Wednesday, January 25, 2012

Taxes as punishment

One of the arguments I always hear from people on the right, is that progressive tax rates are a "punishment" for being successful.  The theory is that people will be less motivated to produce and succeed because as they make more money, they pay more taxes. 

What I want to ask is, Why do you view taxes as a punishment?  Don't we receive goods and services in return for those taxes?  I realize that many of the benefits of government are difficult to see and understand, and therefore difficult to put a true value on.  What is the value of the freedom and safety we receive from our defense department, and how do you quantify it? 

I think we can all agree that we all receive something in return for tax dollars, so we aren't just throwing money into a black hole.  Therefore, I think we can agree that we should all pay at least some taxes.  If we agree to that, then taxes should not be viewed as a punishment.  I will grant that some people will be unhappy with the value they believe they are receiving in return for their tax dollars, but this is not punishment.  Punishment is real and objective.  The real disagreement lies in how much taxes we should be paying, which is subjective. 

In fact, I would argue that a progressive tax system represents exactly the objectively measured value a citizen receives from the government.  The government is supposed to ensure that every citizen is free to pursue happiness.  The more money you make, the more freedom you have to pursue your own happiness.  The more money you make, the more value you are receiving from the government, therefore the more money you should be paying in taxes.

Further, I don't think our motivation for success comes down to the marginal tax rate we pay on the next dollar we earn.  Progressive tax rates do not mean that people pay different tax rates, they mean we all pay the same rates on our income, but the dollars get treated differently.  My first dollar of income gets taxed at a different rate than my 50,000th dollar, which gets taxed at a different rate than my 1,000,000th dollar.  If I don't happen to make that 1,000,000th dollar this year, that does not mean I paid less in taxes than a millionaire did.  We all pay at the same rate.

In the end, nobody likes to pay taxes.  I just want people to be honest in the discussion. 

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