The pervasiveness of Horatio Alger

By Risa Wechsler | July 28, 2005 11:33 am

From a Morning Edition story on the estate tax: “40 percent of Amercians believe they will be in the top one percent of income earners by the time they die”. Breaking news! 39% of Americans woefully deluded about their prospects in life. A bill repealing the century old tax (which affects only the richest 1-2% of Americans) is expected to pass the Senate this week. It will cost the federal government 1 trillion dollars per decade.

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  • David

    Hi Risa,
    If a person has become extremely wealthy as a result of their hard work and ingenuity do you
    not congratulate them and say “well done, you have the right to do what you wish with your money. We as the government will not plunder your assets upon your death”. Isn’t that a basic right no matter how wealthy you are? Maybe I’m misunderstanding your point.

  • http://blogs.discovermagazine.com/cosmicvariance/sean/ Sean

    Do you think it takes hard work and ingenuity to have wealthy parents? The thing about being dead is, you’re dead. Inheritance is the transfer of money from the dead person to some other people. The government makes its income by taxing transfers of wealth from one place to another, and it’s hard to think of any more progressive and economically painless target than the wealth that moves from wealthy dead people to their offspring.

  • David

    Hi Sean,
    You’re right it doesn’t take hard work to inherit wealth. But the person who is about to die deserves to spend that money as they wish. It is their right to disperse it as they see fit, just like any person, wealthy or not. If they have earned it honestly like you and me why should they be treated any differently? You might say “the governement knows best”, I say the “individual knows best.” How do you know whether the Will of a wealthy person uninfringed by government intervention will disperse a large fraction of his wealth on benevolent causes, charities, foundations, scholarships etc etc that otherwise would get slowly whittled away by governement bureaucracy and “redistribution”. How do you know he doesn’t trust his son or daughter to use his money wisely? If he gives it to them, to a foundation, to a charity it is absolutely none of our business anyway. We should quit trying to sponge off him and “targetting” him. If his money is to be taken, well then, I want some o’ your money when you die Sean!!

  • http://members.cox.net/vnoel/weblog/blogger.html Vincent Noel

    I think the point being made here is that a lot of people are against the tax in question because they *think* they will gain so much money during their lifetime that they will be in the top 1% of income (the only people affected by this tax). So they are against the tax as they feel it will be against their own interest.

    As Risa points out, most of the people who think this (39 out of the 40%) will *not* be in the 1%, and the tax would actually benefit them (as well as 99% of the population). So their opinion is based on a wrong assumption and is detrimental to the majority (and them).

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    You’re right it doesn’t take hard work to inherit wealth. But the person who is about to die deserves to spend that money as they wish…

    Unless you simply believe that all taxation is illegitimate (in which case, we have a much more basic disagreement), there’s nothing to your argument that singles out the transfer of wealth to one’s heirs as a privileged economic activity, which should be exempt from taxation.

    To the contrary, many would argue that tax policy should privilege productive, wealth-generating activities, and tax them at a lower rate than unproductive, non-wealth-generating activities (hence “sin-taxes” on tobacco and alocohol). Inherited wealth is the poster-child for an unproductive, non-wealth-generating activity.

    In any society in which one values equality of opportunity (as opposed to fostering an aristoracy of inherited wealth), one should tax inheritance heavily as the least economically-damaging way to raise revenues, while, at the same time, serving a higher social purpose.

  • lossage

    One of the interesting things is that the estate tax can be seen as one of the greatest protections against a noble class in the US. It is undeniably easier to gather money once one already has it. Given a number of generations what is to stop the progression toward a landed gentry and sharecropper dichotomy?

    In the long term I kind of see the estate tax as a hedge by society against the concentration of too many resources in too few hands. But then again Gov’ner, it ain’t my place to talk about such things.

  • Gary E

    Context, people, context! The elimination of this tax is occuring at a time of severe butget deficits, skyrocketing national debt and the waging of war. At the same time, because of years of assault against any notion of acceptance of social obligation, there is close to zero chance that any type of tax increase to pay for the above would pass Congress (at least in its present configuration). It is the height of irresponsibility to eliminate any source of revenue under such conditions. What would we think of the family wage earner who left his/her job voluntarily, with no alternative in sight, while the bills are due and the kids hungry and unclothed? It is shameful that Senators could be so motivated by a desire to be able to annouce “I cut your taxes” in their next campaign ad, that they have no concern regarding the long term effects of their actions.

