Taxation: The Unsung Civil Rights Issue

I recently had a discussion with one of my “moderate” friends about the nature of the federal income tax system. He expressed the commonly held sentiment that those who make more money should pay a higher percentage of their income to the government simply because they can afford to, and that they somehow have a moral obligation to do so. Setting aside the fact that such a policy creates a society of freeloaders who feed off the productive, I pointed out to him that a progressive income tax relies on income discrimination, and arbitrarily grouping people into income classes.

It is odd that almost sixty years after the onset of the Civil Rights Movement, after a plethora of court cases and statutes outlawing discrimination based on attributes like race, color, ethnicity, religion, and gender, we still have widespread discrimination in this country, practiced by the federal government itself, with regard to a policy that affects all working men and women. If those other forms of discrimination are so lamentable, and I believe they are, why should we continue to allow equally insidious discrimination in our tax policy? My friend pointed out that those other attributes are not matters of choice because, for example, one cannot change their race or ethnicity, while level of income is a matter of choice. I think he’s one-hundred percent correct, but it creates a couple of problems for his overarching argument.

If it is the case that there is significant income mobility in the economy (i.e., income is a matter of choice), then people have the power to either increase or decrease their income at will. But one of the main points in favor of a progressive income tax is that there is a lack of income mobility in the economy to the extent that income must be redistributed in order to compensate for what people are unable to earn by working. Therefore, if level of income is a choice, then there is no need for a progressive income tax in the first place. However, if it is not a choice–a concept I reject–then according to my moderate friend, that is even more reason why it should not be subject to discrimination. Either way, a progressive income tax is unjustifiable.

The concept of income as a choice also leads to a more traditional argument against the progressive income tax. If you arbitrarily tax the “rich” at a higher rate than the “poor,” then the rich will choose to work less than they normally would because¬†their work would no longer be worth the amount of money they got to keep after taxes. As a result, they will not aspire to high-earning jobs, and their new work will be less meaningful and useful. In effect, you will see a decrease in productivity within the economy. And when that happens, where does that leave the poor who benefit from the progressive income tax’ redistribution of income?

No matter who you are or how you look at it–whether you work or don’t work, or whether you consider yourself rich or poor–taxation is a civil rights issue. It’s time we as a country started to treat it like one. Now is the time to end discrimination in our income tax policy, oust the progressive income tax, and replace it with a system that treats all earners and producers equally.

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6 thoughts on “Taxation: The Unsung Civil Rights Issue

  1. Discourse America

    Well written post. Taxation as a civil rights issue is an interesting way of framing it. I think that the issues you brought up are worthy of consideration. One thing that I do not necessarily agree with is that those who earn the most are the most productive. I look at this two ways. I am an engineer and a manufacturing team leader. In terms of manufacturing, managers, engineers, HR, accounting, etc. are non-productive parts of our business. The wage earners who actually produce our products are often the lowest paid, yet they produce the most. Another thing to look at is people like Paris Hilton, movie stars, athletes. They produce little for society, but they are obscenely paid or in Ms. Hilton’s case “rich” through inheritance; she’s produced nothing. Nonetheless, your points have merit and Americans should consider them.

    Reply
    1. Jacob Fishbeck Post author

      I can neither agree nor disagree with your claim that those who earn the most are not necessarily the most productive. Someone’s wage/salary, aka the price of their labor, is not contingent on how much of a particular tangible good that person produces–it’s contingent upon how much the purchaser of that labor (i.e., a business owner/primary shareholder) values the labor. That level of value is based on the supply and demand for a worker in particular job market (e.g., the demand for steelworkers determines the steelworker’s wage).

      People should be able to do what they want with their accumulated wealth, and that includes being able to will money to their relatives. Yes, the recipient of the inheritance might produce nothing, but that is their prerogative. People inevitably differ on what valid or wise uses of money are, so such judgment must be retained to only the owner of the wealth in question.

      Reply
  2. ryanmikeorr

    Certainly a compelling argument, and an interesting way of framing it, but I fail to see any practical alternative to a progressive income tax that does not disproportionately harm the individual earning a lower income. If all earners are taxed at a level percentage of their income, those that earn less will be effectively paying a higher tax rate than those earning more. In most circumstances, those that earn the least among us as a society are the most vulnerable, which to my mind means they should not be taxed higher than those who earn more and can “afford” (your words) to pay higher taxes. Of course, this all assumes that one believes a government should have a moderately high tax revenue, which you may disagree with in the first.

    Reply
    1. Jacob Fishbeck Post author

      I don’t think my response will be very satisfying to you, as my views have changed in the last four years; and as you may have surmised, I don’t think the government should have moderately high tax revenue–I think it should have no revenue, in fact.

      If I were to re-assume my mindset from 2011, however, I would probably respond thusly: The United States federal government has a spending problem, not a revenue problem. Revenue levels currently currently match the average for the last 50 years, while spending levels are above that average. Also, spending is expected to balloon over the next 35 years, exacerbating the problem. Lastly, as far as solutions go, raising (or lowering) taxes on the rich seems to have no discernible effect on revenue as a percent of GDP.

      http://www.heritage.org/federalbudget/federal-government-spending-problem
      http://www.heritage.org/federalbudget/americas-deficit-federal-spending
      http://www.heritage.org/federalbudget/income-tax-receipts

      So before we can address tax burdens, we need to address spending. That said, the federal government seems to have no compunction running massive deficits, so this should grant us some leeway in how we define “practical alternatives” to the progressive income tax. To state it differently, since balancing the budget is not a high priority for the federal government, there is no obstacle to implementing a more fair tax system. We wouldn’t have to increase the tax burden on the poor, just lessen the burden on everyone else until we have equality in tax rates.

      By the way, a major way the federal government currently finances its deficits is through inflation, which disproportionately harms the poor.

      Reply
      1. ryanmikeorr

        Great response, and I really can’t disagree with anything you’ve said there. I would certainly agree that spending is the issue, not revenue. Anyway glad to have found your blog, looking forward to checking some of your other stuff and seeing what you continue to publish! Cheers,

        Reply

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