Desert Spaces
Liberal theorists in the blogosphere and elsewhere have expended a great deal of energy attempting to problematize desert of income and wealth, with an eye toward justifying taxation. Here’s my question for liberal readers, bloggers and poobahs: Would you identify any particular level of taxation as unjust? Not unwise or counterproductive, but outright immoral and/or unfair.
Comment by Avram —
May 1, 2005 @ 9:24 pm
Well, 90+% seems pretty horrifying to me. 51% seems only a bit unfair by comparison, but still unfair. I’m not sure if anything below 50% strikes me viscerally as unfair.
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Here’s a question back: Is there any particular degree of wealth difference between the wealthiest and poorest quintiles of the population that’d strike you as unjust/immoral/unfair?
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And another: Would it kill you to slap a bit of bottom-margin onto comment paragraphs?
Comment by Avram —
May 1, 2005 @ 9:26 pm
WTF? Where’d those PRE and CODE tags come from?
Comment by Jim Henley —
May 1, 2005 @ 9:32 pm
All better.
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Answer to your question back: No. There is a level of privation in the bottom quintile that could strike me as, if not unjust, undesirable. But relative inequality doesn’t bother me. Let’s say, for the sake of argument, that the bottom quintile lived twice as well as I do, and the top quintile twice as well as Bill Gates. I’d take that society (absent deal-breakers like torturing a small child forever etc.) without a second thought.
Comment by Avram —
May 1, 2005 @ 9:58 pm
Does the same deal work for taxation? If you could live twice as well as you currently do, but at a much higher level of taxation, would you take that deal?
Comment by praktike —
May 1, 2005 @ 10:04 pm
When the utils don’t add up right anymore.
Duh.
Comment by Sasha —
May 1, 2005 @ 10:05 pm
Not without some sort of context. The levels of taxation that the poor underwent in feudal societies so that the landed aristocracy could build castles and fund wars of conquest seem unjust to me. But heavy levels of taxation might be unjust in some situations but not others. In large part, I think whether or not taxation is unjust has more to do with what is being done with the taxes than what the level of taxation is.
I agree that relative inequality is not the only important consideration; absolute quality of life is a factor but quality of life is just one consequence of income. A poor person today, I believe, has a better quality of life (and very likely a longer one) than a middle class person in the 19th century. However, poor people of any era share a similar exclusion from public discourse; they’re just second class citizens and every one knows it. As long as that’s true, relative inequality will determine, to a large degree, how people are treated.
Comment by Steve —
May 2, 2005 @ 12:16 am
Jim, I’m not sure “immoral” and “unfair” go together. A tax rate of 80% would almost certainly seem unfair, but I can imagine circumstances (World War II, say) when it would feel perfectly moral. So, I guess I’ll jump in and say that stripped of context about circumstances, privation, etcetera, no tax rate of less than 100% would strike me as inherently immoral under all circumstances; my bar is lower for “unfair”, although I don’t think I have a firm idea of where it rests, and lower yet for “a bad idea”.
Comment by Ray —
May 2, 2005 @ 6:08 am
No, not without knowing the circumstances. (But I’m an anarchist, not a liberal – and I’m interpreting ‘tax’ broadly)
Comment by Josh Yelon —
May 2, 2005 @ 8:54 am
Liberals don’t perceive material wealth as the end-goal. We perceive happiness as the end-goal. Money is merely a means to an end.
But if money isn’t a first principle, if it isn’t a postulate, if it’s only a means to happiness, then no, there are no theoretical limits – we’d be willing to do whatever it takes to build a happy, functioning society. If some scientist were to mathematically prove that 22.3% taxation is what it takes to maximize happiness, then absolutely we’d be willing to raise it to that level. If some scientist were to mathematically prove that 87.2% taxation is the number that maximizes happiness, we’d be very surprised and we’d want to check his results many, many times, but in then end, if his theory held up to empirical tests, we’d say “okay, set the taxation level to 87.2%”.
Comment by theCoach —
May 2, 2005 @ 9:16 am
Jim,
I wonder how you think that society would work. It suffers from the fallacy of the mosquito being enlarged 100 times — the same structure no longer applies and the creature in your imagination is just not possible given the world in which we live.
Massively oversimplifying you would have something like the top 20% having
$3,000,000,000,000,000,000 [60Million people w/ $50 Billion]. I am not sure what that number is, but lets just assume that it could buy a lot of oil. A lot of oil. Or that it could buy a lot of land. Of course, the other people have a lot more money too, but if they have relatively less, their prices, would relatively be a hell of a lot higher given the massive increase in demand.
To answer your question (liberal but not a blogger), no level of taxation seems unjust to me if it is not also unwise and counterproductive. If we could live in a perfect society with 100% taxation, or even a better society that is fine with me.
I also do not have any desert problems with relative wealth, but I do have instrumental problems with it.
Comment by mikey —
May 2, 2005 @ 9:20 am
First, I’m going to have to beg the question. It’s hard to take seriously anyone who picks a number for any bracket of the American income tax, because what differentiates 99.1% from 99.0%, as far as justice is concerned, or 10.5% from 10.4%? Nothing, and so, too, does your question, if answered, illuminate nothing. Reframing your question in such a way as to meaningfully discuss tax and justice – now that’ll take a minute or two.