  • Kuas

    An economically rational approach to estate transfer would be to transfer assets to heirs without tax, but to preserve the original tax basis for those assets so they would be taxed when the heirs try to sell them. Oddly enough, you don’t see republicans agitating for that. As it stands, the estate tax law is a $1.5 million tax avoidance loophole, which they wish to exand.

  • http://blogs.discovermagazine.com/cosmicvariance/risa/ Risa

    Yes, indeed, my point was that 39% of Americans are under the mistaken impression that they will once be rich enough that this tax will take their hard earned money away from their children, and that is probably, in large measure, why there is broad support for it when it is framed in this way. I think the pervasive American myth that promises if we work hard enough and are virtuous enough that we will all be rich is a big contributor to what is wrong with American today: it causes many people to act in against their self-interest, in the hope that it might be in their interest someday. And I do not, in fact, agree that there is any basic right to any specific amount of one’s earnings either in life or after death — as citizen of a democracy that has obligations to its citizens, I instead expect that I have an obligation to contribute to these things. In America today, most of the richest one percent did not get that way through sweat and toil. They have benefited enormously from government’s investments in society, and it’s not unreasonable to ask them to contribute a bit more upon their deaths. America, at its founding, was about real opportunity for all and the rejection of hereditary wealth. FDR said:
    “Great accumulations of wealth cannot be justified on the basis of personal and family security … Such inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government.”
    Bill Gates, by the way, agrees with me, as do lots of other billionaires.

  • David

    Hi Jacques,
    I agree, there is nothing in my argument that sets apart wealth transfer from any other economic
    activity. I believe, however, that the rich man should not be treated any differently from the common
    man (assuming of course that the rich guy and the common guy are honest).

    Furthermore, it is the governemt’s role to protect the rights of the individual, to protect him from the use of force by another party to compel/coerce him to do something. It is not the governments job to turn this knob and that knob and somehow control economic activity. In a society that values equality of opportunity this is all the government should do! Your solution to tax individuals who are wealthy more than everyone else sounds eminently practical but why should economic damage be enforced on the wealthy at the point of gun? What you say in effect is: “they are only 0.05% of the population it is OK to sacrifice them for the sake of everyone else having equal opportunity”. I say, let there be an aristocracy! but as long as you have a benevolent government that strictly adheres to the protection of the individual there will always be an opportunity for that individual to embrace that freedom and live to his potential. It is an exacting task for a government and it’s judiciary, I’ll grant you that, but surely it is also the noblest?

    Side note: Jacques, why would inherited wealth be “non-wealth-generating”. Assuming that much of
    the time the son of wealthy man will be responsible, there is no reason why he couldn’t make that
    wealth grow, with stock investments, funds, venture capitalism, foundations, charities and what have
    you? These investments would surely generate a lot of economic activity, jobs, etc…If it happens that he is stupid (which I’m sure is often the case for wealthy heirs!) he will spend
    his money. But what better thing is there for an economy than some stupid rich guy spending all his cash!! Haha!!

  • David

    Risa,
    I disagree with your statement so strongly that I don’t even know where to start!!

  • http://www.chrononaut.org/~dm/ David Moles

    David, I assume you also don’t believe in tax brackets?

  • Greg A.

    Hi David,

    You said: “It is not the governments job to turn this knob and that knob and somehow control economic activity.”

    Without touching on the rest of your post, it is indeed the government’s job to control the economy vis a vis fiscal and monetary policy. If the government was not viewing spending and taxing as economic activity, there would be little justifiable reason to run a deficit, for example. I personally think it’s assinine to cut a specific tax that effects few people negatively in order to court mostly non-negatively affected individuals for a reelection campaign, but that’s just me. Either way, America loses.

  • David

    David Moles,
    If this is the defintion: http://encyclopedia.laborlawtalk.com/tax_bracket
    Certainly not.

  • Zero

    What a fine demonstration of negativity and paternalistic elitism. Imagine, those stupid, wide-eyed commoners actually think that they can make it in this world through hard work and virtue — and without the guiding hand of big-government leftists! And worse, many of these same idiots even believe that they should be allowed to keep as much of their earnings as possible, and pass it on to their children when they are gone! You see, such ambitions are actually what is “wrong with America”.

