Taxation : fair or unfair?

[iain]

I'm in a philosophical mood today :(

People like Shane see taxation as unfair - government theft of value the individual has created themselves and therefore owns. Those of us with more left wing leanings see taxation (within moderation and with democratic support) as legitimate and a good thing.

I'm trying to figure out where the difference stems from and I have a theory.

It seems to be fair that if someone adds value through their work or whatever else, they should receive compensation commensurate with that value. The different systems - free market, mixed economy, command economy - are different approaches to achieving this and, at the same time, maximising the total value created (and some may achieve this better than others).

The Government actually creates a lot of that value, for example by creating and maintaining the national infrastructure, protecting the country from foreign invasion, running the legal system etc. If the Government is performing this role, and has democratic legitimacy to do so, it is fair and right that they should get a proportion of the value created by society in line with their contribution.

When we earn money through our labour or whatever else, we are earning more money than we fairly deserve. The Government should, ideally, earn a proportion of that.

The problem with taxation is that we have the illusion that the money we earn is really ours in the first place and is being taken from us. It isn't - some of this money is money that we have not earned; it just happens that the mechanisms of taxation have proved the most efficient way the Government has to collect money that it is due.

(Anyone wishing to explain that I'm talking complete nonsense, please feel free, as long as you explain why so I come away having learned something :) )

[Tmy]

I think of it as paying club dues. With the "club" being the country.

Imagine being part of a country club. You play golf, swim inthe pool, eat at the hall ect... Now when they come to you for dues could you imgaine saying "what? This is unfair. You're stealing from me! Im sure the club could survive just as well on donations!"

[Drooper]

Originally posted by iain
I'm in a philosophical mood today :(

People like Shane see taxation as unfair - government theft of value the individual has created themselves and therefore owns. Those of us with more left wing leanings see taxation (within moderation and with democratic support) as legitimate and a good thing.

I'm trying to figure out where the difference stems from and I have a theory.

It seems to be fair that if someone adds value through their work or whatever else, they should receive compensation commensurate with that value. The different systems - free market, mixed economy, command economy - are different approaches to achieving this and, at the same time, maximising the total value created (and some may achieve this better than others).

The Government actually creates a lot of that value, for example by creating and maintaining the national infrastructure, protecting the country from foreign invasion, running the legal system etc. If the Government is performing this role, and has democratic legitimacy to do so, it is fair and right that they should get a proportion of the value created by society in line with their contribution.

When we earn money through our labour or whatever else, we are earning more money than we fairly deserve. The Government should, ideally, earn a proportion of that.

The problem with taxation is that we have the illusion that the money we earn is really ours in the first place and is being taken from us. It isn't - some of this money is money that we have not earned; it just happens that the mechanisms of taxation have proved the most efficient way the Government has to collect money that it is due.

(Anyone wishing to explain that I'm talking complete nonsense, please feel free, as long as you explain why so I come away having learned something :) )


What you have there is one way of looking at what is going on. However that is a particularly central planning way of looking at it. You are effectively giving the Government carte blanche to undertake any activity it wants, regardless of whether or not there is a market failure that requires such public intervention. And from this the Government has a right to tax individuals income regardless of any actual need to do so. For example, free air travel would do what you describe. Does this mean a Government has the right to start its own airline, offer free seats and then levy a tax to pay for it?


Here is a better and more orthadox way of looking at public goods.

We know that under some, not particularly stringent assumptions, a market will provide goods and services efficiently. This means firms will minimise cost,they will use the most efficient combinations of labour/capital etc., they will produce what the economy wants in the proportions that they want it. For that reason, it is always best for the Government to stay out if the market can provide goods and services.

In some cases, a market can fail. One reason might be positive externalities, which is a classic infrastructure quality (also education). This means that the benefits extend beyond the immediate user. In a free market this would lead to under provision. So there is a valid argument for public provision and the argument for taxation to pay for the good is well justified.

This approach gives a framework for deciding where public provision is really justfied, rather than leaving that decision to whim, political disposition or socialist dogma;).



..... TBC... I have a economics lecture to give :D .

[Michael Redman]

Fair as a general concept, although particular taxation schemes might not be. (Taxing people for being tall, for example, would not be fair.)

Shane and company seem to be OK with sales tax, duties, etc., but only seem to have a problem with income tax. As I fail to see the use of accumulating money if not to eventually spend it, to me these methods of taxation must all either be fair, or unfair. The money, after all, must come from the production of individuals, whether directly or indirectly. There isn't any other source.