Comment by Rich Puchalsky —
May 2, 2005 @ 9:32 am
Asking whether any particular level is unjust, absent circumstances, is not that meaningful. People upthread have already commented on some of the usual cases of high taxation: world wars and the like. The whole concept of justice as it applies to broad society, according to its earlier sources in Western culture (the Biblical social-justice prophets), has to do with restricting the oppression of poor people. Historically it has been common for poor people to pay high taxes; having rich people complain that they must do so is a recent innovation.
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Substituting “unwise” for unjust, though, I’d be leery of putting something near 50% of social income into taxes. What you’re really talking about here is the size of the government relative to the size of the other power centers in society. Making any one power center too strong is not good, according to hoary liberal American political theory.
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I don’t understand the libertarian fascination with “desert”. No one ever became wealthy in a vacuum; all wealth is socially created. There is a libertarian fascination with new buzzwords — wasn’t “a workman is worhty of his hire” one a few years back? Look, someone can argue that all of society should be run on the basis of sharia law, and it is impossible to prove that they are wrong, since it is impossible to prove that a belief system elaborated from a few unproveable, abstract assumptions is wrong. All you can say is that it doesn’t work. We tried a world in which each monopolist was worthy of his hire, and every trust fund kid fully deserved his inherited gains; it didn’t work.
Comment by Greg Morrow —
May 2, 2005 @ 9:32 am
I’m going to quibble that “unjust”, “immoral”, and “unfair” are probably three entirely different criteria. For instance, taxation so that the ruler can live in luxury without providing services to the governed or without the consent of the governed is immoral according to the American theory of government, regardless of the rate of taxation.
Similarly, is “fair” taxation taxation at the same amount, the same rate, or the same economic utility?
Complete taxation with all necessities provided by the government, i.e. ideal communism, isn’t practical or effective, but I don’t think I’d call it immoral.
To sound-bite my feelings on taxation, I think it’s not about being fair, just, or moral; I think it’s about paying for the government. Taxation (and its counterpart, the services provided by government) are quintessentially policy questions. I think there are policy questions which are themselves moral issues–e.g. food, clothing, shelter, and medical care for all is a societal duty–but any practical taxation probably does not impinge very far on fairness, justice, or morality.
Comment by Jim Henley —
May 2, 2005 @ 9:43 am
mikey: Curiously, I seem to have said “level” rather than percentage, as if they were separable concepts. Rich, it’s weird you accuse libertarians of being obsessed with the term “desert,” when so much desert-speak has been on liberal blogs attempting to refute the concept. See Matt and the famous (in blog terms) post by the woman attempting to refute the concept of desert using Hayek.
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For the record, I posted this particular question because I was genuinely curious what the answers would be. Keep ‘em coming.
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Avram: Good one! Short answer: I don’t know!
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TheCoach: Just an illustrative example. I didn’t imagine it as attainable in the real world.
Comment by LowLife —
May 2, 2005 @ 9:59 am
What system of morality are you refering to? Yours, where the notion of common wealth itself is taken to be immoral? Or mine, where property itself is theft so our whole system is immoral. Maybe the Judeo-Islamic system of tithing has a certain God given legitamency that can be brought to bear on this notion. Liberal theorist of the blogisphere, though, won’t necessarily make sense of the question. Unwise and counterproductive taxes may qualify as immoral, especially when your trying to maximise satisfaction for the many.
Look, I can’t help it it I’m stupid and lazy – I was born this way. Smart hustlers like you deserve and get a bigger part of the pie. Our whole society is set up so whiz-bangs like you and your kind can make a bigger claim on our resuources. Our founding documents help guarentee it. Government programs – such as the ceding of territory to the railroads, airwaves to broadcasters, investments is fundamental researce, building of the interstate highway system, the legal system, are all built and maintained with common funds and mainly benefit you go getters. What is fair is those that benefit most from the decisions we as a society have made should pay the most. The fact that they don’t see that suggest a callusness beyond the understanding of a genuinely moral person.
Comment by Steve Sheldon —
May 2, 2005 @ 10:06 am
That’s interesting. Last night I was watching a BBC townhall meeting with Michael Howard. At some point someone in the audience asked a similar question, if I recall.
It was something like this… “If taxation is unjust and immoral, then why has the Conservative party only offered a small tax decrease. Shouldn’t you be advocating for the elimination of all taxes?”
At which point Howard equivocated by responding “Ok, you caught me! The truth is I like schools and hospitals and I think the Govt needs to spend money… so we gotta have some taxes and really the difference between us and the Labour party is trivial… we’ll tax you at 40%, they’ll get you for 42%. But we like to talk about unjustness and immorality because it’s shocking and otherwise nobody would listen to us.”
Well Howard didn’t use those words exactly, but that’s what he wanted to say if he wasn’t a Brit.
Comment by Trickster Paean —
May 2, 2005 @ 10:14 am
Any level of taxation on those who are below the poverty line (for any generous definition of poverty line) strikes me as unjust.
Comment by Miracle Max —
May 2, 2005 @ 10:34 am
This is easy. Taxes reach an unjust level when they are higher than people want them to be, where what people want is expressed through fair rules of democratic decision-making. The latter is the real question here.
Strictly from an economic standpoint, we know from experience that economies can be sustained with public sectors that are half the size of the economy. But that isn’t a question of justice.
