A Philosopher's Blog

Taxing the 1% I: Fairness

Posted in Business, Philosophy, Politics by Michael LaBossiere on November 4, 2015

The top 1% in the United States currently pay about 1/3 of their income in taxes. As might be expected, people on the left have proposed increasing this tax rate. Laying aside ideological hyperbole, the serious proposals aim at setting the tax rate for the upper level at 40% and there has been some serious discussion of setting it as high as 45%.

While the current Democratic candidates for the 2016 Presidential race are willing to say they will raise taxes on the rich, the Republicans are consistently opposed to tax increases—most especially on the wealthy. Both parties are engaged in sensible politics in that they are saying what they think their base wants to hear. While the political value of each stance on taxing the rich is a matter worth considering, I will instead focus on an argument against increasing the taxes on the rich.

One reasonable approach to arguing against (or for) any tax increase is an appeal to fairness. This sort of reasoning rests on the assumption that fairness matter morally. If this assumption holds, then if something can be shown to be unfair, then that is moral strike against it. In contrast, showing that something is fair is to win a moral point in its favor.

The wealthy and their devoted defenders could argue that a tax increase to 40% (or higher) would be unfair. For example,  Dr. Ben Carson has proposed what has become known as his “10% Flat Tax Plan”, although he did consider a rate of 10-15% (and possibly higher at the start of his plan). He considers this the fairest approach to taxation, in that he claims there is nothing fairer. While not everyone finds such a plan fair (or even workable), it is clear that it can be argued that any proposed tax increase for the rich would be unfair.

Since arguments are free, even the poor can avail themselves of the appeal to fairness. Back before Occupy Wall Street faded from the attention of the media and most Americans, there were many appeals to fairness aimed at the perceived unfairness of the economic system of the United States. This movement did have some lasting impact in that it introduced the 1% and the 99% into American political discourse.

Interestingly enough, this talk of the 99% and the “#iamthe99” inspired Erik Erickson to try to create a counter meme of “#iamthe53.” This is in reference to his claim that 53% of Americans pay federal income tax. He contended that people should stop complaining, stop blaming Wall Street and pay their taxes. In response to the criticisms of the Occupiers, Erickson made an appeal to the old saying that life is not fair:

 

Well, these people apparently forgot that life is not fair and are demanding the government intervene to legislate that life suddenly become fair. They are claiming to be the “99%” against the evil 1% of rich people who work on Wall Street. They are posting pictures to a website holding up their sob stories. Some are terribly tragic, but most? Boo-freakin’-hoo. Life is not, never has been, and never will be fair.

 

This can be seen as something of an evil twin to the appeal to fairness. Under the rhetoric, this sort of argument rests (obviously) on the assumption that life is not fair. When a complaint about unfairness is raised, it is countered by the assertion that this unfairness is acceptable (or impossible to change) on the grounds that life is not fair. This could be referred to as the “principle of unfairness.” This is the principle that unfairness is an unalterable part of life and hence nothing can (or should) be done about it.

While Erickson did not originate the appeal to unfairness, he seems to have helped promote it and it is routinely used as a rebuttal when people are critical of economic inequality. As such, it is typically used by those on the right against those on the left. However, principles and arguments are like sword: they can be wielded by any hand against any target—even their creators.

If the rich and the devoted defenders complain that an increase in taxes is unfair, then the defenders of the tax increase have every right to wield the appeal to unfairness. One could easily imagine a leftist version of Erickson writing in response to such boohooing: “well, these people apparently forgot that life is not fair and are demanding the government not raise their taxes so that life suddenly become fair.”

If the appeal to unfairness is a viable defense of the economic inequality that seems so beloved by its ardent defenders, then it would also seem to be a viable defense for any unfairness. This would thus presumably include the forced redistribution of wealth. That would certainly be unfair, but if unfairness is simply the way life is, then there would be no moral grounds of criticizing it.