[iain]

Originally posted by Drooper
What you have there is one way of looking at what is going on. However that is a particularly central planning way of looking at it. You are effectively giving the Government carte blanche to undertake any activity it wants, regardless of whether or not there is a market failure that requires such public intervention. And from this the Government has a right to tax individuals income regardless of any actual need to do so. For example, free air travel would do what you describe. Does this mean a Government has the right to start its own airline, offer free seats and then levy a tax to pay for it?Thanks Drooper. That isn't how I would characterise my thoughts, but I may be mistaken there of course.

Under my original claim, surely a government would only have the right to reclaim tax to the extent that it added value. A government could not legitimately just run a service which did not add value and then claim tax to pay for it. Also, there is the democratic legitimacy element. Subsidised public transport is something which governments have been doing for many years so is not necessarily wrong; but the electorate need to have the ability to decide how much is enough.

I'm also not sure about how linking tax to added value fits in with things like caring for the elderly, healthcare and so on. There is an argument that these add value, but perhaps not a wholly convincing one. This may be a flaw in my idea; since I would certainly think those were legitimate things for a government to be doing.

[Oleron]

Iain, I find myself agreeing with most of what you are saying. Surely taxation is a necessary evil and the method of collection is irrelevant?
I would be interested to know what alternatives Shane has for the funding of a country's infrastructure.

I do support the idea of a low-tax, 'privatise as much as possible' government, however. I don't mind paying government for certain services (police, roads, care for those who can't help themselves) but I object to 'big' government nannying the state.

Please excuse any shortcomings in my statements, I don't normally post in politics and don't have much knowledge of economics/politics. I was just intrigued by the thread.

[The Don]

Where do we stop with government intervention infrastructure-wise

- Are museums part of the educational infrastructure and if so how many and of what type
- Is the Theatre and Ballet part of the cultural infrastructure and if so how many and of what type
- Are libraries part of the educational infrastructure or are they just a means for government to undermine book/CD/DVD sellers ?
- What about government funding of sports to boost national prestige ?
- What about indirect government funding of sports (giving prominent sportspeople nominal goverment jobs) ?
- How far does the government's duty of care extend ?
- Provision, free of charge of long term elderly care ?
- How about the same but in Claridges ar £5k/week ?

Unfortunately there isn't a one size fits all answer to this. At the moment I couldn't care less about care for the elderly. As soon as my parents start ploughing through my inheritance to fund theirs - I'll suudenly become an activitst

[Michael Redman]

As this is a democracy and our government derives its just powers from the consent of the governed, I think that the government has the "right" to tax and spend however we want it to, within the Constitutional restraints we give it. (Although we can change these if we wish, as well.)

If we decide we want to build a statue of Elvis out of cheese and put it in orbit around Saturn, we can empower the government to do it, and to collect taxes to pay for it, no matter the benefit or the sanity of such a project. We can't weasel ourselves out of responsibility for poor government choices by pretending that it's something the government does to us. It is us. The government has the right to collect income tax until we decide to tell it to stop.

Oleron - Shanek and the libertarians generally feel that the government should exist only on the kinds of indirect taxes (duties, excise, etc.) that the government collected in the early years of our nation. They seem to miss the fact that all taxes, no matter how collected, must come out of the economy, and, in the end, our pockets. On the other hand, they ignore the fact that when the governmetn spends money, it puts it back into the ecomony.

In their defense, they argue persuasively that it would be much harder for government to grow if it couldn't tax income. While this is true, it doesn't seem likely that the governemnt could do much of what the people are going to demand that it doesn't stop doing (like building tanks and ships) if it collected excise and duties only, and, in fact, such forms of taxation are often illegal restraints on free trade, which early America was not worried about. You'll have to ask a libertarian if they want to end our participation in the world market.

[toddjh]

Originally posted by Oleron
I would be interested to know what alternatives Shane has for the funding of a country's infrastructure.

Usually their suggested alternative is, as you say, "privatize as much as possible." For things that aren't possible to privatize, libertarians seem to prefer a usage fee (tolls on roads, etc.). That way, people who don't use the service aren't forced to pay for it.

My take is that various sales taxes are largely equivalent to that. The gasoline tax, for example, is pretty much the same as a usage fee for roads, except it avoids the infrastructure and bureaucracy that would be required to manage it. So not all taxes are bad. I don't even think income taxes are inherently bad, if they're used to support a reasonably-sized government.

What I think are way over the line are federal taxes. There's just no need for a federal government that big. States can take care of themselves just fine, and social security has essentially become a second income tax (in the sense that 95% of people are going to get less back than they put in, accounting for the time value of the money).

