Argument: Wealthy benefit more from system, so owe a greater tax debt
George Lakoff and Bruce Budner. "Hidden Truths Of Progressive Taxes". Tom Paine. 16 Apr. 2007 - An important point often lost in this debate is an appreciation that the common wealth, which our taxes create and sustain, empowers the wealthy in myriad ways to create their wealth. We call this compound empowerment — the compounded use of the common wealth by corporations, their investors, and other wealthy individuals.
Consider Bill Gates. He started Microsoft as a college dropout and has become the world's richest person. Though he has undoubtedly benefited from his unusual intelligence and business acumen, he could not have created or sustained his personal wealth without the common wealth. The legal system protected Microsoft's intellectual property and contracts. The tax-supported financial infrastructure enabled him to access capital markets and trade his stock in a market in which investors have confidence. He built his company with many employees educated in public schools and universities. Tax-funded research helped develop computer science and the internet. Trade laws negotiated and enforced by the government protect his ability to sell his products abroad. These are but a few of the ways in which Mr. Gates' accumulation of wealth was empowered by the common wealth and by taxation.
As Warren Buffet famously observed, he likely couldn't have achieved his financial success had he been born in Bangladesh instead of the United States, because Bangladesh had no banking system and no stock market.
Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors — those who have accumulated enough money beyond basic needs so they can invest — make much more use, compound use, of the empowering infrastructure provided by everybody's tax money.
The wealthy have made greater use of the common good—they have been empowered by it in creating their wealth—and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.
This is the fundamental truth that motivates progressive taxation.
It is a truth that undercuts conservative arguments about taxation. Taxes provide and maintain the protecting and empowering infrastructure that makes our income possible.
Our tax forms hide this truth. They do not indicate the extent to which taxes have created and sustained the common wealth so you could earn what you have. They make it look like the empowering infrastructure was just put there by magic and that the government is taking money out of your pocket. The most likely truth is that, through the common wealth, America put more money in your pocket than it took out — by far.
But this situation is threatened by conservative tax policy. Through unfair cuts in taxes paid by the wealthy, through payment for the invasion and occupation of Iraq, and through borrowing abroad to pay for the tax cuts and Iraq, the common wealth is being drained and the infrastructure allowed to fall apart. We need to return to a fair tax policy that recognizes financial responsibility incurred by the compound use of America's empowering infrastructure.
"Progressive vs. Regressive Tax Structure". Faded.org - It is appallingly unfair because the rich are the ones who benefit the most from government. How do they benefit more? In almost every way. On the most basic level the government creates and enforces the laws that protect their property. The government invests in the nations infrastructure for things such as national defense, public education, transportation, energy. Without this infrastructure in place *and maintained*, the rich would not have been able to become rich, or be able to maintain it. I read too many comments from people who think that the rich made their money in a vacuum. The welfare of their workers, and the welfare of their society depend on these taxes.
We're not talking about putting the rich into the poor house. We're talking about 4.3% (no slippery slope arguments here please.) With the rich disproportionately benefiting from what government and society in general are providing, it only makes sense that a progressive tax system is proportional and fair. You can argue all day long that our government is wasteful, and needs reform. On those arguments I'll likely be right beside you (depending of course on what you're considering wasteful). However, you can not ignore the functions that government, and taxes do provide.
Tommy Christopher. "I'm Tommy the Elitist". 24 Oct. 2008 - I know that there are tens of millions of people who believe, as I do, that a progressive tax is about fairness, about not just the ability to pay, but the degree to which a wealthier person benefits from our common possessions. That position, like any that disagrees with a Republican position, has been dubbed “elitist.”
Steve Weissman. "Spread the Wealth? Soak the Rich?". Truthout. 24 Oct. 2008 - "In terms of fairness, bigger money-makers generally make far greater use of the services government provides, from our subsidized financial system to our vast complex of commercial, property and patent laws to our federally-funded education, communications and transportation networks, once the envy of the world. Those with more property similarly benefit more from the protection of the legal system, while our oil companies and their investors gain far more from our military forces than do the rest of us. Why shouldn't those who benefit the most pay more for all they get?"
Gerald Cox. "Column: Obama's progressive tax plan solution to deficit". U Wire Opinion. 10 Nov. 2008 - "The progressive tax system is an admission to and result of the fact that our capitalist system rewards the wealthy more than its taxes hurts them. Not only is this system just, it is essential."
"In support of progressive taxation". The visible hand in economics. 12 Nov. 2008 - "People on high incomes may benefit disproportionately from government spending - who benefits more from investment in a road, those on high incomes (which are partially a function of domestic infrastructure) or those on low incomes."
"are progressive taxes 'socialism'?". Everyday Scientist. 21 Oct. 2008 - The rich pay more taxes under a progressive plan, but they get many many benfits from the taxes they pay. In fact, some government services go primarily to the rich. I’ve already shown, for instance, that the rich use roads and gas more than the poor. Wealthy drivers should pay for the maintainence of roads they extensively use.
Another example is the effective subsidy on employer-sponsored healthcare: because health-insurance benefits are not taxed, there is an effective $120 billion government subsidy annually. Because the poor usually do not get insurance throught their employers, they do not recieve that subsidy. The highest earners in this country often have gold-plated insurance plans included in their job benefits, so the rich get this huge tax break.
And what about wars, the Bailout, the police? The rich have a lot further to fall, so I would argue they benefit much from security and stability. And the rich benefit from education welfare for the poor, because they don’t have a hungry and angry populace.
"For progressive taxation, or against being against it". American Beat. 11 Nov. 2008 - Parenti also notes the “whole basketful of handouts” given to the business class “from federal, state and local governments…[B]illions of dollars in start-up capital, research and development funding, equity capital, bailout aid, debt financing, low-interest loans, loan guarantees, export subsidies, tax credits, and other special favors.”
Even if Buffet himself never received these “handouts” (he did), and even if his own “sector” was never directly “developed” by the state, these subsidies enrich the whole economy, making his own wealth possible. (It is much easier to become a billionaire when such things as billionaires already exist; all the more when many of them exist.)
So far from a means to punish the wealthy for something they have accomplished, progressive taxation ensures that those who have benefited more from the tax-subsidized capitalist system—lik