Comment by Bruce Baugh —
May 2, 2005 @ 10:47 am
I agree with Trickster Paean about taxation on the poor, and will add that taxing government benefits is silly and stupid – adjust the benefit amount to be what you want it to be, and pay that amount. This seems a “no duh” opportunity for simplification and reduction of administrative costs to me. I think that in general complex schemes are more likely to be both unfair and unwise than simple ones, though of course the wrong sort of simplicity is also undesirable. I’d like to see the state making fewer distinctions about the nature of income and wealth.
My intuition, which may well be wrong, is that if the state can’t provide good personal and collective security and infrastructure on about 25% of income overall, then something’s out of whack. I get more supsicious as the percentage goes higher – but I don’t trust my intuition, and a lot depends on details. Relatively high taxation that produced genuine natural security, provision for the elderly, disabled, unemployed, and otherwise needy, good transportation and communications, justice in the detection, prevention, and punishment of crime, and the like would trouble me much less than relatively high taxation for the Bush administration.
Comment by Hamilton Lovecraft —
May 2, 2005 @ 10:58 am
My first thought: taxation is at an unjust level when the well-off don’t want to earn any more money out of resentment at where the money goes. I’m not talking about the point at which they *complain* about where the money goes; that starts at about the 10% bracket. I’m talking about the point where they can literally look at a million dollars on the table and say “the government is going to take 90% of that, so the hell with it, I don’t want it” and walk away.
Let’s turn the question around – how *low* a level of taxation is unjust? A billion dollars of Bill Gates’ money could buy houses for 2000+ families.
Comment by Francis —
May 2, 2005 @ 11:02 am
Jim: are you responding to the recent Mat Miller column regarding democratic programs requiring taxation at 28% of GDP? (if i remember correctly)
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as the prior posters noted, lack of fairness can be measured only against (a) the services provided; and (b) equal treatment of similarly situated taxpayers.
Comment by Jim Henley —
May 2, 2005 @ 11:08 am
Francis, hadn’t seen that column. I’ll have to chek it out. Your (a) strikes me personally as problematic, recognizing that I’m not you so it doesn’t matter. If “the services provided” are illegitimate government services – baseball stadiums, frex – then sheer quantity of “services” is no justification. However, you may have folded an unspoken judgment on the merits of the services into your criterion and I just failed to find it when I unpacked. (b) is interesting, and I wouldn’t dream of disagreeing with it.
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A billion dollars of Bill Gates’ money could buy houses for 2000+ families.
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Indeed it could. Or any number of things. Perhaps I shall take some of it and start building.
Comment by Jim Henley —
May 2, 2005 @ 11:42 am
Trickster Paean: Any level of taxation on those who are below the poverty line (for any generous definition of poverty line) strikes me as unjust.
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Is there an implied correlary here that taxing people INTO poverty would be unjust? IOW, if the tax rate pushed someone below the poverty line, that would be wrong?
Comment by herostratus —
May 2, 2005 @ 11:49 am
No.
And let me pose a question for you in return: What is your favorite stripe of the flag?
Comment by Rich Puchalsky —
May 2, 2005 @ 12:09 pm
“Perhaps I shall take some of it and start building.”
A democratic society is specifically allowed to do some things that you, as an individual, are not allowed to do. Taking some of Bill Gates’ money and building houses with it is one of those things. (Actually, it has to be done in the sense of taking money from all those in his tax bracket, not from him personally, but you get the idea).
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If you disagree, and say that what is forbidden to an individual should be forbidden to the collective, well, you’re not agreeing with the social rules that the rest of us have agreed to. It’s rather like the distinction between Socialist and Social Democratic parties. If you can get people to vote to change the rules, then they have by definition changed, but until then, insistence on redefining the situation for everyone according to your own ethical framework looks like vanguardism.
Comment by Walt Pohl —
May 2, 2005 @ 12:26 pm
Jim: I initially assumed, like mikey, that when you said “level” you meant “percentage”, though I have no idea why. I blame the media.
If by “level” you mean is there some set of facts about a situation where the amount of tax someone pays is unfair, then of course. Surely almost everyone thinks that.
Comment by Jim Henley —
May 2, 2005 @ 12:47 pm
Walt, you need to blame the MAINSTREAM media. Otherwise you might accidentally be including Jeff Jarvis in your circle of blame and that, of course, would be wrong.
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Anyway, I can see “level” as a distinct subset of “facts” including but not being limited to percentage rates. Frex, Trickster’s express and implied disapproval of taxing someone in or into poverty. This could theoretically make it not unjust to take 99.x percent of Paris Hilton’s money, but unjust not to leave her that last $20K. Stuff like that.
If you disagree, and say that what is forbidden to an individual should be forbidden to the collective, well, you’re not agreeing with the social rules that the rest of us have agreed to.
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Rich, indeed I am not, necessarily. I kind of lost you after that, though. It seems like you’re going for a rhetorical jiu jitsu that may or may not actually work, but whose precise movement sequence I couldn’t follow.
Comment by The Editors —
May 2, 2005 @ 12:52 pm
101%.
What’s the right answer, by the way?
Comment by Jim Henley —
May 2, 2005 @ 12:55 pm
What? You think I would be so careless as to choose a question anyone could get right? Bah!
Comment by Rich Puchalsky —
May 2, 2005 @ 1:22 pm
Sorry for the confusing writing. I’ll try to write better.