Jeremy

[Oleron]

The Don, I suppose it is a matter of opinion where you draw the line. How about saying that any service/infrastructure that is not essential, directly or indirectly, to the vast majority of the population is dropped from government spending? I know it wouldn't cover all the bases but perhaps it would make a good 'rule of thumb'. Anything else is privately funded by the individual.

Michael, I'm starting to get a clearer picture of the libertarian viewpoint. My question to them would be - Could the government raise the required revenue from indirect taxation only? I would have thought that this would just lead to massive increases in this form of taxation to fill the void left by stopping income tax. If this question could be answered, I would probably join them!

Of course I'm assuming here that government actually needs all the money it currently collects.
Now I remember why I don't think about economics too much!

[Tmy]

Originally posted by toddjh

States can take care of themselves just fine,
Jeremy

Are you kidding? The states rely so heavily on Fed funds. There like druggies waiting outsiode a methadone clinic waiting for that grant money fix.

[pgwenthold]

Originally posted by Tmy


Are you kidding? The states rely so heavily on Fed funds. There like druggies waiting outsiode a methadone clinic waiting for that grant money fix.

But they have to because the fed government takes so much money from the citizens that the states can't.

OTOH, does it really make any sense for the fed government to tax the citizens and give the money back to the states? Why can't they just let the states get the money themselves?

I suspect the response is that the feds get to decide who gets the money, as opposed to letting the state citizens dictate that (poor states can get more money than they would if it were just state funded)

[toddjh]

Originally posted by pgwenthold
I suspect the response is that the feds get to decide who gets the money, as opposed to letting the state citizens dictate that (poor states can get more money than they would if it were just state funded)

Agreed. On the other hand, if they weren't subsidized by the feds, maybe the poor states would have to address the actual issues keeping them poor. I think a lot of the educational issues in the deep south are being sustained by the current system.

Also, the federal government just loves to hand out the money. That way, they can threaten to withhold it if some uppity state wants to, say, up the speed limit.

Jeremy

[Drooper]

Originally posted by iain
Thanks Drooper. That isn't how I would characterise my thoughts, but I may be mistaken there of course.

Under my original claim, surely a government would only have the right to reclaim tax to the extent that it added value. A government could not legitimately just run a service which did not add value and then claim tax to pay for it. Also, there is the democratic legitimacy element. Subsidised public transport is something which governments have been doing for many years so is not necessarily wrong; but the electorate need to have the ability to decide how much is enough.

I'm also not sure about how linking tax to added value fits in with things like caring for the elderly, healthcare and so on. There is an argument that these add value, but perhaps not a wholly convincing one. This may be a flaw in my idea; since I would certainly think those were legitimate things for a government to be doing.

I am back now (monetary policy:) ).

Now where was I?

That right. If we can identify a market failure, public provision may (not will) be a sensible solution. The Government has to fund this provision, so it levies a tax, or charges or both.

It will most likely have to resort to taxation if (not exhaustive):
- the good is non-excludable. This means you can't stop people consuming it (e.g. national defence).
- the good is universally consumed (e.g. education, roads)
- the good has large positive externalities.

The good will be more likely to be funded by charges if:
- the good is excludable.
- the good is consumed by only some of the population (third level education?).
- there are limited externalities.


Note that the Government isn't charging anything (either via direct charging or taxation) related to the value added, but only covering the cost of provision.


Further issues you need to get to grips with in respect of public provision includes:

- issues of efficieny (public provision can be far less efficient in terms of cost, as well as level of output and method of output)-
- equity issues regarding the allocation of cost. One of the reasons for much grumbling over tax is the question of whether it is fair one should pay for something other people derived most direct benefit from (e.g. third level education). Also there is the question of how progressive the tax system should be - it is alright to tax those with higher incomes more, but how much more and at what incomes? There is surely a limit

[Tmy]

No state is an island (ok cept Hawaii), they constantly bleed off each other.

What would New Hampshire be withour Mass. for example. the Fed systems sort of spreads the wealth to where its needed. Do you think itd be better to have 50 big beurocracys or One big one with 50 small ones.

When it comes to these tax threads people dont seem to have a problem with taxes per se'. THey have issues on how taxes are being spent (misused). THen theres the others who want to change the tax system based on selfish reasons. They want a system that will cost them less, and usually costs someone else more.

[toddjh]

Originally posted by Tmy
Do you think itd be better to have 50 big beurocracys or One big one with 50 small ones.