    With a message like this, it is no wonder the Democratic party is hemorrhaging voters. Guess what: a whole lot of people can make it without your “help”.

    Zero

  • Cian

    I think anyone who has enough money to make it into the top 1% of earners can afford to give up a substantial portion of it. How much can a meal cost? Or a roof over your head? How much better is a $10,000 coat than a $1000 one? Ten times?

    I believe in a healthy level of governmental interference. That is, provided the extra revenue is used wisely, which doesn’t appear to be the general case in modern America.

  • http://www.chrononaut.org/~dm/ David Moles

    Zero, how can nearly half the population make it into the top 1%? Do they each suddenly make it in in the last six months of their lives, and then die?

  • http://homepage.ntlworld.com/g.mccaughan/g/ g

    I entirely agree about the substantive point at issue (repealing the estate tax is insane, very few will benefit, etc., etc.), but it sounds like there’s something a bit off in the logic of the original post. (Disclaimer: I haven’t listened to the NPR story, so maybe I’m just lacking some crucial information.)

    1. “the top one percent of income earners“? Surely most people expect not to be earning any more by the time they die. I guess the meaning is something like “get into the top 1% before their death”.

    2. If “top 1%” is understood the way I’d take it, it doesn’t follow from that statistic that 39% are deluded. Stupidly extreme counterexample: imagine that everyone’s income is simply determined by how long they have left to live, and independent of everything else. Then the top 1% simply consists of those who are in the last 1% of their lives, and everyone gets there eventually. Of course that’s laughably far from how things really are, but people certainly do tend to earn more as they go through life, and rather more people will end up in the top 1% than are in it at any given moment.

    Of course, if “top 1%” actually means “top 1% at time of death” or something — which would be quite appropriate for this particular debate — then #2 doesn’t hold. But then that word “income” seems very weird indeed. :-)

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    Furthermore, it is the governemt’s role to protect the rights of the individual, to protect him from the use of force by another party to compel/coerce him to do something. It is not the governments job to turn this knob and that knob and somehow control economic activity. In a society that values equality of opportunity this is all the government should do!

    Really? That’s all the government should do?

    Then our disagreement runs very, very deep. You are convinced that 99% of what our govenment actually does is illegitimate. No wonder you are opposed to any and all taxation.

    Your solution to tax individuals who are wealthy more than everyone else sounds eminently practical…

    Progressive taxation isn’t “my” idea. But, it figures that, given your belief in the illegitimacy of government, you wouldn’t be in favour of progressive taxation either.

    …but why should economic damage be enforced on the wealthy at the point of gun?

    Taxation is theft, eh? That explains the “point of gun” phraseology.

    I say, let there be an aristocracy! but as long as you have a benevolent government that strictly adheres to the protection of the individual there will always be an opportunity for that individual to embrace that freedom and live to his potential.

    You don’t see even the teensiest bit of irony in the juxtaposition of those two sentences?

    You must not be a student of history, then.

  • http://homepage.ntlworld.com/g.mccaughan/g/ g

    (I hadn’t read David Moles’s comment when I wrote that. I’d like to make it clear that supporting “Zero”‘s non-sequitur is no part of my purpose.)

  • http://blogs.discovermagazine.com/cosmicvariance/risa/ Risa

    g, I agree, it’s oddly phrased; I thought the same thing when I heard the story, but that’s indeed what it said. What question was actually asked I don’t know.

    But your point number 2 seems correct until you realize that when they talk about the estate tax affecting the top 1%, they are talking about the top 1% of estates, not all people, so this is already taken into account. Ie, if 40% of people think the estate tax will affect them, then 39% are deluded.

  • foam

    “Bill Gates, by the way, agrees with me, as do lots of other billionaires.”

    Not sure if you realized this or not, but that book that you linked to was written not by the commonly known “bill gates” but by his father “William Gates Sr.”

    Not all children share the same belief systems as their parents (compare George H.W. Bush to Dubiya wrt to Iraq).

  • http://blogs.discovermagazine.com/cosmicvariance/risa/ Risa

    foam — My mistake. You’re right, the book was by his dad. On the other hand, Bill has said that he plans to give away most of his wealth, and only leave very small amounts to his children.

