Magic Poriferan
^He pronks, too!
- Joined
- Nov 4, 2007
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I wrote this post in response to a thread asking for arguments in favor of taxation and against a flat tax. I wanted to keep it saved somewhere for my purpose, but I also think it actually follows from last few entries pretty well.
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Big projects that take an enormous amount of coordination, like deploying a military or maintaining national infrastructure, are things that generally require not only an enormous amount of money, but also for that money to be applied with a great deal of focus. Who's going to get that kind of money and where? The government, from taxes.
To expect something else, like a bunch of private businesses or non-profit organizations to take in this kind of money and then invest in a coherent way is absurd. And not only would it be incoherent due to being divided over many different organizations, it would also be less vested in the interest of the people than it would if that money were in the hands of the government (unless we're talking about a non-democratic unrepresentative government).
Of course, you might ask why the government doesn't just have a bunch of government owned monopolies and oligopolies and profit off of them for revenue instead of taxes. There are basically two reasons.
One reason is that you can potentially get way more money from taxes, which is one of the reasons many people fear that having the government enter any kind of market will destroy the private competition. As my one Republican friend said "I don't know anything that can fund things more than the government, so it doesn't have to face competition in anything it's allowed to work in".
The other reason to use taxes is because of the nifty benefit of dividing costs. If I use taxes, I can take just a little a bit of money from everyone (supposing for simplicity that we have an all inclusive tax) and allocate it to one project, the result being that I quickly get the project from to scratch to a level of productivity while dividing the costs amongst my citizens so evenly that it doesn't make anyone a weak link (an unproductive or even dependent citizen). If I were to leave all the costs for a project to those who use it (this could be anything; school, roads, law enforcement), then those people who use it will pay a hell of a lot more money because the costs aren't covered by everyone. The result is that many more people, the people paying for the project, become weak links, while the people who aren't taxed have been spared such small expenses that their being spared the expense doesn't really make the economy noticeably better. On top of that, there will be many more people who just can't afford to pay for the project out of pocket in the first place, thus depriving them of the benefits, and others who won't see a point paying the price, thus reducing the funding and weakening the value of the project.
Those who want completely private education would do well to see how these factors would destroy the education system.
So for the most specific question, why not a flat tax? Well, maybe in some cases a flat tax would be viable. I don't know where you live, Greenfairy, but the USA is not one of those places where a flat tax is viable. The reason is that the USA has rather severe inequality of wealth. A flat tax is simply a tax where everyone is taxed at the same rate, right? Well, because of how skewed our wealth is, any flat rate high enough to bring in sufficient revenues would probably make our poor and lower-middle class completely destitute, and any flat rate low enough to be affordable for the poor and lower-middle class just wouldn't take in enough revenue to fund the things we've come to take for granted.
It must be said that I believe wealth, all capital, aggregates by default. That is it concentrates into the hands of fewer and fewer people over time. The poor get poorer and the rich get richer. Since this is the default, you have to take pro-active measures to prevent it. The flat tax does nothing to prevent wealth aggregation, while a progressive tax works to counter-act it.
As for why inequality of wealth is bad, there are a ton of reasons and it's a long story which I won't tell right now because that's not the question of this thread.
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I put the segment most relevant to the previous entires in bold.
Basically, the taxes are one of the best means to redistribute wealth in the optimally productive way. You divide your society's costs and you concentrate its benefits. The part where I referenced weak links can be understood as people below the threshold of necessity and to some extent those below the threshold of luxury. The are unproductive or even anti-productive people. As my point above says, when people are left to pay for every service out of pocket, the sheer number of people who are weak links becomes much higher, and so does the number of people who aren't weak links but fail to receive valuable services that make the whole society healthier. When we tax people, including those who don't use a service, it includes those who are past the threshold of avarice, people who could lose money at no detriment to themselves and at the benefit of society by default. Even those who aren't past the threshold of avarice simply lose a smaller amount of money than a service user would if he or she had to pay out of pocket, so it still divides the costs in a way that are easier to handle for everyone.