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Let me use an Islamic example rather than a Socialist one. Let’s say that someone says that we shouldn’t be able to take Bill Gates’ money to build houses because this is contrary to sharia law. I say, well that isn’t how our society works. They say that it should be how our society should work, because there is no God but Allah and Mohammed is his prophet. Then what do I say? I can’t prove that they’re wrong. And clearly, if their premise is correct, then their conclusion follows. Similarly, Socialists and Libertarians can develop wide-ranging social prescriptions from a few simple, undisproveable premises.
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So the question for other people really becomes whether you’re just restating your premise. If you are, then people can simply judge whether they like your premise or not. However, in pluralistic societies, most people will not agree with any one idealistic premise. This is why the European Socialist parties have pretty much all changed to Social Democratic; it’s the difference between claiming that they have a solution that really should be implemented whether people agree or not, and between claiming that their solution works best and that people should vote for it.
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I know that in the past you’ve disagreed with my emphasis on pragmatism, saying that it makes no sense to talk about what works best when people have different goals. Well, OK. Without assuming that we share certain criteria about what kind of society that we’d like to live in, I can only fall back on disagreement with your premises.
Comment by Trickster Paean —
May 2, 2005 @ 1:25 pm
IOW, if the tax rate pushed someone below the poverty line, that would be wrong?
Yes, that would be a necessary corollary.
Now, that idea was based primarily on the idea that such taxation would be leveled on income, earned or unearned. The Paris Hilton example brings to mind other possible means of taxation, like wealth taxes, which could take 99.x percent of Paris Hilton’s wealth, but leave her with .x percent of her wealth left.
On that order, it would seem unjust to me if any one person was taxed in such a way that reduced their level of wealth, and did not affect others similarly. That is, taxation that is not uniform is unjust.
If you tax Paris Hilton to X amount of her wealth, then everyone else above X amount of wealth should be taxed to the same. If you tax PH’s income at X percentage, then everyone else with similar income should be taxed at X percentage.
That is not to say that progressive taxation is unjust. Different levels of wealth/income may require different levels of taxation for any number of reasons.
And that is not to say that a flat level of taxation is unjust either, as long as it does not tax people into or in poverty. It would not be the best of all worlds, but it would not be the worst.
Comment by larry birnbaum —
May 2, 2005 @ 1:25 pm
Dear Jim,
Matt Yglesias copied your question and here’s the comment I posted to his site, slightly edited:
I hate to beat a dead horse… but if any tax at all is considered just, and if a just tax must be fair — certainly I would think that is a [necessary] component of a just tax — and if by fair we mean causing equal pain to everyone (not the only but certainly one reasonable definition of fairness), then marginal utility tells us that not only must a just tax system be progressive, but tax rates must go arbitrarily close to ([although] not reach) 100%.
Now of course there may be other definitions of fairness, or this definition might be in conflict with other attributes of a fair or just tax system, but I find it hard to imagine that a just tax system could completely ignore this aspect of fairness.
So, as noted in an earlier comment [on Yglesias's site], whatever the number is, it’s MUCH MUCH higher than any limit we would set on more practical grounds.
Comment by Jim Henley —
May 2, 2005 @ 1:52 pm
Rich, thanks for the clarification. I get a much clearer picture, I think, of where you’re going.
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Now, I feel a Puchalskayan impulse coming on. A big complaint against conservatism and libertarianism is that they contain a large spoken or unspoken component of “Whatever is, is right” regarding relative distributions of wealth and power. I think I detect a fairly strong element of “whatever is, is right” in your stance toward – society? democratic polity? You might disagree with this or that policy – I can think of policies with which we BOTH disagree without working at it – but it seems like, according to your premises, whatever official acts a pluralistic democracy undertakes are ipso facto “legitimate.” How wrong is that inference?
Comment by colin roald —
May 2, 2005 @ 2:01 pm
I don’t see any coherent basis for saying that any of the kinds of taxes we actually have in the real world could be *moral* at one level (28%) and *immoral* at another level (29%, presumably). Even 99% is *moral*, provided it is uniformly implemented. It might be staggeringly unwise, but I don’t see a moral objection to it that wouldn’t still apply if you cranked the level down to 1%.
The sort of thing that *is* immoral, or at least *unjust* if that’s not the same thing, is deciding that Jews have to pay extra. Or that you get a discount if someone from Skull and Bones vouches for you. Or if some anonymous desk-warmer in the Ministry of Graft gets to decide what your taxes ought to be without right of appeal.
Otherwise, I’m prepared to accept the sort of taxes we have are basically legit, and then get down to pragmatic cost-benefit debates on the levels.
Comment by theCoach —
May 2, 2005 @ 2:08 pm
From my view, unjustness would be entirely a product of the empirical effects, the instrumentality, of the level of taxation.
Figuring out what the goal of taxation was would be a separate problem, and the level of taxation has nothing at all to do with the goal.
Trackback by Political Animal —
May 2, 2005 @ 2:30 pm
Tax Rates
TAX RATES….Jim Henley asks about rates of taxation. Here’s my quick and not-very-well-thought-out guesstimate: Above 40%: Unwise. Above 50%: Counterproductive. Above 60%: Unjust. Note that I’m talking about actual tax rates, here, not theoretical o…
Comment by Common Sense —
May 2, 2005 @ 2:50 pm
Off the top of my head, I seem to recall that IRS statistics showed the maximum real rate paid by anybody in the top tier was in the 20-30% range. The lower part of the range. We seemed to be in a fairly nice groove of prosperity when the top Clinton rate was 39%, so I suggest 40% as a maximum for keeping the economy humming nicely, keeping our bills paid, and preventing the excruciating tax avoidance schemes that are a blight on the moral standards of our CPA industry.