  • http://homepage.ntlworld.com/g.mccaughan/g/ g

    The possibility that it was “1% of estates” not “1% of people” is what I was getting at with “top 1% at time of death” — but, as I say, that makes it especially weird that the term “income” was used. Anyway, it seems that it just is weird, in which case the logic is fine and it’s just the words that are strange. So I’ll shut up. :-)

  • http://blogs.discovermagazine.com/cosmicvariance/joanne/ JoAnne

    Okay everyone, let’s look up the facts before we get hot and bothered. It’s a trait of mine not to believe the statistics given in a report, whether it comes from the right or the left. As a scientist, I know how statistics can be manipulated to make a point.

    So, I went to the source: the IRS website. Here’s what it said: `Roughly 2% of estates pay estate taxes. There is no tax for estates that pass to spouses or are left to charities.’

    Note that the IRS counts estates left to spouses as an estate and this factors into their statistics. For a count of family estates left to children, one needs to include the fact that both spouses have to pass away. Assigning a factor of 2 for this means that roughly 4% of family estates are taxed.

    Now, let’s look at the dollar figures. Again, from the IRS website: `estates with a total value under $1,000,000 and a date of death in 2002 or 2003 and $1,500,000 and a date of death in 2004 or 2005 do not require the filing of an estate tax return.’

    Now, to be honest, $1M or $1.5M is not worth that much these days. The price for an average house here in Palo Alto starts at $1M. And, family-owned businesses are worth that much. I know – my father owned his business. Nothing fancy, he sold lifttrucks and was based in a midwest manufacturing town of aveage population. He worked 24/7 and we had no money – everything was put back into the business to make it go. But in the end, the capital value of the equipement was worth that much (just barely). Family farms, with all the land and equipement, are worth more than that. Heirs can lose the family farm or business or house because they can’t pay the tax.

    The Rockefellers, the Gates, the Mellons, the Hearsts, the …. are in a different situation. I can’t think of any reason to repeal their tax.

    Why not help out the hard working family who wants to pass on the house, business, or farm? Why not simply raise the minimum taxable amount to something which separates the truly wealthly from the rest? We would need to see the numbers to see what is reasonable, but I can imagine something like $5M, instead of $1.5M would go a long ways. I think there is merit in reforming estate tax laws.

  • http://logandline.blogspot.com/ Jeff

    The $1 trillion figure that gets bandied about in this debate should also come in for some serious scrutiny. According to the IRS, the estate tax collected about $21 billion in 2003 (there’s a spreadsheet at http://www.irs.gov/pub/irs-soi/03es01tp.xls with the figures). This will no doubt rise in coming years as more families find themselves in the estate tax’s grasp, but it’s a far cry from a trillion. It’s important to recognize that the $1 trillion is an interest group figure, one which also generally assumes that inherited money is never spent or invested.

  • Chaz

    JoAnne raises a good point, and in fact I think a lot of the support for the cut stems from the fact that non-uber-wealthy people think they will be affected because of their farms or businesses. But as FactCheck.org explains, in 2004 the number of taxable estates primarily made up of farm and business assets was tiny (440), and most of them pay an estate tax of only %1.6. Family farms and businesses also get special treatment under the current law.

  • grahamc

    To paraphrase the theory of marginal utility, the rich miss the loss of any given amount of money less than the poor. They’re rich, right? So they have plenty left.
    Therefore it is fair to impose higher taxes on the rich. I really can’t see why some people let their hearts bleed for the poor old overtaxed rich. They are not poor, they are rich.

  • David

    Jacques (comment 19)
    First let me ask you a couple of technical questions….how do you frame
    your quotations? and how do you italacize your words? Do you need to
    download some software?

    Ok. You said:

    “Progressive taxation isn’t “my” idea. But, it figures that, given your
    belief in the illegitimacy of government, you wouldn’t be in favour of
    progressive taxation either.”

    My response is:

    I know it’s not your idea. The “your” in my statement is perhaps more
    appropriately replaced with “the”.

    I am in favour of a low, flat tax.

