Day: October 11, 2012

Check this out.

We hear a lot these days about ‘entitlements’. Usually, this is a disparaging term used to slam the mooching 47% who don’t pay federal income tax. But, IMO, if you want a sense of entitlement, you really have to watch someone with money in action.

However, the point to make about this is why progressive taxation is appropriate. It’s because the wealthy generally use more of government services than us common folk.

OK, maybe some of them do create jobs. At least, a few jobs. How many jobs does your average hedge fund create directly? A few dozen? Maybe a few hundred?

And, no, we’re not counting auxiliary jobs, the butchers and bakers and candlestick makers who serve the monied elite. Not that these jobs don’t count, but, somehow, the pro-wealthy side never considers the auxiliary jobs union wages create.  So we’ll play by their rules.

But let’s say they happen to employ actual working-class workers. What do the wealthy expect?

The right to a healthy, educated workforce. Who educated these workers? Yes, taxpayers.  Most of us pay to help educate our kids. But those at the top of the pyramid have to educate many more people than their immediate family.  If they require educated workers, shouldn’t they pay a bigger chunk of the tax burden? After all, they are the ultimate beneficiaries of the education.

Shouldn’t the people using the service pay for it? If I need more education, shouldn’t I help pay for that?

Roads. I drive 10 miles to work each day, and 10 miles back. I need public roads for this. I depend on them. So, I pay gas taxes, etc. Fair enough. But if I need roads and bridges to transport my goods to market, then I’m gaining more benefit than the person who’s just driving back and forth to work? If I’m deriving extra benefit, shouldn’t I be expected to pay for a bigger share?

Who benefits? Should the one who benefits most pay more?

The military. If I decide to manufacture my products in a low-wage country, I have to ship my stuff to the market here, or wherever. But, what happens if every tenth, or twentieth ship is hijacked by pirates who steal my shipful of goods and then sell them, stealing my profit. This changes the cost structure significantly. Who makes sure this doesn’t happen? The US military plays a huge role in enforcing the freedom of the seas.

So, again, who benefits from this? The people who decided they could increase their profit margin by sending US jobs offshore.  Since pretty much all of this extra profit has been retained by the upper echelons, they become the biggest beneficiary of the taxpayer-supported military. Given that they benefit the most, shouldn’t they pay a bigger chunk of their income in taxes?

I’m not talking redistribution of wealth; I’m talking about basic fairness. It’s not unreasonable to expect people who benefit more to pay more for a service.

Things I’m aware of: yes, all of society benefits from these things: education, infrastructure, cheaper goods. However, the top echelons benefit significantly more. Of every $1 in increased wages since 1980,  something like 54 cents has gone to the top 1%.  They are confiscating 54% of income increases; how is it unjust to expect them to pay an extra 10% of that increased income in taxes?

Yes, I’m aware that the top few percent pay something like half of all federal income tax. Well, that’s because they have all the money. Here’s the thing: if you pay a lot of taxes, that means you made a lot of money. There is a direct correlation. It’s really simple. In the final analysis, you’re coming out ahead in the long run.  I have never,  ever,  in my whole life heard of anyone refusing a pay raise or promotion because of the extra couple % of taxes they’d have to pay.

I mean, really. Let’s be serious.

The thing is, most of what we pay taxes for benefits those at the top of the pyramid far more than those at the bottom. The relationship for the bottom may be more direct, and so easier to identify and then attack, but that does not make those at the bottom ‘moochers’ or ‘takers.’

The military alone is 20-25% of the budget, and the vast majority of that benefits capital to a very large degree. Absent the military, and there would be a huge incentive to keep production here in the US to avoid problem areas of the world. We would have a huge incentive to look for alternatives to imported oil to run our businesses and our cars. Maybe we wouldn’t be driving around in 6,000 lb vehicle that measure fuel efficiency in gallons per mile. (It’s deliberate.) Who benefited from the invasion of Iraq? The Oil Companies. Gas went from $2/gal to $4/gal, without any real increase in the actual expense of the cost of production.

As for Social Security and Medicare which also chew up a significant chunk of the budget, a case can be made that corporations receive outsized gains from these programs. They alleviate the need for a pension, and for the employer to pay medical expenses of retirees.  Look at the contract that GM negotiated with the UAW.

The UAW took on the pension and medical expenses of retirees in exchange for a large lump-sum payment. This got GM out from under the financial burden of these obligations, which they had freely given to the workers in previous contracts. IOW, GM was allowed to break its contractual obligation to make these payments. As a result, GM is once again profitable.

Cui bono? Not new workers, who now make less than those who were on the payroll when the contract was negotiated. So, it was those on top. Once again. Surprise, surprise.

Given that, why shouldn’t those at the top pay an extra 10-15%?

How is that outrageous? How is that immoral? They’re using the services, why shouldn’t they pay for them?  They are, after all, reaping the lion’s share of additional profits,

Note: the successful and logically consistent rebuttal to this thesis would require proof that the economic elite DO NOT receive an outsized benefit from the services provided by government. Talking about incentives, or morality, or moochers is all beside the point and does not address the thesis.