That’s Why We Call the Tax “Progressive”
Steven Colucci, a public school psychologist (I’m pretty sure), had a letter in the August 12 Providence Journal raising a point that comes up from time to time:
[In a previously published letter, Keith Garrison] notes that the top 1 percent pay 37 percent of the total income taxes. Mr. Garrison makes a couple of egregious errors. In order to compare apples with apples, I would prefer to know what proportion of the income of this top 1 percent goes to taxes, compared with the rest of us …
Secondly, he wrongly suggests that small businesses would be hurt by a tax increase and that jobs would be lost. He curiously leaves out that the tax increase is on personal income and is not a business tax.
I understand that using the word “egregious” can spark a little burst of pleasure, but one should be extremely careful with logic and assertions of fact when deploying it. For one thing, that Mr. Colucci “would prefer to know” one thing doesn’t mean that citation of the other thing is an error. Moreover, surely somebody with the time to write and send a letter to the Projo also has the time to do some quick research.
If Colucci had done so, he might have paused long enough to remember that people talk about the progressiveness of various taxes, and that income tax is heavily weighted against the rich. That is, they naturally pay more of their income in income taxes. At least in 2007, taxpayers earning over $200,000 per year made 24% of Rhode Island’s income but paid 40% of its total income taxes.
Perhaps he’d argue that other taxes ought to be considered as well, which is ground that I covered in 2008. There, he’d find that it’s true that families with higher income pay a smaller percentage of their income in total state and local taxes, but that’s because things like property and sales taxes aren’t calculated on income, but on the value of the item purchased, and such taxes will take up a larger proportion of a smaller income.
The most regressive tax, in this regard, is the excise tax category (such as on cigarettes, gas, and alcohol). According to the table at the above link, the lowest income quintile payed 4.9% of its income in excise taxes, but the portion for the top 1% of earners was 0.3% of income. Put that in dollar figures, though, and you’re comparing $411.60 for the lower category and $2,361 for the higher (and remember that we’re comparing 20% of people with 1% of people). For sales taxes, the number is $268,80 versus $3,148.
One suspects that, for Colucci, nothing will be fair until people who’ve worked hard to have comfortable incomes are taxed such that nobody, regardless of merit, has any less disposable income.
As to the second paragraph that I quoted above, I’d suggest that Mr. Colucci ought to familiarize himself a little bit more with the methods of income taxes. For multiple categories of businesses (sole proprietor, S-Corp, and so on), business income appears as personal income. Unarmed with that knowledge leads Colucci to make his own egregious error.
“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the
higher portions of property in geometrical progression as they rise.” –Thomas Jefferson to James Madison, 1785.
Marxist! Eh?
Implicit in the idea that “the more you make,the more you pay”, coupled with the huge burden shouldered by high income earners, is that the majority of Americans are on welfare. They receive benefits which are paid for by others. Doesn’t this offend anyone?
I am not impressed with “they get more out of America,they should give more”. They have not won a lottery, they have earned it. The phrase above is just a reiteration of “soak the rich”.
Face it, they don’t use the roads anymore than anyone else, their kids do not receive preference in public schools, the army doesn’t defend them any better, municipalities do not plow their driveways.
Hey, I just had an idea! Why don’t we tax unearned income, like lottery and gambling winnings, at 95%.
WF, the reason for progressive taxation is among the central ideas of the founding of this country, that a democracy can’t function with extreme gaps between the rich and the poor (at least not for very long). The founders knew what an aristocracy looked like, having seen the effects in Europe and wanted to prevent the rise of one here. Here’s Jefferson arguing that the rich should shoulder the entire burden.
Roads built and maintained by the government are but one example of how tax dollars are used to increase the wealth of those dependent on transportation of goods. We all use the roadways to get here and there, but without those little conveniences people whose livelihood and wealth depends on selling peanuts to grocery stores, or cars to the consumer, or gasoline to service stations where would those profits derived from public transportation be? Without a civilized productive society full of “little” people buying things, there would be no wealthy individuals, so therefore, Warrington, your premise is fundamentally flawed.