    (this point also addressed to Greg A from comment 13)
    The point on government legitimacy would take me too long to answer, sorry. Briefly I do believe in government, but a “small” one. I hope you’ll excuse my
    brevity here. I know I was the one who brought it up..sorry. I’m sure many of you have read them but I recommend Milton Friedman’s “Capitalism and Freedom” or Friedrich Hayek’s “The Road to Serfdom” for a better take on where I’m coming from. They are wonderful pieces of economic/political literature (and so short (usually a good sign, right?) :))

    You said:
    “Taxation is theft, eh? That explains the “point of a gun” phraseology.”

    My response is:
    If someone works hard/has talent/is ambitious/ they more likely than not
    will earn more money. The question therefore is: do we penalize them
    for that?, namely, relative to everyone else, do we in effect reprimand them
    for being successful by taking away an extra percentage of their money?
    I say: no we should not. Another question might be: do we reward them for their productive endeavours? My answer again is: no. They’ve already been rewarded! We, the beneficiaries of taxing more productive people than ourselves are in effect “thieving” from the more productive person. So in answering your question “Taxation is theft, eh?”, I would say “uneven taxation is
    theft, yup.”

    You said:
    “You don’t see even the teensiest bit of irony in the juxtaposition of
    those two sentences?”

    My response is:
    Maybe, sorry, I’m not really that good on irony. Excuse my naivety :) What is your point?

  • David

    Hi JoAnn, nice to e-meet you (Ok this was kind of geeky :)),

    You said:

    “Why not help out the hard working family who wants to pass on the house, business, or farm? Why not simply raise the minimum taxable amount to something which separates the truly wealthly from the rest? We would need to see the numbers to see what is reasonable, but I can imagine something like $5M, instead of $1.5M would go a long ways. I think there is merit in reforming estate tax laws.”

    My response:
    I’m glad you agree that there should be some reform. But who are you to judge, or for that matter who is anyone to judge where that line should be? There is nothing reasonable in taking extra money from someone just because they’re worth an extra few hundred million? Sure, they “don’t notice” the effects of your taking their money but the principal remains, namely: you have decided as a person to accept that you and the public (the government) should take it upon yourselves to decree (under threat of force) unto the wealthy person that it is right and just that you (the government/the public) would be better positioned then the owner of that wealth to spend that wealth.

    I just can’t get my head around why this is reasonable?

  • Ryan Scranton

    David: If you wanna get specific about who’s in favor of progressive taxation, you might start with Adam Smith. He was kinda popular back in the “Greed is Good” 80s; yuppies used to have his face on ties. Alternatively, you could go to your local econ department and ask pretty much anyone about the concept of marginal utility.

    Taxing the wealthy doesn’t penalize them for their success. Rather it recognizes that a) the value of the second $100K isn’t as large as the first $100K and b) people who have benefited more from the common public goods (public schools, public roads, law enforcement, public utilities, etc) should be on the line for more of the money that provides those goods. The myth of the self-made man pulling himself up with his own bootstraps is exactly that. No one succeeds completely independent of their circumstance.

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    If someone works hard/has talent/is ambitious/ they more likely than not will earn more money. The question therefore is: do we penalize them for that?, namely, relative to everyone else, do we in effect reprimand them for being successful by taking away an extra percentage of their money?

    How sad that you would compromise your principles so easily!

    Why a flat percentage of income? Why should a rich man be obliged to pay more in taxes, just because his annual income is 1000 that of someone at the poverty line? Where’s the justice in that? It’s absurd, given your priors, that a rich man should be asked to pay more, just because he is rich.

    No, if you were consistent in your beliefs, you would demand, not a flat percentage levy, but an actual flat tax: a $10,000/year tax on every individual over the age of 18, whatever their income level.

    And, yeah, if some poor deadbeat can’t pay, it’s off to Debtors’ Prison with him!

  • SelfInterested

    Risa said:
    I think the pervasive American myth that promises if we work hard enough and are virtuous enough that we will all be rich is a big contributor to what is wrong with American today: it causes many people to act in against their self-interest,

    But…but…. I thought all *enlightened* people are not supposed to act only in their self-interest?

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  • http://www.freebsd.org FA

    Bottom line: Live within your means.

    If one wants all kinds of tax cuts, you will have to destroy the social programs. There is no free lunch. Be upfront about it, don’t go about doing it by stealth (by heading the country into bankruptcy).

    It is amazing how, despite US having the finest economists, the majority believe in the “get rich quick” type of scams. People want social security (no politician who openly wants to destroy it will be elected, even in the “Red States”) and yet loathe government.