Why can't we have one small one and 50 small ones?

Jeremy

[pgwenthold]

Originally posted by toddjh


Why can't we have one small one and 50 small ones?

Jeremy

Moreover, in what universe is the state government a small beaurocracy? Compared to the feds, maybe, but on an absolute basis?

[Tmy]

What if we ran the country like a business.

Fisrt thing. consoladate about a dozen states!! Its like there are too many branch offices.

[iain]

Damn if this isn't turning into another thread about how much tax Americans pay. Can some libertarians post explaining why taxation itself (at least income tax) is wrong and criminal.

[Michael Redman]

Originally posted by Oleron
Michael, I'm starting to get a clearer picture of the libertarian viewpoint. My question to them would be - Could the government raise the required revenue from indirect taxation only? I would have thought that this would just lead to massive increases in this form of taxation to fill the void left by stopping income tax. If this question could be answered, I would probably join them! They believe that almost all current government spending should be eliminated.

Iain - libertarians believe income taxation is wrong because it is involuntary, whereas VAT, sales tax, duties, etc. are voluntary, i.e. you only pay if you use. I don't think makes much sense when you examine it closely, but I think that's a fair summary.

(The argument that income taxation is criminal or theft is simply factually wrong. Income taxation is authorized by the Constitution and enabling law.)

The libertarian party website might be a better place to get answers on their positions: http://www.lp.org/

[Tmy]

If sales tax is voluntary then so is income tax. After all you dont HAVE to earn income. And if you dont like being in a high tax bracket then you can easily make less money and drop down to a lower bracket.

Now lets go to the real world. You have to work and you have to buy stuff. So income tax is just like the rest. Dont wanna pay tax, then go live in a tent somewhere. No income tax, no sales tax, no nothing. Enjoy your unibomber tax free bliss

[shanek]

Originally posted by iain
The Government actually creates a lot of that value, for example by creating and maintaining the national infrastructure, protecting the country from foreign invasion, running the legal system etc.

And if government limited itself to that role, you wouldn't be hearing all these gripes from me. Because then we wouldn't need an Income Tax, corporate taxes, capital gains taxes, sales taxes, and anything else except for user fees, tariffs, and excises. While those aren't exactly fair, they at least are severely limited.

When we earn money through our labour or whatever else, we are earning more money than we fairly deserve.

How do you come to that conclusion? And who decides what you deserve?

The Government should, ideally, earn a proportion of that.

Why?

[shanek]

Originally posted by Tmy
I think of it as paying club dues. With the "club" being the country.

Again, no real problem here other than the fact that the government is disobeying the bylaws every time they turn around...

[shanek]

Originally posted by Michael Redman
Shane and company seem to be OK with sales tax, duties, etc.,

Actually, I have a problem with sales taxes, too. Duties, tariffs, excises, etc. are subject to market forces and are limited by them, so as taxes go they aren't so bad.

[shanek]

Originally posted by Michael Redman
If we decide we want to build a statue of Elvis out of cheese and put it in orbit around Saturn, we can empower the government to do it, and to collect taxes to pay for it, no matter the benefit or the sanity of such a project.

But the process by which we empower the government to do this is by Constitutional amendment. No amendment, no power. This is exactly what's been circumvented for so many decades now.

Oleron - Shanek and the libertarians generally feel that the government should exist only on the kinds of indirect taxes (duties, excise, etc.) that the government collected in the early years of our nation. They seem to miss the fact that all taxes, no matter how collected, must come out of the economy, and, in the end, our pockets.

No, we don't miss that at all. In fact, that's exactly the reason why taxes should be limited to those restricted and set by market forces.

On the other hand, they ignore the fact that when the governmetn spends money, it puts it back into the ecomony.

I have never ignored this. I have spoken to it several times. Most of what the government spends money on is transfer payments, which adds nothing to the economy; it just takes the money from people who worked to earn it (and thus have an incentive to economize and use the money efficiently) and give it to people who will have no such incentive because they didn't work to earn it.

As far as the infrastructure is concerned, it's only the portion that actually makes it there that is of benefit. At least 20% of the money is lost just taking it through the Federal bureaucracy. Since the money is just being moved around, the money lost to bureaucracy is spent without a corresponding increase in wealth.

You'll have to ask a libertarian if they want to end our participation in the world market.

That's just an untrue conclusion. Libertarians are really the only ones for free and open trade in the world market. The problems you mentioned are a result of government treaties that should never have been made to begin with. As Thomas Jefferson said, open trade with all nations, entangling alliances with none.

