Why Our Progressive Tax is Best for ALL

American Tax Policy Has An Ethical Foundation

Congressional gridlock surrounding the United States Tax policy now resembles an ancient holy war with Tax Relief Crusaders and Left-Wing Secularists defending immovable positions by any and all means. The nastiness of discussion, misrepresentation of facts, and general lack of civility serve none; yet we choose to speak in political code and refuse to talk clearly about the most fundamental issue of disagreement—the ethical component of our progressive tax structure.

US_federal_effective_tax_rates_by_income_percentile_and_component

By (Graph) Peter G. Peterson Foundation / (Data) Tax Policy Center http://pgpf.org/budget-explainer/taxes SOURCE: Tax Policy Center, Table T13-0174, July 2013. Data are for 2014. Compiled by PGPF. NOTE: *Individual income tax rates for the lowest and second lowest quintiles are negative and are netted against the payroll tax rate. A quintile is one fifth of the population. The breaks are (in 2013 dollars): 20% $24,191; 40% $47,261; 60% $79,521; 80% $134,266; 90% $180,482; 95% $261,471; 99% $615,048; 99.9% $3,170,865.

The Left speaks about the rich paying “their fair share,” while the Right harps on the overburden and restrictions on the so-called “job-creators.” Both positions appeal to fairness, and it could be argued that anything other than a flat tax  (equal percentage) or equal amount is unfair, but fairness is not the only consideration in our tax design.  [see my post on fairness at Tax Fair Share for that discussion.]

The Left speaks about the rich paying “their fair share,” while the Right harps on the overburden and restrictions on the so-called “job-creators.” Both positions appeal to fairness, and it could be argued that anything other than a flat tax  (equal percentage) or equal amount is unfair, but fairness is not the only consideration in our tax design.  [see my post on fairness at Tax – Fair Share for that discussion.]

Accepting the legality of the United States Federal Income tax, and that it has been progressive since its inception—almost 100 years—why is it progressive? Who made this initial decision and why? What is a fair level of progression? Is our progressive structure a mistake? I could list dozens of similar questions, all of deepening complexity, and that all lead to the foundations of philosophy and civilization itself.16th Amendment

Absent the knowledge and intellectual capacity to explore the philosophical nature of tax structures in depth, I argue that morality alone is sufficient reason to justify and continue our progressive structure. I find it easiest to explain my reasoning by referring to a recent discussion I had with a very close friend.

Morality Alone Is Sufficient Reason to Continue Our Progressive Tax

My friend complained about his taxes, and that he felt it unfair that he “should have to pay for others who have made poor choices in life.” At first I was very surprised that a successful and very rational person would arrive at this conclusion, then the more I thought about it, I realized this view is very common in our society—particularly within the conservative, and perhaps not-so-compassionate right.  Then again, did Congress originally install a progressive tax structure from inception because the rich are best positioned to pay a larger share? If so, how much larger?

I believe this view of paying for others’ poor choices is far too simplistic.  After all, we can only take pride in those things that we have control over in our lives, and where we enter this life is not one of them. It would be safe to assume a healthy child born to a middle class family somewhere in Connecticut would probably (not always of course) be raised in some form of Christian environment, with a supporting structure of typical American culture and values. Of course, this child had no influence on where he was born into this world, he was simply fortunate–or not. Therefore, if you enter life on the middle of the societal ladder, you can only control how much you achieve based on where you start.

On the other hand, another child could have been born on a rock pile somewhere in a desolate portion of the middle east or Africa, and this child may be raised within an Islamic culture, taught to hate the west from a young age, and face an entirely different standard of living–including education and even nourishment. This second child would probably become a fine upstanding citizen; however, he could also end up channeled into an extremist adulthood; either way, this child also had no say where he was brought into the world.

A third child may be born into a poverty stricken broken household and never taught solid values, leading to poor education and involvement in gangs, drugs, and crime–again, this child did not select his entry point in life.

My response to my friend is that none of us can take pride in our socio-economic position, other than relative to where we enter life. Rich kids can be lazy and achieve nothing while poor kids can become leaders and industry titans. If you were born into a less than optimal situation far down the ladder of life, would you not hope that those above you reached down to help you?  To use a favorite phrase of our elected leaders, “Let there be no mistake!”  Not a single one of us can take responsibility for where we enter the world.  If we are in a position to help others, we were either born into that position or climbed with extraordinary determination; either way, those below us who are not as capable must not be left along the side of the road, for in most cases it is only simple luck that we are not one of those less capable.

As with so many areas in life, if we follow that most basic tenet of behavior—treat others, as you would like to be treated by others—then our moral and ethical obligation is clear.  A progressive tax structure is not a “re-distribution of wealth,” it is simply doing the right thing for a fellow human being.

I believe we all have an obligation to reach down and help those around and below us, for in the long term, this will enable all segments of society to raise their standard of living. For this reason I don’t mind paying more taxes than others, because not all paying less have made poor choices, most have simply been unlucky in their entry point.

So now the question is how much more? I find this the simpler part of the question to answer.  As much as is necessary to ensure that not a single person in the country is left homeless, hungry, or without food and proper medical care—not a single person.

Can we all achieve complete equality? No, of course not. That has never been, and will never be our goal. But we can guarantee a fairly high minimum standard of living while preserving our unique American style of life. Perhaps a single slice of collectivism is exactly what we need to make that life even better?

Sincerely,

Mark G Capolupo

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Wallababy
Member

The entire system is broken. It doesn’t really matter what the rules are for corporations of people, they both finds way to avoid paying what they should.

Look at Apple (AAPL), they have about $55B overseas and simply leave it there to avoid repatriating it and paying a 35% tax–this is hardly a system that works.

Teradactl
Member

I think the most fair is the consumption tax, you use, you don’t lose it, you pay for it. It’s is that simple.

The PATRIOT
Member

Fair you say? Fair is fair is fair, not 10% of the richest paying 70% of total taxes. Check this out http://www.taxfoundation.org/news/show/250.html#table1

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