One thing I learned early on is that when you make something free, it has no value. If a sports team gives away tickets to games, people see the tickets as trash. If they even have to pay $1, they seem them as having value.
I think the taxation and welfare systems are similar. When people pay in very little or nothing, there is no value in the services they receive. There are people receiving services from the state that the receivers see no value in, until they’re taken away.
Russ,
Your use of Jefferson quotes is laughable because he was a Libertarian first and is probably spinning in his grave at what liberals have done to this country. For every quote you post there are Jefferson quotes on the limitations of government. You should save them to share with your fascist friends over on RIFuture. Some may claim he was a Liberal but not by the current definition of the word.
Russ,
Whatever Jefferson may have thought (he was referring to “customs” on which the government solely supported itself for many years. “Buy American” would relieve you of the tax.)income tax was not even dreamed of. In fact, it only came into being as an “emergency measure” to fund World War One. One might argue that the “emergency” is over.
Michael,
All of the businesses you refer to already pay a “road tax” on their trucks for use of the roads, in addition to the fuel tax which everyone pays. You fail to mention how else the “little” people would get their peanuts (“goobers” where I come from).
Neither of these points counter the obvious. If you pay little to the government, and receive much from the government which is paid for by others, you are on welfare. This may have political appeal, but I do not see how it is refutable in logic.
RE: Jefferson. Let us not forget he was also quick to point out the features which made blacks inferior (Notes on Virginia). So, it may be assumed he was wrong here and there. That does not mean I ever travel to Washington without visiting the Jefferson Memorial.
“If you pay little to the government, and receive much from the government which is paid for by others, you are on welfare.”
It would be interesting if there was an online tool somewhere that people could go and see what their “value” is for their tax dollars. We could see what we all get for our tax dollars every year, at each of the municipal, state and federal levels.
Examples, take the local highway dept, divide it by the number of people who pay for it, there’s that value. Take the local police, state police, fire, and other similar organizations, do the division, get the value. Same at the federal level. Then figure out a way to know what we pay in taxes each year, and let people see whether they are getting value for their money.
The only way to justify any amount of taxation is on utilitarian grounds. It’s essentially a legalized theft of property from those who earned it to those who did not. It may very well be the case that some level of wealth redistribution through taxes is necessary for a modern society to function, although in my view this should be minimized as much as possible and treated precisely as that – a necessary evil, rather than some sort of moral obligation, which it is not. You are not morally entitled to my labor.
The argument that everyone benefits from taxes is mostly nonsense with limited exceptions. I don’t use public education and many of its graduates are functionally illiterate anyway. I take good care of myself and don’t need socialized medicine. The military is 10x larger than necessary for legitimate defense. I haven’t had any interactions with police besides being harassed over revenue generating traffic tickets and other nonsense unrelated to safety. I’m not stupid enough to set my house on fire, nor will I ever do so. I don’t receive welfare or food stamps or any subsidies. Admittedly, sometimes I use the roads, which are in terrible disrepair, despite costing more every year.
I have no strong objection to taxation or even progressive taxation on utilitarian grounds, but please don’t tell me I benefit from public services because it’s inaccurate and insulting. I’d opt out if I could.
“One thing I learned early on is that when you make something free, it has no value.”
Well, I bet if I locked you in an air tight room you’d change your mind.
The guy who brokers the peanuts, fuel whatever commodity doen’t pay road use tax, and the middle men make a lot of money.
So Jefferson was a libertarian who believed in limited government. So am I and so do I. I just don’t believe unregulated capitalism is an attractive (or the only) alternative.
You right wingers seem to forget that libertarianism isn’t just the anarcho-capitalism in vogue with the Teapublicans.
“Well, I bet if I locked you in an air tight room you’d change your mind.”
Air ain’t free. Want proof? Head to a gas station with a flat tire and no quarters.
WF, yeah, I agree, but what’s important is that Jefferson thought it just to use a vehicle for taxation that affected primarily the rich and that preventing the rise of an American aristocracy was something Jefferson and many others thought was of importance.