[shanek]

Originally posted by toddjh
My take is that various sales taxes are largely equivalent to that. The gasoline tax, for example, is pretty much the same as a usage fee for roads, except it avoids the infrastructure and bureaucracy that would be required to manage it. So not all taxes are bad.

Very good point, but that's actually an excise, not a sales tax.

[shanek]

Originally posted by Oleron
Michael, I'm starting to get a clearer picture of the libertarian viewpoint. My question to them would be - Could the government raise the required revenue from indirect taxation only?

To pay for the essential functions of government? Yes. To pay for the trillions of dollars in boondoggles it spends money wildly on now? No. And that's the beauty of it.

I would have thought that this would just lead to massive increases in this form of taxation to fill the void left by stopping income tax.

No, it couldn't, because the more they try to raise the taxes the fewer people will buy the products because of the higher price. So they'll only be able to set the taxes so high before they actually start losing money.

[shanek]

Originally posted by pgwenthold
OTOH, does it really make any sense for the fed government to tax the citizens and give the money back to the states?

No, especially considering what I mentioned above: you lose at least 20% of the money just sending it on a round-trip to DC.

Why can't they just let the states get the money themselves?

Because then the Feds wouldn't be able to say things like, "Raise the drinking age to 21 or we'll withhold your highway funds!"

I suspect the response is that the feds get to decide who gets the money, as opposed to letting the state citizens dictate that (poor states can get more money than they would if it were just state funded)

Except it doesn't work that way. If anything, more money actually goes to the richer states.

[Thanz]

Originally posted by shanek

That's just an untrue conclusion. Libertarians are really the only ones for free and open trade in the world market. The problems you mentioned are a result of government treaties that should never have been made to begin with. As Thomas Jefferson said, open trade with all nations, entangling alliances with none.
Here is what I don't understand: How can you have free and open trade in the world market and still charge tariffs and import duties? Tariffs and import duties are antithetical to free trade.

[TillEulenspiegel]

Originally posted by Tmy
I think of it as paying club dues. With the "club" being the country.


That's about right, Ted Sorenson told JFK during the Cuban missile crisis, "We belong to the least exclusive club in the world that has the highest dues". That he meant the last final measure is understood , but I think You could look at taxation that way also.

I believe most reasonable people on both sides of the political spectrum would agree the we NEED taxation to provide a baseline of services I.E. The standing Army(s) to defend national sovereignty, the Fire dept., the Police, Roads and ports. Schools -worthwhile but debatable, good in idea poor in practice, should people with no children pay taxes to support schools? I did for the majority of my life and only had children much later. Welfare? VERY divisive. How about mandates? Who funds them if the Fed enacts them? Entitlements? Arts and humanities programs?

Many would argue that great schools with dollars committed to arts and humanities will produce a healthier society, which in turn will drive the engine of commerce and MAY even reduce crime.

Even if that is the case should people be REQUIRED to pay for services they don't use or do not agree with ( multi-ethnic education, midnight basketball ) ? Originally taxation was a way to raise money for the armed forces and has turned into a bureaucratic, bloated nightmare. The only function for a bureaucracy is to provide its own preservation.

[shanek]

Originally posted by Thanz
Tariffs and import duties are antithetical to free trade.

No, they aren't. That's only the case if they're misapplied, for example, placing a high steel tariff in order to encourage more people to buy domestic steel. The tariffs should be consistent across the board.

Besides, if you have excises without tariffs, you have the opposite effect: people start buying more imported goods. With equivalent tariffs and excises across the board, everything is equal.

[Quixote]

Very good point, but that's actually an excise, not a sales tax.

Sales taxes are excises.

[Quixote]

Shanek:

quote:
--------------------------------------------------------------------------------
Originally posted by Oleron
Michael, I'm starting to get a clearer picture of the libertarian viewpoint. My question to them would be - Could the government raise the required revenue from indirect taxation only?
--------------------------------------------------------------------------------



To pay for the essential functions of government? Yes.

The last time I called your bluff on that, it turned out that you were comparing costs in 1991 dollars with revenue in current dollars. Once the dollars were standardized, it was clear that imposts and excises alone were not enough at current levels.

[Quixote]

Duties, tariffs, excises, etc. are subject to market forces and are limited by them, so as taxes go they aren't so bad.

