Saturday, January 07, 2012

Thou shalt not covet

Here's the conclusion to George Will's article: "Government: the redistributionist behemoth"
Try a thought experiment suggested decades ago by University of Chicago law professors Walter Blum and Harry Kalven in their 1952 essay “The Uneasy Case for Progressive Taxation,” published in their university’s law review. Suppose society’s wealth trebled overnight without any change in the relative distribution among individuals. Would the unchanged inequality at higher levels of affluence decrease concern about inequality?
Surely not: The issue of inequality has become more salient as affluence has increased. Which suggests two conclusions:
People are less dissatisfied by what they lack than by what others have. And when government engages in redistribution in order to maximize the happiness of citizens who become more envious as they become more comfortable, government becomes increasingly frenzied and futile.
The populist/class war mindset just escapes me.  There are some people who have done very well, no doubt, and many if not most deserve their success.  In what way do I - or anyone - have a right to a portion of that success?  If these people have come into money in some illegal fashion (e.g. Bernie Madoff) then of course they should be punished.  But punished (e.g. "millionaire's surtax") for success?  Why would we want to demonize and de-incentivize that?

I just finished reading Keith Richard's autobiography "Life" and somewhere in the middle he wrote that Great Britain imposed a 95% millionaire's tax (something like that - I had to give the borrowed book back).  Keith and Mick essentially fled the country and the Stones recorded "Exile on Main Street."  Long story short: Keith, Mick and the rest of the band are now "non-citizens" of England in that, to escape the tax bite, they can only spend three months a year in their homeland.  Keith Richards now lives in Connecticut.

In other words: somewhere along the way Richards' taxes moved from "onerous" to "punitive" so now England gets none of it.

9 comments:

Bram said...

Mick Fleetwood, Paul McCarthy, Eric Clapton - there are lots of Brit stars who left the UK for taxes.

Ironically, George Harrison was the most pissed (and wrote "The Taxman" in reaction), but never left.

I never understood the whole Jealousy, Envy, Redistribution philosophy of the Left. Why would you want wealth other people earned instead of an opportunity to earn your own?

Eric said...

Speaking of that, before she died of cancer, Linda McCartney did everything legal to avoid Britain's 40% inheritance tax.

More to it than that said...

Emotionally you may be correct, but in practice, your philosophy does not address the rigged roulette wheel at Rick's Cafe Americain which represents too much of our economy.

The failure to find fault with this reality is one thing. But passing off a false astonishment that anyone could object to it is vulgar.

George Will obviously skimmed Blum & Kalven at top speed. Also in the pages of “The Uneasy Case for Progressive Taxation" -- um, the title's kind of a giveaway -- Blum and Kalven advocate for proportionate taxation, which they call a "degressive tax." They write: "An equitable apportioning of sacrifice requires inflicting equal hurt on each taxpayer." They argue that taxation should therefore properly be scaled commensurate with ability to pay. Starting to sound like a "millionaire's surtax" to you?

Eric wonders why would we want to "demonize and de-incentivize" the amassing of wealth. Blum and Kalven didn't agree: "Progression does not impair incentive since the highest income is still the highest income both before and after taxes however high the marginal rate of tax." They even argue that higher tax rates INCREASE incentive, by inspiring people to work in order to maintain their net position after taxes.

You can decide whether these arguments have merit. George Will was clearly in too much of a rush to notice them at all.

Blum & Kalven's work also examines other arguments for progressive taxation and general welfare programs, and criticizes or downplays them. That's the part of their analysis that conservatives latched onto. But it's only a part. They're clearly trying to find an equitable middle ground, something that doesn't interest George Will at all. You would do well to gravitate towards the Blum/Kalven method the next time you're reflecting on the meritless greed of the people who don't get to push the hidden button on Rick's roulette wheel.

Eric said...

Well, my friend, wouldn't an "equitable apportioning of sacrifice" imply that ALL taxpayers should throw something into the pot. Somewhere around 45% of taxpayers pay zero federal tax while the top 1% pay for 22% of everything.

You know a month ago, there was an internet sensation of a girl from Maine who wrote about all the welfare queens coming into Walmart and abusing their benefits on cigarettes and candy bars. I didn't link to it because: big surprise, there's always going to be a handful of people who are bad eggs in an otherwise good system (see: Solyndra.)

The dunning of those awful "rich" and the class warfare raged by the Democrats is based on resentment and envy. And to access our "five minute hate" we're supposed to imagine the rich are ALL hoarding their big gold piles while we huddle in rags.

I would guess the roulette-fixers are as rare as the welfare queens. But Obama and his buddies are intent on making them out as Scrooge. Really, Bill Gates? Warren Buffett? Pinch Sulzburger?

I believe I advocated some time ago of letting the Bush tax cuts expire because then everybody would feel the bite of the government that's out of control with spending and borrowing. I can't say for sure but I wonder if Blum and Kalvan would support it also. After all, there would be "equitable sacrifice" plus the rates on the rich would rise more meaning they'd pay an even bigger share of the total tax bite. But why have "shared sacrifice" when you can have class warfare?

One other thing: there IS one unfair advantage the rich have, out of reach from us regular people. When taxes get too high they can flee to another country, or hide the money in the Cayman Islands, or set up blind trusts (right, John Kerry?) Then none of it ends up in the private sector or government coffers - but we showed 'em!

22 Black said...

In the last quarter century, the average pre-tax income for the bottom 90% of American households decreased by $900. However, the average pre-tax income for the top 1% increased by more than $700,000 per year over the same period.

To truly believe your own "it's all resentment and envy" horsesh#%, you also need to believe that the fundamental value of work is worth more than 700 times what it was worth in 1985.

And actually, the true value of today's work has to be much greater than 70,000% more, because "Obama and his buddies" have worked so tirelessly to siphon the rich dry.

Eric said...

OK, let's say what you say is true - and I have no reason to doubt it. The new Atlantic magazine has a series of reasons why income disparity has widened.

My question is: what has it got to do with me? We live in a consensual capitalistic system where value is placed on a person's capabilities. I went back to school and found a much better job a year ago. But I don't sit around sulking that Madonna can afford a villa on Lake Como while I have to settle for camping in Vermont.

Roger Bournival said...

In the last quarter century, the average pre-tax income for the bottom 90% of American households decreased by $900. However, the average pre-tax income for the top 1% increased by more than $700,000 per year over the same period.

Obviously, then, the rich aren't being taxed enough!

Bram said...

"they can flee to another country..."

Joseph Kennedy was furious at the tax rates he was getting charged on his oil companies. So he moved the operation to Fiji. That is where most of the Kennedy trust is located now. And when non-elected family members pass away, they all turn out to be FL residents.

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