mindlace

There’s an argument going around that the tax system is inequitable because the richest Americans pay a disproportional percentage of their income in taxes, while not receiving “more” government than poor folk. This isn’t the case, in a more balanced analysis.

They do receive more government services than an individual poor person: they get more protection from the police because they own more property. They get more from the Securities and Exchange Commission, the US Treasury, and the diverse set of agencies involved in protecting, regulating, and managing money, because they use more money and own more securities.

They receive more from the United States military because they own more foreign assets, more from local, state, and government judicial systems because they use courts more, the Interstate Highway System, because they and the goods they demand use it more, the Federal Aviation Administration because they fly more, the National Institutes of Health, because they get more health care, especially newfangled drugs, treatments, and surgeries.

Another factor in progressive taxation is the observation that we do not live in a perfect meritocracy.

While it is certainly true that the number of “High wealth” slots in this country is not fixed, neither is it true that a hypothetical optimal assortment of wealth according to greatest ability/highest demand would result in the current crop of “winners” being chosen.

In other words, rich people are rich in part because the way we structure our society and our markets mean that their place on the top is driven in part by externalities.

People don’t generally see it this way; we tend to falsely correlate ‘good’ events to our own agency and ‘bad’ events to exterior agency. When you are rich, especially if you didn’t inherit the wealth, it’s easy to be blind to the externalities (I’m a white male raised in an upper middle class home) and focus on the internalities (I’m smart, I work hard). The transitive analysis leads you to the sort of casual cruelty that the bum on the street is there because he doesn’t “want” things to be better, or doesn’t have enough of a “work ethic”.

So we disproportionately tax the rich because they *do* receive more government services, and to recapture externalities: what came from social context should go back to funding more social improvements to aid in the creation of the next generation of rich folk.

Of course, the real problem is that corporations pay less taxes than all but the poorest Americans. As pure social fictions given weight by the inertia of history, a corporation’s wealth is substantially less meritocratic than that of an individual, and their reliance on and benefit from social institutions is absolute; without Government there would be no Corporation.