If the appeal to unfairness does not work in the case of justifying raising the taxes on the rich (or the unfair forced redistribution of wealth), then there are two main reasons this would be the case. The first possibility is that relevant difference could be claimed between the 1% and the 99% that justifies the unfair treatment of the 99% while requiring that the 1% be treated fairly in this matter. No doubt some able defender of the 1% can present such an argument. The second possibility is that fairness is actually morally relevant for everyone. As such, if the 1% can appeal to fairness, then the 99% can also avail themselves of the same appeal. Put another way, if the rich want to talk about the fairness of their taxes, they are obligated to consider the fairness of the economic inequality that exists. Likewise, fairness also requires that the tax rate imposed on the rich not be unfair.

 

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  1. ajmacdonaldjr said, on November 4, 2015 at 10:03 am

    The 16th amendment should be repealed.

    • WTP said, on November 4, 2015 at 11:17 am

      Yes, along with the 17th and 18th (of course, that one is already gone) and possibly 19th as well. In fact I could see doing away with the 23rd and 26th at times. Perhaps war should be put to a popular vote that would drop the age to 18, but otherwise it stays at 21. Of course such is a pipe dream because the meaning of “war” has already been blurred into meaninglessness.

      Except for amendments 20, 24, 25, and 27 the 20th century was a disaster for the Constitution. Not only in the other amendments, but in the “interpretations” as well. For the first 100 years we only needed to amend the constitution 5 times and 3 of those were directly related to the Civil War, the greatest constitutional crisis in this country’s history. In the 20th century we added 12 more. Of course that last one was proposed as part of the original Constitution, so we could quibble and say 6 vs. 11. But still.

  2. ronster12012 said, on November 4, 2015 at 1:15 pm

    Michael

    If we cancel out the concept of fairness from both sides of the equation we are left with greed on one side and envy on the other. The argument then comes down, in honest terms then, to “we want what you have and will do whatever we can to take it” and ” and we want what we have and will do anything to keep it”.

    Life isn’t fair. as fairness is merely a human construct. What is to be done about ugly people? People who die young? People who aren’t happy for whatever reason? Short people? Fat people? The list could go on and on……….where do we stop?

    • Michael LaBossiere said, on November 5, 2015 at 11:36 am

      Only those who believe in a benevolent teleological universe would believe that life is fair. The problem of evil, in addition to being a telling argument against the perfect God, also nicely shows that the natural world is unfair–that is, there is no mechanism to ensure that each gets the fate deserved.

      But, as you note, we also have an artificial society and this is within our control. If it is unfair, that is on us.

      Arguing for some fairness in one area does not commit one to perfect fairness (which is impossible). You seem to be suggesting that we should do nothing about any unfairness because we cannot address all unfairness, which would be a neat version of the perfectionist fallacy.

      • ronster12012 said, on November 5, 2015 at 12:12 pm

        Michael

        A perfect version of the perfectionist fallacy I hope….don’t want to be half arsed about it.

        As far as fallacies go, is there a ‘perfectability fallacy’ whereby excessive efforts to make everything fair)beyond a certain point) by attempting to continually perfect society actually makes things worse?

        • WTP said, on November 5, 2015 at 12:49 pm

          The perfect is the enemy of the good.

          https://en.wikipedia.org/wiki/Perfect_is_the_enemy_of_good

          Commonly heard in software development and other applications of theory to reality. As philosophers are never on the hook to actually produce anything of tangible value, they lack any practical concern as there is no feedback mechanism of risk vs. reward/punishment.

          “Killing the goose that lays the golden egg” is a somewhat similar fault, though these goose-slayers lack the self-awareness to understand the damage they do. Of course one can analyze that cliche to death in regard to what it means for true believers in the Gold Standard. Silly goose.

          • ronster12012 said, on November 6, 2015 at 9:14 am

            WTP

            “The perfect is the enemy of the good”

            I love that quote as it fits so many situations. OK, there does need to be a few perfectionists pushing science and technology along but to have them infesting every area of life with idiotic ideologies is another matter entirely.