  • David

    In reply to Jacques Distler comment no. 32.

    I ask you: who has the most to lose at the hands of a thief? The productive man. It is the productive man who is in greatest jeopardy from foreign invasion, and from “sponging” fellow citizens. He should pay more as he has the most to lose by irrational, emotional pleas for “equality”, by foreign invasion and general unfairness. But he should pay more in accordance with his productivity. The best, most unemotional and scientific measure we have of a man’s productivity is his wealth. It is this we should use as the device for accessing how productive he is and therefore much he should pay. A flat tax (where I am using the definition: http://en.wikipedia.org/wiki/Flat_tax) taxes a man in proportion to his productiveness. It does not penalize him for that productivity. You might say well say a man earns $100,000 a year and pays $10,000 in tax. And then a second man earns $1,000,000 a year and pays $100,000 in tax. How do you know that the second man needs exactly 10 times as much protection? Maybe he needs 15 times as much protection and should pay $150,000 in tax? But the man who is more productive has already benefitted society greatly by virtue of his productiveness. He has already contributed to the $100,000 earned by the first man. He has already paid a tax. Who is to say the second man should not have earned $1,500,000 instead? Maybe there is some complictated economic formula for computing how much more a productive man needs protection from his government but I am not aware of it. Besides, people don’t use this criterion as a formula for computing how much tax he is obliged to pay. They aren’t interested in how much protection the productive, able man needs. They aren’t concerned with his property rights. On the contrary they are concerned with aiding the unproductive, uncreative, undynamic, “unlucky” man. What sort of warped logic is this?

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    I ask you: who has the most to lose at the hands of a thief? The productive man. It is the productive man who is in greatest jeopardy from foreign invasion, and from “sponging” fellow citizens. He should pay more as he has the most to lose by irrational, emotional pleas for “equality”, by foreign invasion and general unfairness. But he should pay more in accordance with his productivity.

    And, by what leap of illogic, do you conclude that the amount he should pay scales linearly with his income?

    For that matter, if protecting his property rights is the only function of government, why shouldn’t he be able to ‘opt-out’, pay nothing in taxes, and hire a private militia with the savings? That would be more cost-effective for many a rich man.

  • David

    Jacques said:
    “And, by what leap of illogic, do you conclude that the amount he should pay scales linearly with his income?”

    My reply:
    I attempted to answer that in the subsequent sentences folllowing the passage on which you have quoted me.

    You said:
    “For that matter, if protecting his property rights is the only function of government, why shouldn’t he be able to ‘opt-out’, pay nothing in taxes, and hire a private militia with the savings? That would be more cost-effective for many a rich man.”

    My reply:
    I abhor anarchy as defined here: http://encyclopedia.laborlawtalk.com/Anarchy
    There must be a rule of law by which people can live and have the opportunity to be happy and attempt to fulfill their potential. Every man (and woman:)) should pay a low, flat, tax to an independent body called “the government” with a cooly unemotional, scientific, constitution-bound judiciary as it’s enforcer-in-chief. No-one can opt-out. THAT is not fair.

  • Greg A.

    David, a flat tax completely ignores the illimitably important concept of marginal utility as outlined in Ryan Scranton’s post above (especially point a). I’m not sure there’s much point in arguing much further, as libertarians typically don’t believe a market failure is possible, whereas it seems most other people do. For example, no one wants their air or water polluted, but companies want to get rid of their waste in the most “efficient” way possible, which often times affects air and water supplies. If there were no such thing as a market failure, we’re expected to believe that a company will somehow figure out that the air/water has gotten too polluted for its taste or that affected people will merely move out of harms way, letting the company continue with a clean conscience. If we believe that a market failure occured, we’re just saying that the company imposed a cost onto its neighbors (the cost being having to clean up pollution, pay medical bills due to ingestion of polluted materials, etc.) which the company doesn’t have to pay. How do we make the company pay? Regualtions, sanctions, and taxes. Taxes aren’t bad: they’re good.

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    Jacques said:
    “And, by what leap of illogic, do you conclude that the amount he should pay scales linearly with his income?”My reply:
    I attempted to answer that in the subsequent sentences folllowing the passage on which you have quoted me.