Comment by MDtoMN —
May 2, 2005 @ 3:06 pm
Some levels of taxation would be unjust at a given time, but it entirely depends on other areas of injustice and risks of injustice.
There are certain wars that would justify taxes around 90% and that would not stop people working even if taxes were around 90%.
There are other times when we’ve met the needs of national defense, the basic needs of education, health, and opportunity for the working class, and environmental protections and civic institutions, and we’re maintaining robost middle class growth, when any taxation over 40% might be immoral, even in the interests of greater redistribution.
So, just taxes are part of a just society, and the % taxes that is just depends on the other needs for justice in the society.
Comment by Rich Puchalsky —
May 2, 2005 @ 3:18 pm
Well, “legitimate” in the sense that you’re using it in is pretty much tautologically defined as the official acts of a pluralistic democracy. So I think that the question you’re asking is whether I think that legitimate acts are always right, or always just. My personal opinion is that no, they aren’t.
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Actually, I would guess that almost everyone’s opinion would be the same in this respect, although they would disagree about in which respects legitimacy differs from rightness or justice. That’s why legitimacy has a special force to it, it embodies a certain form of societal compromise among competing value systems. It’s not “whatever is, is right”, it’s “whatever is, is a currently more or less functional compromise”. Of course when it gets less functional, it eventually changes, at least in theory.
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So much for grade-school civics. But what I think is really wrong with standard libertarian arguments about taxation is that they tend to implicitly argue from basic premises. It seems to me that if someone doesn’t share your premises, these arguments will by their very nature have no force, so you might as well just go back to basic premises and expound them. Aren’t we really arguing about the purposes of taxation rather than the level?
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Let’s turn the question around for the libertarians here. What level of taxation, if any, would you find unjust? I’ll assume that minarchist libertarians would be willing to assess taxes to fund military defense. OK, so if defense requires 90% taxation — if America were being invaded and every resource was needed — would that be unjust? Or is taxation for defense assumed to be just because defense costs are assumed to be low? Here’s another thought experiment; imagine that 60% of America converted to the variety of libertarian belief that finds nothing wrong with Bush’s program of endless war. And that these people voted in 30% taxes for war — after all, this would still mean that overall taxes would go down, after all social spending was cut. Would that be just?
Comment by Jim Henley —
May 2, 2005 @ 3:20 pm
Dammit, Rich, you’re jumping the gun on TONIGHT’S post!
Comment by roublen vesseau —
May 2, 2005 @ 3:41 pm
To talk about justice, it seems to me you have to take into account how the money was made and what it is to be used for. What gives someone a moral claim to their money is the work they put in and the correct moral choices they made in order to make their money. Also, while someone who doesn’t work, or doesn’t work particularly hard, or receives income disproportionate to the amount of work they put in, may not have a moral claim to their money, that doesn’t necessarily mean that the individuals in charge of the state have the moral right to take it away from them. We don’t want the state, except within prescribed limits, to be the moral arbiter of who deserves and doesn’t deserve their money.
That puts the question of taxation back at the level of pragmatics, and at the effects various levels of taxation have on the real lives of real human beings, which is where I think it belongs.
Matthew Miller wrote a Jan 22, 2003 column on exactly this topic, and devoted much of his book “The 2 percent solution” to a discussion of the moral justifications for taxation, and by and large Miller speaks for me. Singapore’s Lee Kwan Yew in his memoirs had a chapter called “A Fair, not a Welfare, Society”, and by and large Yew speaks for me as well. (No links because the XHTML validator was harshing my mellow)
Comment by Nicholas Weininger —
May 2, 2005 @ 3:48 pm
Rich, you’re just begging the question here (and I mean that in the original, correct sense). Your argument boils down to, “if you don’t think that majority votes should decide who gets to take other people’s stuff, that’s too bad, because the majority disagrees with you.” Talking about “functional compromises” improves the situation not at all: “functional” by whose metric?
Of course libertarians are arguing from basic premises. So are you! You’re just failing to articulate your premises explicitly, and justifying the failure by argumentum-ad-populum handwaving.
Comment by rsl —
May 2, 2005 @ 3:50 pm
Justice is one of those philosophical terms that can’t be precisely defined, so what’s the use wasting time debating if a particular tax level is just or not? You’ll never find a consensus. A better question might be what technique could we use to actually measure when taxes are too high (or possibly too low)?
A hint toward an answer: if I were an economist, I’d want to find an efficient market to show me the right answer. Well, most people don’t shop for their countries based on tax rates, so there isn’t such a market in existence. However, comparing our tax rates with those of countries with similar living standards to our own might be a place to start. Are we in-line or above or below norms for other (comparable) nations? (I don’t know the answer–but I’d love to hear it from someone who does.) We’d have to assume that (because there isn’t an actual market) the tax rates we discover won’t be the most efficient rates . . . but they’d give us a hint about whether we’re getting a good deal or not for our current tax rate.
Comment by Rich Puchalsky —
May 2, 2005 @ 4:05 pm
No, Nicholas, I’m arguing from pragmatism rather than from simple premises. As I said above, if your metric for what is functional really differs from mine so drastically that it has different meanings for us, then all that’s left is a simple power struggle.