But the limits can be quite high. The excise tax on salt in colonial times was 350% of the price of the salt without the excise. That was one of the few taxes that were not opposed by the colonists.

in 1790, Alexander Hamilton, as Secretary of the Treasury proposed, and got, excise taxes on liquor, because he knew that demand was highly inelastic, so taxes could be quite high before consumption dropped appreciably.

I imagine that an excise tax on food could be raised quite high before taxpayers chose the alternatives to paying the tax, the black market and starvation.

[Bruce]

There are only two certainties in life: Death and Taxes

Death is not biased.

[Oleron]

Originally posted by Quixote


But the limits can be quite high. The excise tax on salt in colonial times was 350% of the price of the salt without the excise. That was one of the few taxes that were not opposed by the colonists.

in 1790, Alexander Hamilton, as Secretary of the Treasury proposed, and got, excise taxes on liquor, because he knew that demand was highly inelastic, so taxes could be quite high before consumption dropped appreciably.

I imagine that an excise tax on food could be raised quite high before taxpayers chose the alternatives to paying the tax, the black market and starvation.

Taxes would need to be kept deliberately low on 'essential' items but market forces could be trusted with everything else.
In fact maybe market forces could be trusted with even the essential items. You mention that food taxes could go quite high before people stopped buying but surely no gov't could survive such a move?
I'm still not convinced though that indirect taxation is enough on it's own. I would need to check the sums first.

[Oleron]

Shanek, I would like to find out more about libertarianism - can you recommend any books?

[iain]

When we earn money through our labour or whatever else, we are earning more money than we fairly deserve.

Originally posted by shanek
How do you come to that conclusion? And who decides what you deserve?If there is a company which makes dingles and sells them around the country, it distributes its profit amongst those who have added value, either by working for the company or by investing in it. Ideally, I guess, the remuneration should have some link to how much value has been added by each person, like that happens all the time.

Anyway, some value has been added by the government. For example, a road network to allow distribution. A legal system, with enforcement, to prevent their competitors unfairly putting them out of business, and so on. Therefore, if you look to remunerate people based on the value they add, the government (or whichever body has provided these services) is fairly due some cash.

There are lots of ways it can get the money, one of which is through income tax. The point being that after income tax is paid, it is still quite possible that the employee is being fairly paid for the value they have added and the government is receiving fair pay for the value they have added. No one has been robbed, everyone is treated fairly.

I'm not saying of course that this always happens in reality - that's why the thread is about the principle of taxation rather than which levels are set in specific places.

As for who decides - I would say the democratically elected and accountable government; though I appreciate that is not a perfect solution and I agree with many of the concerns you have about it.

[Tmy]

State vs Fed govt: I find state govt to be more corrupt and unprofessional compared to comparable Fed govt. Why do we assume state govt is the better way to go.


The US (and the world) today is alot more complicated than back in the founding father time. THey lived in an aggie 3rd world country. Taxes, govt, and life were alot simpilar. People want the govt to go retro, is that really a good idea.

[toddjh]

Originally posted by Tmy
State vs Fed govt: I find state govt to be more corrupt and unprofessional compared to comparable Fed govt. Why do we assume state govt is the better way to go.

Well, three things. First, would state government still be "more corrupt and unprofessional" if they were shouldering the burden of running things?

Second, a corrupt state affects a few million people; a corrupt federal government affects the entire population (as we are seeing now).

Third, giving more responsibility to each state would allow market forces to determine their success to a greater extent than it already does. In essence, states would be in competition with each other. Government accountability would go up and they'd be forced to deal with the issues bringing them down instead of doing nothing and getting subsidized by the feds.

Jeremy

[shanek]

Originally posted by Quixote
The last time I called your bluff on that, it turned out that you were comparing costs in 1991 dollars with revenue in current dollars.

No, it wasn't. I adjusted for inflation; I pointed that out to you. You ignored it.

[shanek]

Originally posted by Oleron
Shanek, I would like to find out more about libertarianism - can you recommend any books?

The Great Libertarian Offer by Harry Browne
Libertarianism in One Lesson by David Bergland
Healing Our World by Dr. Mary J. Ruwart (read the first edition online for free at www.ruwart.com)

That should get you going. Of course, you can also go to www.lp.org and read up on it there. You can also go to Harry Browne's website at www.harrybrowne.org and read dozens if not hundreds of articles by him, and listen to archives from his radio show.

[shanek]

Originally posted by iain
If there is a company which makes dingles and sells them around the country, it distributes its profit amongst those who have added value, either by working for the company or by investing in it. Ideally, I guess, the remuneration should have some link to how much value has been added by each person, like that happens all the time.

