Hi Andrew,
You write that you want government to raise money "as equally as possible", and that you disagree with the idea that "tax policy should really be about redistributing wealth, and engineering substantive economic outcomes." This is all well and good. However, it is not clear to me that nominal equality in the tax code--i.e., everyone being taxed by the same numerical percentage--necessarily translates to the sort of "equality" that you are interested in. Certainly, if minimizing the impact of taxation on society is your goal, you will favor a scheme that imposes as few burdens as possible on society, and imposes them as equally as possible across all members, thereby making the government's presence in our lives as neutral as possible vis-a-vis our situation in life--our level of wealth, our ambitions, etc.. But to speak of a burden is to speak of a subjective state of the individual, a felt cost. Because a flat tax ignores the fact of diminishing returns on income--the fact that my 100,000th dollar earned means less to me, is worth less to me than my 1,000th dollar earned--it thereby imposes a very uneven burden on society, causing there to be a proportionately greater felt cost to the less wealthy.
So the question is: what is the more meaningful interpretation of "equal taxation"? Does it mean taxation that, while nominally equal for everyone, imposes a far greater burden (as subjectively evaluated by the individual) on the less wealthy? Or does it mean taxation that, while not nominally equal for everyone, makes some attempt to equalize the felt cost of taxation across all members of society?
Friday, June 27, 2008
Re: Flat tax
An email I sent to the Sullivan blog with regards to the flat tax issue. I don't know if anyone will ever read it, but whatevs.
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3 comments:
Despite the million conversations we've had involving utility vs. dollars, I never considered this as an argument against the flat tax. Cool.
Though I'm curious: do you *personally* believe that the government shouldn't be redistributing wealth? Or is this just targeted to those more low-government than you?
This is targeted, for the sake of argument, towards low-government types.
However, I think I have over the last few years been gradually coming to a more anti-redistribution of wealth position, where "redistribution of wealth" means something more or less like taking money from the rich and giving it directly to the less rich, as opposed to taking money from everybody "equally" (whatever that may mean) to invest into the general infrastructure and various practical societal institutions. So, I'm less sympathetic to, say, welfare (as well as subsidies) and Social Security, and more supportive of investment in infrastructure, public education, and public health.
Moreover, I'd also say I'm a firm supporter of "tax simplification", where I take that to mean that the tax code should not be used as an instrument to mold social behavior, and should be transparent and easy to understand. E.g., I don't think there should be deductions for anything (unlike Sullivan, who for some reason thinks there should be an exception for giving to charities). While I understand that this would result in a less fair, or at least less "compassionate" (to use a term) tax code (since simplicity is often sacrificed to ensure greater fairness/compassion), I think that the benefits to good governance would outweigh the harms (and, of course, the tax code could still be as progressive as you like).
This is just a critique on form: your argument for a progressive tax vs a flat tax in order to tax in an equitable fashion was much more readable and understandable in your original entry. This email was tough to get through.
Also, doesn't everyone remember me saying: David will eventually become a fatty Conservative. Watch.
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