Comment by Randolph Fritz —
May 2, 2005 @ 4:24 pm
Sure. A level of taxation that makes it impossible to live is clearly unjust. A level of taxation too low for the government to pay its debts is also unjust–one must remember that ever-growing debt/GNP is privation for the next generation. In between these these extremes lie all the sustainable variations on the social contract, just if people can manage to agree.
I do not think it appropriate to give numerical levels, since currency is a variable measure of value, rather than a reliable guide to wealth.
Comment by roublen vesseau —
May 2, 2005 @ 4:39 pm
I guess another way to pose this question is, What level of (marginal) tax rate would you personally resent paying? I think 40 as the upper limit is about right, though if I were comfortably rich I would probably tolerate anything upto, say, 46.
Though if the choice was posed as “if you could pay a little more in order to save lives, would you be willing to do it?”, I would always be willing to pay a “little more”, even if my tax rate was 60 or 70%. Though I would be very inclined to ask where the hell my other 60-70% was going to.
Trackback by Outside The Beltway —
May 2, 2005 @ 5:03 pm
Progressive Taxation: No Desert for the Rich
Jim Henley offers an interesting challenge:
Liberal theorists in the blogosphere and elsewhere have expended a great deal of energy attempting to problematize desert of income and wealth, with an eye toward justifying taxation. Here’s my question fo…
Comment by Leonard —
May 2, 2005 @ 5:13 pm
Rich, since you asked about what libertarians think…
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Taxation is theft. (A kind and gentle form, true enough, but the thing is what it is.) The right level in terms of justice is zero. In fact it’s fun to read this whole page of discussion with that simple-n-easy substitution in mind. People talking about: when is theft OK? What’s the right level of theft? Is that just stealing people’s incomes, or is it also stealing their wealth? Clearly the feeling among normal people is that theft is OK but it needs to be fair. Also stealing from poor people is seen as bad whereas robbing the rich, no real problem, though it does seem that there is some level that’s too high. Just hard to know what it is. But that’s what democracy is for!!
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But back to libertarians… any level of theft (I mean taxation) is unjust. Period. Now, that’s something you can make a bright-line test of!
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I do look forward to Jim’s posting the question so as to see the minarchists twist in the wind a bit. But still, I love ‘em. I’d much rather be only stolen from a little bit, rather than a lot.
Comment by Jason Ligon —
May 2, 2005 @ 5:22 pm
“No, Nicholas, I’m arguing from pragmatism rather than from simple premises.”
Functional seems to me to be a paltry standard. Many different policies may function in the sense that they won’t destroy the whole economy. You have to look to the maximization of some value to tell you which functional policy you prefer. The invocation of justice may seem entirely inappropriate if you have no sense of ownership in ones product. The replacement value may utility in that case.
The explicit answer to the question posed would then be, ‘I reject the notion that justice is an economic value. That allocation of wealth which maximizes utility is defined to be just.’
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May 2, 2005 @ 5:30 pm
Just Taxation
Here is my quaint (but unsexy) answer: The level of taxation is unjust if it results in revenues to the State that exceed the amount of money the State needs to perform the operations that the State has undertaken.
The inverse of this is that it i…
Comment by Avram —
May 2, 2005 @ 5:39 pm
Leonard, I thought property is theft.
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A quick Google search tells me that a bunch of things are theft:
Property,
Taxation,
Tax avoidance,
Copying,
Warchalking,
Humming,
Water privatization,
Foreign aid,
Free conferencing,
Rent,
Linking,
Hijacking,
Spamming,
War,
62% of the federal budget,
Gentrification,
Wireless networking,
Linux,
TiVo,
Research,
and, of course, Theft
Comment by Jim Henley —
May 2, 2005 @ 5:45 pm
No, theft is taxation . . .
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Huh? Wha? Where were we?
Comment by Nicholas Weininger —
May 2, 2005 @ 6:12 pm
Rich, you again confirm my belief that “pragmatism” is a shorthand for “beliefs about which ends are desirable that I don’t want to lay out or justify.”
I probably agree with a great deal of your definition of what is functional. I probably also disagree with it in some significant respects. I’d guess that our disagreements would revolve largely around the validity of interpersonal utility comparisons, but that’s just a guess. Neither you nor I can really tell how much, or what kind of, disagreement we have if you treat “functional” as a primitive concept, or otherwise pretend that it doesn’t depend on normative premises.
Comment by Leonard —
May 2, 2005 @ 6:14 pm
Avram, it appears you find yourself in a situation where some moral discrimination will be necessary.
Comment by Kimmitt —
May 2, 2005 @ 8:22 pm
In the absence of knowledge about results, this is a meaningless question. If the state requires 80% taxation to put together a large enough surplus to protect our borders from an incoming military force, then 80% taxation is fair and just. If the state requires 5% taxation in order to build golden palaces from which pesticides are spewed into my drinking water, 5% taxation is far too much.
In the case of the modern United States, I’d say 45% is too much, unless I get health care out of it, whereupon I get to 55%. Any more than that, and you’re probably distorting incentives, which will lead to lower economic growth, which is unwise, unfair, and unjust.
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May 2, 2005 @ 9:49 pm
[...] ders, bloggers and theorists: your turn. We got a nice sincere effort from the liberals in the item below, and thanks to everyone who participated. By all means, don [...]
Comment by theCoach —
May 2, 2005 @ 9:57 pm
Jim,
I also get the feeling that you are a little off on your statement that “Liberal theorists in the blogosphere and elsewhere have expended a great deal of energy attempting to problematize desert of income and wealth, with an eye toward justifying taxation”.
