Societal Debt

The following is a response to a picture going around on the internet:

Yeah, I saw the picture, but I find that it has several nearly insurmountable shortcomings as an argument for the increasing the marginal tax rate on the rich.

First off, it is not at all clear that the premise necessarily implies the conclusion. In other words, the fact that society contributed to the making of you does not necessarily entitle society to the sweat of your brow. I would be remiss to not point out the works of a philosopher on this matter of justice: http://www.econlib.org/library/Columns/Jasaydog.html

"There is a minor and a major point to recognise. The minor point is that the "framework" is not a person, natural or legal, to whom a debt can be owed, "institutions" do not act, "society" has no mind, no will, and makes no contributions. Only persons do these things. Imputing responsibility and credit for accumulated wealth, current production and well-being to entities that have no mind and no will is nonsense. It is a variant of the notorious fallacy of composition.

Once this is understood, we can move on to the major point. All contributions of others to the building of your house have been paid for at each link in the chain of production. All current contributions to its maintenance and security are likewise being paid for. Value has been and is being given for value received, even though the "value" is not always money and goods, but may sometimes be affection, loyalty or the discharge of duty. In the exchange relation, a giver is also a recipient, and of course vice versa."

In the broad scheme of things, all this is part of the universal system of exchanges. Some of these exchanges may be involuntary. Such is the case where redistribution, a coercive act, is taking place. We then lose the trace, the precise measure and the assured reciprocity of contributions to wealth and income, but this circumstance can hardly serve to justify the very redistribution that has caused it. However, where exchanges are voluntary, tracing and measuring become, in a strong sense, otiose and irrelevant. For in a voluntary exchange, once each side has delivered and received the agreed contribution, the parties are quits. Seeking to credit and debit them for putative outstanding claims is double counting.

In other words, the fact that others worked to make you who you are does not entitle them to what you produce unless they have gone uncompensated for their work.

My second major objection is that it is not at all clear that the recommended course of action follows from the conclusion of the argument. Even if I were to grant that because the rich benefit disproportionately they should pay more, the only taxation method that this argument rules out is a per person flat tax. If there was a simple 17% flat tax on income or consumption, the rich would still pay a disproportionate amount of taxes relative to their percentage of the population. The argument pushed by Elizabeth Warren, and others of the same ilk, does little to philosophically recommend that the rich should pay a higher percentage of their income relative to the poor. Putting that aside, what we have already is a highly progressive income tax, in which the top 50% pay for almost all government operations, and the top 10% pay more than 70% of the taxes that go to the IRS.

Even if I do grant the conclusion that the rich ought to pay more, it has absolutely no practical application in the real world. Why should I believe that a flat percentage tax is any more unjust than a progressive tax? Why should I believe that the current progressive tax is less just than a more progressive tax? This argument does nothing to answer either of these questions.

Finally, there's the matter of consistency. If this is indeed the premise that we operate under, then the government ought to tax business leaders proportionally to the resources they use. That means that in order to remain philosophically consistent, we ought to tax businesses that hire graduates from public high schools and colleges at a higher rate than those that hire private school graduates. We should also tax businesses that sell products and services to public school graduates at a higher rate than those that sell to private school school graduates. Such a policy would be literally absurd, but falls well in line with the line of reasoning. If a business leader should pay higher taxes because he uses more of "society's resources," then it is only fair that a business leader who uses less of society's resources be taxed at a lower rate.

Other than those three crippling points, I find the reasoning to be flawless.

anachronism n. - person or artifact appearing after its own time or out of chronological order
tyro n. - beginner; person lacking experience in a specific endeavor.