    No, you didn’t. You asserted (rather unconvincingly, I might add) that the amount should rise with rising income level. You did not justify why it should rise precisely linearly with income, rather than faster than linear (or, for that matter, slower than linear).

    A progressive tax system is one in which the tax burden rises faster than linearly with income. If you’re resolutely opposed to the very idea of progressive taxation, you’d better have an argument why the tax burden should not rise faster than linearly.

    How about slower than linear or, for that matter, flat (independent of income, as I suggested earlier)?

    So far, all you’ve done is repeat that linear is “fair” and faster-than-linear is “unfair.”

    No-one can opt-out. THAT is not fair.

    Why? If the only function of government (by your account) is to enforce property rights, and I can enforce mine without its aid, why should I be forced to paid for something I don’t need? That, by your own logic, is theft.

  • Eric

    Simply, we are taxed on income raised by our sweat, why should we not be taxed on income that appears unbidden and unearned?

  • David

    I am going to try and answer both questions in comment 40 at once.

    You are right. It does contradict my basic principles and my logic. I am advocating theft. If I truly had faith in human beings I would accept the following: Abolish all taxes. Allow the free market to conduct the affairs of men. A free market is a free market because men enter entirely volitional contracts with one another with the end of increasing their own wealth. Those who would benefit the most from such a system are the most productive. They would, no doubt, become wealthy. It is in the interest of these productive, wealthy men to ensure that contracts are not forced upon them by other men. Therefore these productive, wealthy men have a vested interest in an independent body to oversee transactions and would therefore contribute most to such a legal system of self-government and judiciary. How could a society function if every man had is own militia enforcing their contracts under threat of force? It is precisely this type of erratic, irrational individual with whom the productive man cannot conduct his affairs. Say every man had his own militia. What happens? The man with the biggest militia will win, every time. What sort of incentive is that for the rest of men to produce? It is no incentive. It is stalemate. Stagnation. Socialism. Communism. Dictatorship. Death.

    So do I think that this will work? Namely do I think that the abolition of taxes and a reliance on wealthy, productive, rational men, in my own words “to oversee transactions and therefore contribute most to such a system.”. No at this point, I don’t. And to be frank, I’m somewhat ashamed for that. I am violating my own principles. I am defaulting to the next best alternative that, at best, preserves the spirit of what I have said above. In reality, however, I have given up.

  • Aaron Bergman

    Just a few links people might find relevant:

    How to not complain about taxes: I, II, III, IV

  • Aaron Bergman

    When I typed those links in, they didn’t work in the preview, by the way. There’s a bug there somewhere. Also, that should be ‘How not to complain about taxes”

  • http://golem.ph.utexas.edu/~distler/blog/ Jacques Distler

    You are right. It does contradict my basic principles and my logic. I am advocating theft. If I truly had faith in human beings I would accept the following: … … And to be frank, I’m somewhat ashamed for that. I am violating my own principles. I am defaulting to the next best alternative that, at best, preserves the spirit of what I have said above. In reality, however, I have given up.

    Some would draw the obvious lesson that any political philosphy, which leads inexorably to the logical conclusion that even the most rudimentary forms of government are illegitimate, is a worthless political philosophy. And they would look about for some firmer foundation on which to base their political beliefs.

    My experience with hardcore Randians is that they are often not so-easily cured. The usual prescribed treatment — healthy doses of Locke, Rousseau, Mill, …, ending up, usually, with Rawls — is often ineffective.

    Good luck!

  • David

    I remain somewhat disappointed in myself and the laziness of my mind. But
    I take some solace in the fact that you have recognized me, in what I have said,
    for what I am; an Objectivist: http://www.atlasshrugged.tv/speech.htm
    I hope that I can refine my arguments in the future.

    To Greg A in comment 39, I wish I had the time to respond to you, but I’ve spent WAY too much time thinking about philosophy this past 3 days :) Maybe I should quit this grad school physics lark and jump ship to philosophy??! Anybody willing to write a letter of recommendation…???….I didn’t think so!

  • http://www.woodka.com Donna

    All taxation is illegitimate, and we ought to stop taxing everyone immediately. Then the wealthy will stop buying our politicians, the military won’t have enough money to start illegal wars, and the country can fall apart completely.

    Good grief, people.

    David, you’re a moron.

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