Wednesday, July 22, 2009

Why we should raise taxes on the wealthy

Since the House proposed raising taxes (1-3%) on the wealthiest 1.5% or so of incomes, there has been the usual rhetoric about "punishing the successful" and about how "unfair" it is to take away "their money that they worked so hard for."

In response to such knee-jerk rhetoric I think a brief justificatin of the progressive income tax should be given.

We pay taxes to enjoy the benefits and services of society. We are protected by police and the military, enjoy the services of the fire department, post office, and public roads. We attend public schools and congregate in public parks. We walk our dogs on public sidewalks. All of this and much more is payed for by our tax dollars.

Some argue - rather absurdly - that all this could be paid for by sales tax alone. This claim is false. Sales tax would have to be raised too high for many to afford, would unfairly discriminate against those who had less money by greatly reducing their spending power, and simply cause many to buy less. Very quickly we would have more poverty and a weaker economy. Income tax is essential to create, maintain, and improve public services and programs; which are, let us not forget, essential to society.

Very well, some might argue,then why not just have a flat tax? All pay the same percentage of their income. Again the answer is very simple, a flat tax would have to be low enough to make sure that the very poor do not fall below levels at which they could not afford to live. It follows that a flat tax would be very low indeed, and that once again we could not afford the upkeep of our public roads, defense forces, police, etc. ..

This is really very simple logic; not rocket science. In order for society to function we need public services and only a progressive income tax can provide the government with the money to properly create and maintain such services. Let us put ideology aside here and just look at these facts.

The most common objection to the progressive income tax is that it is unfair to take a rich man's "hard-earned money" and give it to somebody else. There are numerous problems with this objection.

First, that someone makes 300,000 dollars a year and someone else makes 45,000 seldom has anything to do with how hard they work. The hardest workers in our country are blue-collar working people, who sometimes work 60-70 hours a week and will never see a pay check over 40,000. So the hard work argument is absurdly false. Indeed, wages don't even depend very much on education. I will have my Ph. D. in May and will never make more than 60 or 70 thousand. There are people with Bachelors' degrees who make twice or three times that much. And this is not always - not even all that often - because of the importance of my and their respective occupations' importance for society

Second, the person making 300,000 a year did not create that money all by themselves. People who defend this "don't raise taxes on the wealthy" line of argument often talk as if such wealthy people accomplished this entirely through their own power. This is absurd. Take a person making six figures. Someone built the roads he drives on, the car he drives in, and the clothes he is wearing. Someone built his home, set up the plumbing and wiring in it, his cable, and so on. Someone slaughtered his food, processed it, packaged it, and sold it to him in the grocery store. Even more telling, he had teachers who gave him the tools for success.

None of us are self-made men, none of us operate in a void. We are not atomistic souls pulling ourselves up by our own bootstraps. We are all part of a network of relationships, we are interdependent, interconnected, and interlinked with those who are in our community. Unless you live in the woods, built your own house from trees you chopped down, hunt and cook all your own food, and wear only the fur from your kills - you are radically dependent on other people. Without the hard work of millions of others, we could not survive and certainly could not flourish or earn high salaries. We owe a great deal to a large number of hard working people - many of whom live on meagre incomes and are often in need of public services and government aid.

If you earn six figures most of these people earn far less than you. The teachers who taught you the basic skills needed to function in society made a scant salary; many who provide you your food and clothing made far less than that. Is it really too much to ask that Uncle Sam take a few percent more of your income and then redistribute it so these people who teach our kids, build our roads, feed and clothe us might have health care? Or food stamps? Can you honestly look these hard working people in the face and say that the government cannot provide needed social service because it is wrong to raise taxes on the wealthy by 1 or 2 percent?!

Finally, the whole logic of this argument misses the point. It is NOT the case the a progressive income tax takes money from party x to give it to party y. The government takes income from party x in order to provide necessary social services available to everybody - including party x should he fall upon harder times. So we are not taxed to support "other people." Rather, we are taxed according to our means so that all people - and that includes us and our loved ones should we need it - may have access to necessary public services and government aid.

There remains, of course, those who think raising taxes on the wealthy will kill small business and hurt job growth. This is complete falsehood as well. Check out Robert Reich's blog as well as this thoughtful piece from New Republic for the truth on that front.

It is time we dropped the "punishing the successful" line and actually looked at the issue rationally and objectively.

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