            • WTP said, on November 9, 2015 at 12:35 pm

              Thinking about this in discussion with a friend over the weekend, his thoughts were that unrealistic requirements for a “perfect” world, nearly obsessing over it, that such may be a manifestation of a fear of showing weakness. To admit that one is wrong about something is to acknowledge a flaw. Thus one’s ideology or craving for such must be flawless. Consequently, if one projects an image of knowing The True Path and a mastery of such, the ego fools itself into believing that it is, if not perfect, at least as pure as humanly possible. It is a form of Puritanism. Which is, as H. L. Mencken pointed out, the fear that someone, somewhere may be happy.

        • Michael LaBossiere said, on November 6, 2015 at 1:39 pm

          Exactly. Go big, or hit the showers.

  3. TJB said, on November 4, 2015 at 5:07 pm

    The fundamental tradeoff in capitalism is that by allowing inequality we greatly increase the aggregate wealth and so everybody is better off.

    So every time I hear a rant about income inequality, I just wonder why on earth that person wants to make everybody poorer. Why would that be, Mike?

    • Michael LaBossiere said, on November 5, 2015 at 11:39 am

      I have no desire to make everyone poorer. Far from it, I am in favor of a system that gives everybody a fair shot and getting as far as their ability and will can take them. So, I am against monopolies, crony capitalism, laws that stifle actual competition, etc. I also favor investments in education and infrastructure.

      Grotesque income inequality that arises from a rigged system does not make everyone better off. Look at the United States over the years-what we have now is not the worst ever, but is very bad for most of us.

      • ronster12012 said, on November 5, 2015 at 12:05 pm

        Michael

        It seems to me that most systems are ‘rigged’ to a greater or lesser extent, for no other reason than that is the business insiders and professionals. So ‘rigged’ whether purposely or simply by all the added complications that everything has these days works against the majority.

        So, that said, how much rigging or ‘skewing’ is embedded into the system, from all the laws and regulations( and no, I am not a libertarian) and is that a more important issue than raising tax rates…..that will be mostly nullified by loopholes and sharp accountants.

        I bring this point up because even taxing the 1% at a rate of 100% doesn’t add up to all that much compared to the great bulk of the taxpayers. So is the proposal anything more than an appeal to envy?

        Here in Oz we have been stuck with a 10% GST( a Goods and Services Tax, like the British VAT Tax) in a effort to broaden the tax base. It is also supposed to be returned to the states and so is a state tax, though that doesn’t stop states from their own efforts at screwing us.

        • Michael LaBossiere said, on November 6, 2015 at 1:38 pm

          Well, crunching the numbers shows that bumping the tax rate to 40% on the topmost top would yield enough money to provide college education for a vast number of people. So, it would have a meaningful impact. The college educated folk would earn more, so pay more taxes, invest more and buy more stuff to make the 1% even more money. As such, this can be seen as social re-investment.

          • WTP said, on November 8, 2015 at 8:18 am

            crunching the numbers shows that bumping the tax rate to 40% on the topmost top would yield enough money to provide college education for a vast number of people.

            AGAIN, demonstrating that you don’t know a damn thing about economics, or human behavior, or dynamic systems, or reality for that matter.

      • TJB said, on November 5, 2015 at 2:40 pm

        Mike, so if I read you right, your fundamental objection is not income inequality, but the lack “of a system that gives everybody a fair shot and getting as far as their ability and will can take them.” Is this right?

        So just taxing people without fixing the system is not the answer, am I correct?

        • Michael LaBossiere said, on November 6, 2015 at 1:41 pm

          Simply raising taxes won’t fix the system. It might be that a tax increase could be used to fund what would help fix the system, but as I am sure has been said, we cannot just tax our way out of a failing system.

    • ronster12012 said, on November 5, 2015 at 12:14 pm

      TJ

      Someone or other said “A free society can never be equal and an equal society can never be free”.

      • TJB said, on November 6, 2015 at 12:03 am

        True, but, sadly, many people fear freedom.

        • WTP said, on November 6, 2015 at 12:17 am

          They don’t fear freedom. They fear responsibility. You can’t have one without the other.

        • TJV said, on November 6, 2015 at 12:22 am

          I think many people fear making decisions.