“Air ain’t free…”
That’s for the compressor. Ask yourself, how much does the service station pay for the air?
Progressive taxation was not amongst the founding principles of the US. The “capitation” clause included in the original Constitution (Article I, section 9) was intended to make progressive taxation difficult, if not impossible, for the Federal government.
Andrew, interesting point, and I’ll check that out (for my own curiousity… I’m sure you’re correct).
But I was talking about one of the reasons why we have progressive taxation, to prevent extreme income inequality and the rise of a European style aristocracy, which of course was of concern to Jefferson and others.
“But I was talking about one of the reasons why we have progressive taxation, to prevent extreme income inequality and the rise of a European style aristocracy, which of course was of concern to Jefferson and others.”
Can you cite that theory? Jefferson may have been concerned about aristocracy but progressive taxation was designed to lessen the burden on lower income. It had nothing to do with restraining income or wealth. You seem to be twisting history to fit your own theory.
Which theory? I stated that I personally believe progressive income tax (or other methods of lessening income inequality) are necessary to maintain a functioning democracy.
Jefferson for his part wrote about the threat to democracy of “an artificial aristocracy founded on wealth” (for instance below) and of his concern for “inequality of property” that I mentioned above.
OK, you want theory. Found it.
Plato (427-347 B.C.):
“The form of law which I propose would be as follows: In a state which is desirous of being saved from the greatest of all plagues — not faction, but rather distraction — there should exist among the citizens neither extreme poverty nor, again, excessive wealth, for both are productive of great evil . . . Now the legislator should determine what is to be the limit of poverty or of wealth.”
btw, the beginning of that Jefferson quote above goes:
“Examples, take the local highway dept, divide it by the number of people who pay for it, there’s that value. Take the local police, state police, fire, and other similar organizations, do the division, get the value. Same at the federal level. Then figure out a way to know what we pay in taxes each year, and let people see whether they are getting value for their money.”
… one more step: do it for every state and then list them (all 58 states) from highest to lowest. Good idea, Patrick.
What you said Russ:
“But I was talking about one of the reasons why we have progressive taxation, to prevent extreme income inequality and the rise of a European style aristocracy, which of course was of concern to Jefferson and others.”
…is not phrased as a ‘personal’ opinion and I was not aware that Plato was one of our founding fathers. You got me there. That is definitely news to me.
Just sticking this in where it might get read. In the discussion about S&P lowering the rating on government bonds, I made the point that they were paid by their subscribers, and the rating was their opinion to subscribers.
When I was involved in this stuff, S&P sold a book to subscribers the “bond manual”. That was the source of their income.
Since then things have been reversed, the issuers of bonds now hire S&P, that is now the chief source of their income. The possibility for conflict of interest is huge. I do recall that they were giving AA ratings to bonds based on junk mortgages.
Dan writes;
I’m not stupid enough to set my house on fire, nor will I ever do so.
But your neighbors may have a problem that could affect you. Or you could be involved in a motor vehicle accident that is not your fault. In those cases I think you would hope for a rapid response of trained emergency crews that a portion of your taxes help maintain. Do you feel better?
“But your neighbors may have a problem that could affect you.”
Statistically very unlikely. My neighbors aren’t that stupid either, and I’m not going to buy a home right on top of theirs. If I were super risk averse, I’d simply buy insurance on my home and belongings. Like most insurance and socialized services, it would more likely just be money down the toilet for me.
“Or you could be involved in a motor vehicle accident that is not your fault.In those cases I think you would hope for a rapid response of trained emergency crews that a portion of your taxes help maintain. Do you feel better?”
Again, statistically unlikely since I don’t drink and drive or drive at fast speeds, and I’m a defensive driver. Sure, all sorts of terrible things theoretically could happen to me at any moment. I accept that as a part of life and I don’t want to spend thousands of dollars every single year in the least efficient manner possible to ensure that I can get aid (which probably won’t help me anyway) in those cases.