If those people felt they weren't given a fair return, they wouldn't agree to the transaction. So if both they and the company agree that it's worth x amount, who is anyone else to contradict them?

A legal system, with enforcement, to prevent their competitors unfairly putting them out of business,

I really would like to see you present some evidence of this ever happening.

There are lots of ways it can get the money, one of which is through income tax. The point being that after income tax is paid, it is still quite possible that the employee is being fairly paid for the value they have added and the government is receiving fair pay for the value they have added. No one has been robbed, everyone is treated fairly.

Oh, really? And who agrees that the employee is being "fairly paid"? And who agrees that no one is being harmed, that everyone is treated fairly?

What really happens is that a company has x amount of dollars budgeted for hiring employees. Budgets aren't as flexible as people seem to think they are; that amount is pretty much the most they can spend on employees without the business suffering in other areas. So, let's say they have $330,000 in this budget. They hire ten employees at $33,000 each. Now the government comes in and instigates a one-third Income Tax. Effectively, these workers are only working for $22,000, so that is the amount they take home. They may go now and look for better paying jobs elsewhere because the work they do for this company isn't worth just $22,000 a year. To prevent that, the company must increase the amount it pays each employee—but, since the $330,000 budget is pretty much set, they have to lay people off to do it. They increase the salaries to $50,000, which ends up being $33,000 take home...but now they only have enough money to hire six workers, not ten.

Either people are going to be losing money they earned, or some people will be losing their jobs needlessly, or some combination of both. There just isn't any other way it can work out.

As for who decides - I would say the democratically elected and accountable government;

Really? How is government to decide that what you and an employer have agreed is fair and what a job is worth, or you and a company have agreed is fair and what a product or service is worth, is wrong?

And since when has government EVER been accountable?

[shanek]

Originally posted by Tmy
State vs Fed govt: I find state govt to be more corrupt and unprofessional compared to comparable Fed govt. Why do we assume state govt is the better way to go.

Because it's a lot easier to find and move to a less corrupt state than it is to find and move to a less corrupt country.

[toddjh]

Originally posted by shanek
Effectively, these workers are only working for $22,000, so that is the amount they take home. They may go now and look for better paying jobs elsewhere because the work they do for this company isn't worth just $22,000 a year.

Except that the pay everywhere else will be similarly deflated. Why would they suddenly go in search of other jobs when the prospects for higher pay are no different than they were before?

Jeremy

[shanek]

Originally posted by toddjh
Except that the pay everywhere else will be similarly deflated. Why would they suddenly go in search of other jobs when the prospects for higher pay are no different than they were before?

Because there are other higher-paying jobs that they can now demand the salary for.

[Quixote]

Originally posted by shanek


Because there are other higher-paying jobs that they can now demand the salary for.

But those jobs were there before, paying $55,000. Unless, of course, they're government jobs paid for with the new tax revenue.

[Quixote]

Originally posted by shanek


No, it wasn't. I adjusted for inflation; I pointed that out to you. You ignored it.

Hmmm. The unadjusted numbers matched up nicely. My adjusted numbers did not. Why should I believe that your adjusted numbers did?

[shanek]

Originally posted by Quixote
But those jobs were there before, paying $55,000.

Which had to be raised because of the same effect. The problem is, people value the worth of the job based on the take-hope pay plus benefits (and other intangibles like the working environment), but businesses value the worth based on the total of EVERYTHING spent on the employee, including taxes.

[shanek]

Originally posted by Quixote
Hmmm. The unadjusted numbers matched up nicely. My adjusted numbers did not. Why should I believe that your adjusted numbers did?

Because either you're lying or you kept ignoring the several times I pointed out that I multiplied the inflator for those two years with the portion that was taken out in Income Tax, thus yielding inflation-adjusted results.

[Quixote]

Originally posted by shanek


Which had to be raised because of the same effect. The problem is, people value the worth of the job based on the take-hope pay plus benefits (and other intangibles like the working environment), but businesses value the worth based on the total of EVERYTHING spent on the employee, including taxes.

But there are no more jobs than there were before.

Economy before the tax hike (simplified)

Abe...............$33,000
Bob...............$47,150
Chris.............$67,350
Debbie..........$96,200

Economy after the tax hike (simplified)

.......................Gross.............Net after 30% tax
Abe...............$47,150...............$33,000
Bob...............$67,350...............$47,150
Chris.............$96,200...............$67,350
Debbie.........$137,400...............$96,200

Where did Debbie's new job come from?