I am not so sure problematize captures it well. My understanding is that liberal theorists have been trying to disentangle desert and instrumentality, dismissing the claim of desert, especially in the sense that whatever is, is right.
When desert is a seperate question, me, and I think liberals do not belive that people that are born with special skills, contacts, good looks, luck, or whatever helps them gain more in our system ‘deserve’ more, but for instrumental reasons, it is a good idea to have a system that incentivizes certain behavior in society.
The question of instrumental towards what, is a different question, not solved by this approach.
Comment by Jim Henley —
May 2, 2005 @ 10:11 pm
I dunno, tC, “problematize desert” sounds like a fair capsule of what you just said. Perhaps “demolish desert and replace with . . . ” would be truer to your own account of what’s been going on, but I can’t see how my formulation goes astray in any invidious way.
Comment by jlw —
May 2, 2005 @ 10:15 pm
What level of taxation is unjust? One that doesn’t cover all the programs that have been instituted by a representative government. That’s because it leaves a debt for a future generation that is paying the bill without the benefit of the program. (Debt issued for publically constructed infrastructure is different, of course, but I’d limit this in principle to infrastructure that, you know, promoted the general wellfare. Not stadiums.)
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So set the level to that of expenditures. Set the structure so that it draws from several sectors that have varying responses to the business cycle. Set the standard of exemption (for income taxes) at a two or three multiples of the poverty rate.
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Don’t like the amount of taxes you’re paying? Get someone to cut the budget first. The starve the beast ploy isthe height of immorality.
Comment by Rich Puchalsky —
May 2, 2005 @ 10:48 pm
Nicholas, I can’t tell whether you really don’t understand or whether you’re rhetoricizing. Is it really that difficult to describe what a functional society is?
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Most people really want the same sorts of things from their society. The most basic elements are avoidance of starvation, avoidance of civil war or military defeat, some basic level of public order, the ability to raise a family more or less untroubled by regular catastrophe. Before you sneer, there are large parts of the globe that have not achieved this level of societal function. I don’t intend this standard to be normative, but descriptive.
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A functional compromise is one that achieves at least this level of social function. It has not always been achieved throughout American history. I don’t believe that libertarian beliefs, if implemented, would function in this way: libertarian anarchy would turn into something pretty much indistinguishable from plain old historically familiar anarchy, and minarchy would lead to economic depression and mass starvation. Look at Leonard upthread writing about how all taxation is theft, and you see a recipe for something like Somalia. I don’t think that many people are lining up to move to Somalia, despite its absence of taxes and laws.
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Of course there are higher levels of societal function. Again descriptively, I’d say that people tend to prefer richer societies over poorer ones, and ones in which they have greater freedom (however defined) over ones in which they have less. Which societies have the best record in this regard? Well, the record speaks for itself. Pluralistic, democratic societies tend to have relatively high taxes and extensive sets of laws and tend to be rich and free; countries with low tax rates and fewer laws tend to be poor and oppressive. Correlation is not causation, but there are well-established reasons for believing that causation is a factor in this case.
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May 3, 2005 @ 2:48 am
Ice Is Back, With A Brand New Mission
Well, not so much Ice as me. Sorry sorry sorry sorry for the supreme lack of content that has graced these pages over the last week or so. Finals are reaming me a new one. Advice to aspiring undergrads: Never…
Comment by Tim Worstall —
May 3, 2005 @ 9:00 am
Liberal in the classical sense, not in the modern, not a theorist either. But perhaps an example of a tax which was quite clearly, to my mind, immoral?
Late 1960s in the UK, Roy Jenkins, then Chancellor, imposed a 130% top rate of tax on investment income for the previous year. Correct, it was a retrospective tax.
Not just unwise or counter-productive, but actually immoral /unfair.
Perhaps start from there and work downwards to a level at which such a tax is not immoral?
Comment by Blogsy McBlog —
May 3, 2005 @ 12:08 pm
Mr. Henley, aren’t you beating around the bush with this question? The justice of a given percentage/level of taxation is obviously tied to one’s belief about the presence or strength of a causal correlation between wealth accumulation and normatively desirable actions, or “desert.” My two cents; as a determinist, I cannot argue that there are any normatively desirable actions that are within the province of the individual. Thus, people have what they have merely due to circumstance. Even if there is a strong correlation between hard work and acquisition of wealth, the ability to “work hard” is not controllable by the individual. Thus, there is no level of progressive taxation that is “unjust,” except for one that failed to take into account the limitations that are placed upon individuals, especially if that system of taxation reflects and perpetuates the myth of free will. Thus, all regressive taxes are “unjust.”
Comment by Connie —
May 3, 2005 @ 12:48 pm
Jim:
Avram said, “If you could live twice as well as you currently do, but at a much higher level of taxation, would you take that deal?”
And you said you -don’t know-? Isn’t that strange? I mean–that seems to be a fairly important question, philosophically speaking, and you simply don’t know? I’d love to see you think on this further, and respond.
Comment by Eric —
May 3, 2005 @ 1:03 pm
An unjust “level of taxation” would have to depend on the society and the circumstances, right?
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Let’s say you had a choice between three societies:
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Society A levies a 10% tax rate. Most people are small farmers, and there’s no real industry. There’s no public education, few roads, no government R&D funding, and no regulation of anything. In other words, Society A could be any ancient agrarian society.