I understand the aim of progressives is to carpet the entire world for everyone, but I’d much rather hold on to my money and simply wear shoes. I don’t even want to think of the many thousands of dollars I’ve wasted on car insurance due to state mandates. New Hampshire doesn’t have such a requirement and the world doesn’t fall apart.
Just be honest – we both know that all these liberal services aren’t going to help people “like me.” If I lobotomized myself, stopped working, and fathered a dozen or so children, I might start getting a return on investment after the politicians and union leaders took their share.
Or, one day you might wake up and your legs feel a little funny, and a few weeks later you are dropping things, and a month after that your vision gets blurry, and a few years after that your mind isn’t quite as sharp as it once was, and a few years later you are walking with a cane, and then a wheelchair.
It happens.
Sh*t happens and life isn’t fair. Unlike progressives, I disdain but accept both of these realities. What makes life precious is the fact that it is fleeting. Each day I try to remember how lucky I am to live in relative freedom. I ask only that others do not trade my freedom away in the name of some hollow security.
” I was not aware that Plato was one of our founding fathers”
Sure he was! Along with Confucius and Maimonides …
michael
He has not seen the things that you have seen.
Ignorance is bliss.
That’s Why We Call the Tax “Progressive”, Life Expectancy Follow Up, and Facing Reality. Three consecutive post all of which some how broke down into a public safety union hand-grenade match. Not that I wasn’t partially at fault but it is getting kind of old.
It’s what they want, Max. View Crowley, Liedecker, Rainone, Tom Kennney, michael, etc. in action – turn everything into a battle and leave no one unscathed. They want the “enemy” (bloggers, taxpayers, unfavorable politicians, etc.) to run out of energy, get dragged through the muck they live in, and for the public to get tired of constant warfare. They know this is just a hobby for us – for them it’s their livelihood. More money is at stake for them than it is for us so they fight harder. It’s their turf. One of many reasons why it is an unwinnable war.
Max, I didn’t realize the idea was a contentious one. I’ve given you more than one quote from Jefferson on the subject. There are, of course, many, many more about the corruptions of wealth on a democracy…
And for the record the Greeks were the “founding fathers” of democracy (I guess that’s what I get over here for trying to provide an honest answer to a question).
“Michael, He has not seen the things that you have seen.”
Max, we were talking about my wife who was diagnosed with MS in 1991, nothing to do with public safety. Personal responsibility was the topic, misconstrued into a public safety theme by those who see it that way. I tire of the public safety topic as well.
Notice how Jefferson is the only Founder that Russ quotes? Perhaps because Jefferson was the most speculative and inconsistent mind among the leading circle of the Founders, and one whose personal life mocked his written positions. But Russ tries to use Jefferson as the icon for all the Founders in order to establish a false historical justification for Progressivism. We see through it.
“Notice how Jefferson is the only Founder that Russ quotes?”
I also quote Paine once in a while, who by the way specifically proposed progressive taxation as a defense against primogeniture, exactly the reason I gave above.
As for TJ, I’m a UVA grad and have read many, many of his writings. What of it? Now you guys are suddenly against quoting the Founders?
For those of you who don’t want to take my word for it (and who aren’t afraid to read something you might disagree with)….
tiny.cc/dsv1k
Dan,
Thanks for bringing up my name again as some sort of wack-job. That’s OK.
Let’s see: [[[ The argument that everyone benefits from taxes is mostly nonsense with limited exceptions… The military is 10x larger than necessary for legitimate defense. I haven’t had any interactions with police besides being harassed over revenue generating traffic tickets and other nonsense unrelated to safety. I’m not stupid enough to set my house on fire, nor will I ever do so. I don’t receive welfare or food stamps or any subsidies. Admittedly, sometimes I use the roads, which are in terrible disrepair, despite costing more every year. ]]]
Good of you to admit that you “sometimes use the roads”. You have no need or use for the military…police…fire…rescue…because you’re special? Because your not “stupid”?
Who is the wack-job, really? And you expect me (or others) to listen to your arguements on government responsibilities?