[Quixote]

Originally posted by shanek


Because either you're lying or you kept ignoring the several times I pointed out that I multiplied the inflator for those two years with the portion that was taken out in Income Tax, thus yielding inflation-adjusted results.

No problem. I'm sure you have those data handy. Just post them again.

[toddjh]

Originally posted by shanek
Because there are other higher-paying jobs that they can now demand the salary for.

Where did these higher-paying jobs come from? I thought you said there were fewer jobs in an income tax environment. Now you're saying that there are suddenly higher-paying alternatives that weren't there before? :confused:

Jeremy

[shanek]

Originally posted by Quixote
But there are no more jobs than there were before.


Why would there have to be? There are no more workers than before.

[shanek]

Originally posted by toddjh
Now you're saying that there are suddenly higher-paying alternatives that weren't there before? :confused:

When did I say they weren't there before?

[Earthborn]

Originally posted by shanek
Healing Our World by Dr. Mary J. Ruwart (read the first edition online for free at www.ruwart.com)That one requires a login and password.

[shanek]

Originally posted by Earthborn
That one requires a login and password.

Weird...it never has before. Something must be wrong. I'll shoot her an email.

[shanek]

Until her site gets fixed, here's the Google cache of her entire book:

http://tinyurl.com/2vvht

[toddjh]

Originally posted by shanek
When did I say they weren't there before?

If the higher-paying jobs were there all along, why wouldn't the employees have jumped ship earlier? I mean, who doesn't want more money? Why wait until tax time?

Jeremy

[shanek]

Originally posted by toddjh
If the higher-paying jobs were there all along, why wouldn't the employees have jumped ship earlier? I mean, who doesn't want more money? Why wait until tax time?

[sigh] Because they WERE effectively getting higher pay, and it wasn't until the taxes dropped their take-home so much that it became worth the time, trouble, expense, and risk of quitting and finding a new job.

[toddjh]

Originally posted by shanek
[sigh] Because they WERE effectively getting higher pay, and it wasn't until the taxes dropped their take-home so much that it became worth the time, trouble, expense, and risk of quitting and finding a new job.

[sigh] yourself. I'm not convinced this has ever occured in the real world. When's the last time someone quit their job because the tax rate went up? Most people don't even know how much they pay in taxes.

Anyway, I don't think this really needs any more comment, so I'll leave it up to others to decide whether it makes sense to them.

Jeremy

[Quixote]

Originally posted by toddjh


[sigh] yourself. I'm not convinced this has ever occured in the real world. When's the last time someone quit their job because the tax rate went up? Most people don't even know how much they pay in taxes.

Anyway, I don't think this really needs any more comment, so I'll leave it up to others to decide whether it makes sense to them.

Jeremy

In the real world there are no 30% across the board tax hikes. A more realistic scenario would posit a 3% tax hike. Those effected would either do without a few luxuries, tighten their belts, or save less, depending on their circumstances and preferences. The taxes might fund new jobs, within the government or a government contractor, or might subsidize lower paying private sector jobs.

[shanek]

Originally posted by toddjh
[sigh] yourself. I'm not convinced this has ever occured in the real world. When's the last time someone quit their job because the tax rate went up? Most people don't even know how much they pay in taxes.

They know how much they take home. Are these really points that people can't think of themselves?

[toddjh]

Originally posted by shanek
They know how much they take home. Are these really points that people can't think of themselves?

Thought of, and dismissed as too extreme. I disagree with Quixote that tax dollars create good jobs, but I agree with him that 30% tax hikes are unheard of, and that no one is going to quit his job because of a 3% hike that may or may not be gone in a couple years. If they were living that close to the edge, they would've taken one of these enigmatic higher paying jobs you speak of to begin with.

Edited to add: case in point, the university I work for faced huge budget cuts two years ago. They froze all salaries, which is equivalent to about a 3% pay cut after taking inflation into account. Nobody quit. In fact, the people who were left standing after the layoffs breathed quite a large sigh of relief.

Jeremy

[Oleron]

Originally posted by shanek


The Great Libertarian Offer by Harry Browne
Libertarianism in One Lesson by David Bergland
Healing Our World by Dr. Mary J. Ruwart (read the first edition online for free at www.ruwart.com)

That should get you going. Of course, you can also go to www.lp.org and read up on it there. You can also go to Harry Browne's website at www.harrybrowne.org and read dozens if not hundreds of articles by him, and listen to archives from his radio show.

Sorry for not thanking you before now - work got in the way of my social life.
Cheers, I'll have a look at this lot.

[shanek]

www.ruwart.com is working now.