          • WTP said, on November 6, 2015 at 9:09 am

            Not to belabor the point, but I think it’s an important philosophical distinction. If there is fear making decisions, it is due to the attached responsibility of making a bad one. For example, people want the freedom to smoke but they want to hold the tobacco companies responsible for the consequences. This will be interesting 20 years from now when big corporations are running the marajuana trade. When large numbers of people realize the damage that excessive pot use causes, the lawyers will be right on top of that and ready to sue.

            Though I also believe the fear of making decisions may be exacerbated by the SJW culture we have been gradually sinking into over the last couple decades. Better to do nothing than do something that will offend the vile.

            • ronster12012 said, on November 6, 2015 at 9:36 am

              WTP

              SJW culture is quite punitive. I have noticed over the past few years a massive increase in rule following decision avoidance…but to be fair, when the price of a ‘bad'(whether actually bad or just scapegoating) decision is high, it isn’t surprising to see an avoidance of them.

              I was chatting to a doctor a couple of years back at a meeting. There had just been a doco on TV taking aim at the saturated fat/cholesterol/heart disease model. I mentioned this to him and he said yes he agrees with it being a hoax…..but he cannot tell his patients that as it could come back at him legally . He does tell some that he knows will understand the situation but for most he can’t. Isn’t there something seriously wrong with with picture?

        • ronster12012 said, on November 6, 2015 at 9:04 am

          I don’t think that there really is such a thing as freedom in itself, just varying degrees More is generally better up to a certain point and no further,,,,,the arguments start about exactly where that point is. Put a few humans together and inevitably there will be rules, without any pushback there will be more and more and more of them.

          I agree that many people fear freedom and responsibility…but that’s the way our political elites like it, nice and passive. That way they don’t have to put up with their constituents harassing them on a continuing basis.

          It seems to me that part of the issue about freedom is we’ve had it too good for too long…..fat,(metaphorically or literally),lazy,apathetic,greedy and stupid….we (generalising here) want to make govcorp give us stuff…..and that goes from the bottom all the way up to the top.

          Never mind….the next economic collapse or asteroid strike or solar mass election or nuclear war will sort out the freedom question…..till the cycle starts again.

  4. nailheadtom said, on November 4, 2015 at 10:22 pm

    Why should any American pay taxes at all? First of all, federal spending doesn’t have anything to do with federal income. When the feds want to buy some fighter jets or concrete they check and see if there’s enough money in the till for the purchase, they just write a check. The check is based upon maybe T-bills or for sure enpixelated out of thin air, it don’t come from income tax withholding. So the income tax is redistribution or punishment for success, not a means of raising money.

    Second, even though the income tax system is described by the feds as “voluntary”, it ain’t. If you don’t pay they’ll be real mean to you. Since that’s the case, why don’t the feds extract taxes from the Egyptians and the Bolivians and Japanese and the Germans and all the rest of the teeming masses? Aren’t they being protected by Mr. Democracy? Shouldn’t they pay their share of the great experiment? The feds, if they are indeed so powerful that they can make slaves out of their own citizens, should be able to easily force wimps like the Belgians and Turks to cough up some of their wealth every year before April 15. An added bonus would be that taxing would-be belligerents like the Russkies would force them to prioritize their spending, guns or butter, but not both, making the world safer for the US allies and taxpayers. Another plus would be the slight downsizing of the US military, since the rest of the world would be too broke to resist our boys. In the global village, nobody gets to evade paying for the US military. What are they waiting for?

    • Michael LaBossiere said, on November 5, 2015 at 11:44 am

      Damn straight, Tom. We need to get those vassal states kicking in for the cost of maintaining Pax Americana.

      But, you are right: we pay a lot of blood and treasure being the world police and it can be argued that the other states should chip in more. On the plus side, we are thus the top world power and have taught the other states a degree of learned helplessness. They expect us to do it for them.

      • ronster12012 said, on November 5, 2015 at 12:17 pm

        The Romans had it sorted….pay us tribute or we will kill every one of you….If you do pay us tribute you get all the benefits of Rome including having to learn latin..


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