Society B levies a 75% tax rate. Most people work in either white-collar or unionized blue-collar jobs. The government spends tons of money on roads, infrastruture, research, and education. Everybody has health care, child care, unemployment insurance. Society B could be Sweden.
Society C spends enormous amounts of tax money on infrastructure, research, and education. But let’s assume, hypothetically, that all the research and smart people make the economy so productive that even after paying 90% of your income in taxes, you can still afford to launch private satellites in your spare time (as in Vinge’s Marooned in Realtime).
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Now, which society would you prefer? What if, empirically, the only way to create and maintain Society C was to pay a 90% tax rate? I’d happily pay it. When it comes to abstract moral questions about taxation, my general answer is: “Whatver is reasonably consistent with making everybody as rich and free as possible.”
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In pactice, well, all of the societies I’d actually want to live in would currently take 40-70% of my income in total taxes. I wonder about the cause-and-effect relationship.
Comment by JR —
May 3, 2005 @ 3:02 pm
To follow up on Sasha’s response, there are available studies from behavioral economics which demonstrate that in fact relative inequality is a huge part of people’s consideration of fairness.
One example I can think of was a “game†in which participant A is given say $100 and must offer participant B a part of this money. If B accepts they both get to keep the cash, otherwise they both end up with $0. The classic economic model of rational behavior is that person B is happy with anything, since it’s better than $0, but that’s not how it plays out.
I think anyone who has ever worked in their life can also intuit that this classic model of human behavior is wrong. If you got ½ the raise or bonus of a co-worker who had made a similar contribution would you be “happy†with it? Why not, you both got a raise?
In a discussion of the “justice†of taxation, I think it’s worthwhile to note that inequality is also a matter to which we apply the criterion of justice.
Like it or not it is simply not human nature (and this may extend beyond humans) for a guy living in New York today to view his status in relation to a French peasant in the 1400s or someone living in Somalia.
Other studies have even shown that relative status is not just a philosophical issue, it may even a direct health effect, i.e. we may be hard-wired to compete for status and we view status relative to our peer group not vis-Ã -vis people we never see (or who no longer exist as in the case of the French peasant).
So I don’t accept the premise that relative inequality is not an “issueâ€, I think an honest assessment of human behavior pretty clearly indicates that it is in fact one of the major issues in our lives.
As for the libertarian poster who is taking the position that all taxation is theft, I wish him the best of luck in the social organization he constructs without benefiting from any of the advantages that taxation has given this society. I wonder what his personal currency will look like for example.
Comment by Stephen Abbot —
May 3, 2005 @ 3:59 pm
The last time the Republicans were solidly in power was during the 1920’s, when they cut the top tax bracket to 24%. The result was a flood of money in the hands of the investor class. That money, in search of a place to invest, resulted in the speculation and over-production that eventually brought us the depression.
With the election of FDR, a different tax model was implemented, a model that remained essentially intact till Reagen came to office. From 1932 till 1981, the top marginal tax rate averaged 79.94%. During the 1950’s and early 60’s it actually topped 90%. Throughout those decades our nation prospered, without the need to run up the national debt, which has since mushroomed under Reagan and the Bush clan.
Prior to Reagan, the lower limit for the highest bracket varied from a few hundred thousand dollars (at a time when a few hundred thou was a very big deal) up to a few million. The well-to-do were free to take their deductions, on which they paid no tax, and to pay what everyone else paid on their initial income. But on everything over a very handsome, some might say obscene, income, they were expected to give the lion’s share back to the country that provided them with a healthy, educated work force, and the infrastructure necessary for their businesses to thrive.
During that period America became a model of success and prosperity to the rest of the world. But Reagan and Bush have started us down an entirely different path. We’re on our way to becoming a banana republic, where the powerful acquire and keep everything they can get their hands on, and everyone else is on their own. Where economic policy is based on unproven or already discredited ideological theory, the future of our nation be damned.
Comment by Leonard —
May 3, 2005 @ 9:23 pm
JR, in anarchy the currency is likely to be gold. That’s what free people have chosen in the past. Still, we have better tech now… so who knows? Maybe one or more popular currencies will be something which nobody has predicted.
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What is absolutely clear is that some currency, or likely, several, will evolve if the state gets out of the business. Money has been invented numerous times in the past, by all manner of people, primitive and technological.
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This is but one small example of a good or service that many people cannot conceive of as independent of a coercive centralized state; yet there is no necessary connection. The fact is, that with the power to coerce the state has a huge advantage in any human endeavor, and can force out all competitors. And so it does. America used to be much freer than it is, and it had a nearly infinite variety of social organizations that performed the functions that the state now monopolizes.
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It’s also a good example about how to think about anarchy. Statists typically are people who demand certain things hold true of their ideal society; and if there is no clear mechanism in place for that, they are unhappy. Anarchists, in contrast, want people to be truly free; if they really want something they can organize it voluntarily. But there is no guarantee that they’ll organize anything in particular; they only will if enough of them want it.
Comment by Rich Puchalsky —
May 3, 2005 @ 11:55 pm
Gah. The thread is probably dead now, but I have to comment on “America used to be much freer than it is”. Unless you were black or female or gay or poor. Yeah, the liberal project of the American 20th century is going to be pretty much incomprehensible if you assume that everyone is a rich white heterosexual guy.
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And some of those social organizations that performed the functions that the state now monopolizes were called lynch mobs.