_________________________
Big projects that take an enormous amount of coordination, like deploying a military or maintaining national infrastructure, are things that generally require not only an enormous amount of money, but also for that money to be applied with a great deal of focus. Who's going to get that kind of money and where? The government, from taxes.
To expect something else, like a bunch of private businesses or non-profit organizations to take in this kind of money and then invest in a coherent way is absurd. And not only would it be incoherent due to being divided over many different organizations, it would also be less vested in the interest of the people than it would if that money were in the hands of the government (unless we're talking about a non-democratic unrepresentative government).
Of course, you might ask why the government doesn't just have a bunch of government owned monopolies and oligopolies and profit off of them for revenue instead of taxes. There are basically two reasons.
One reason is that you can potentially get way more money from taxes, which is one of the reasons many people fear that having the government enter any kind of market will destroy the private competition. As my one Republican friend said "I don't know anything that can fund things more than the government, so it doesn't have to face competition in anything it's allowed to work in".
The other reason to use taxes is because of the nifty benefit of dividing costs. If I use taxes, I can take just a little a bit of money from everyone (supposing for simplicity that we have an all inclusive tax) and allocate it to one project, the result being that I quickly get the project from to scratch to a level of productivity while dividing the costs amongst my citizens so evenly that it doesn't make anyone a weak link (an unproductive or even dependent citizen). If I were to leave all the costs for a project to those who use it (this could be anything; school, roads, law enforcement), then those people who use it will pay a hell of a lot more money because the costs aren't covered by everyone. The result is that many more people, the people paying for the project, become weak links, while the people who aren't taxed have been spared such small expenses that their being spared the expense doesn't really make the economy noticeably better. On top of that, there will be many more people who just can't afford to pay for the project out of pocket in the first place, thus depriving them of the benefits, and others who won't see a point paying the price, thus reducing the funding and weakening the value of the project.
Those who want completely private education would do well to see how these factors would destroy the education system.
So for the most specific question, why not a flat tax? Well, maybe in some cases a flat tax would be viable. I don't know where you live, Greenfairy, but the USA is not one of those places where a flat tax is viable. The reason is that the USA has rather severe inequality of wealth. A flat tax is simply a tax where everyone is taxed at the same rate, right? Well, because of how skewed our wealth is, any flat rate high enough to bring in sufficient revenues would probably make our poor and lower-middle class completely destitute, and any flat rate low enough to be affordable for the poor and lower-middle class just wouldn't take in enough revenue to fund the things we've come to take for granted.
It must be said that I believe wealth, all capital, aggregates by default. That is it concentrates into the hands of fewer and fewer people over time. The poor get poorer and the rich get richer. Since this is the default, you have to take pro-active measures to prevent it. The flat tax does nothing to prevent wealth aggregation, while a progressive tax works to counter-act it.
As for why inequality of wealth is bad, there are a ton of reasons and it's a long story which I won't tell right now because that's not the question of this thread.
_________________________________________
I put the segment most relevant to the previous entires in bold.
Basically, the taxes are one of the best means to redistribute wealth in the optimally productive way. You divide your society's costs and you concentrate its benefits. The part where I referenced weak links can be understood as people below the threshold of necessity and to some extent those below the threshold of luxury. The are unproductive or even anti-productive people. As my point above says, when people are left to pay for every service out of pocket, the sheer number of people who are weak links becomes much higher, and so does the number of people who aren't weak links but fail to receive valuable services that make the whole society healthier. When we tax people, including those who don't use a service, it includes those who are past the threshold of avarice, people who could lose money at no detriment to themselves and at the benefit of society by default. Even those who aren't past the threshold of avarice simply lose a smaller amount of money than a service user would if he or she had to pay out of pocket, so it still divides the costs in a way that are easier to handle for everyone.
