight the war and, in doing so, to tax those who had the most money. The ranks of the soldiers, who were putting their lives at risk, was made up of young people from poor and middle-class families. It was considered unfair that wealthy older people get to stay home with their feet up having their property protected, without making a comparable sacrifice. Consequently, their wealth was taxed.

Since the 1970s, without a war argument to use to support taxing the wealthy, tax rates on the wealthy went down. Most people, according to the research discussed in this presentation, favor a "fairness" argument that determines what a just tax rate is. And what people seem to consider fair is a tax rate where all individuals pay approximately the same percentage, a "flat rate" tax.

The authors looked at a number of different arguments offered for and against higher tax rates, as well as other causes. For example, one of the arguments they examined through their research was whether or not current lowering of tax rates can be explained in virtue of the "capture" of the political system by those with a great deal of wealth. In other words, the cause of the current change was not the fact that a flat tax rate "seems fair" to the bulk of the population, but that the wealthier people were able to use their wealth to capture the political apparatus to get favorable tax rates changed.

The "capture" argument, they said, did not adequately explain the relevant data. The tax rates went down across countries regardless of any individual differences in terms of capture by the rich. Whatever the cause of these reductions in tax rates were, they were constant across countries. And what was constant across countries was the fact that they were no longer paying off a war. Consequently, the "conscript the wealth" argument had simply become less effective.

One of the things that Professor David Stasavage argued that would be an effective argument in favor of getting the wealthy to pay more taxes would be to point out that the very wealthy actually pay a lower percentage of their income than those who make less. Tax write-offs, loopholes, and the ability to hire expert tax accountants meant that the very wealthy pay a lower percentage of their millions of dollars than the rest of us pay on our thousands of dollars. Consequently, a fairness argument should be useful to make it the case that the very wealthy were at least paying the same percentage as middle-income earners. However, getting the wealthy to pay a higher percentage would be an uphill struggle given what most of the people see as "fair".

Stasavage did not, at least in this presentation, consider the question of why people feel that a flat rate tax is fair. I would like to see some investigation into the argument that they perceive it as fair because political factions who favor the wealthy have been able to spend a great deal of money arguing that it would be unfair for the wealthy to pay a higher percentage. In other words, they have been able to use their excessive wealth to get the people on a whole to adopt an attitude that favors them. If this is the case, then one possible road to take would be to get people to see a progressive tax as being more fair.

Which it is. The wealthy person for whom taxes might take $5 million out of $10 million is left with $5 million, which can purchase a great deal. This person is not suffering even the slightest in terms of health care, securing his retirement, taking care of his children, worrying about what might happen if he loses his job or suffers some other setback. However, the person who is knocked back from $50,000 to even $40,000 (a 20% reduction rather than a 50% reduction) still loses a great deal more in terms of potential risks to his well-being and livelihood as well as those in the same family. I think it is reasonable to hold that it is better to take $5 million from a person with $10 million than to take $10,000 from 500 people with $50,000 each. We have more and stronger reason to take more money from those who have a great deal of wealth than from those who are getting by.