quote:

---

Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard Utilitarian framework for tax policy analysis answers this question in the affirmative. Moreover, based on the empirical distribution of height and wages, the optimal height tax is substantial: a tall person earning $50,000 should pay about $4,500 more in taxes than a short person earning the same income. This result has two possible interpretations. One interpretation is that individual attributes correlated with wages, such as height, should be considered more widely for determining tax liabilities. Alternatively, if policies such as a tax on height are rejected, then the standard Utilitarian framework must in some way fail to capture our intuitive notions of distributive justice.

---

The reasoning goes like this. If you believe that
a) People should not benefit from unearned characteristics,
b) People should not be penalised for working hard, and that
c) Tall people earn systematically more than short people (and the evidence is pretty strong),

then you'd conclude that tall people should pay a height tax.

In case you're wondering "Why not just have a progressive income tax and leave it at that?", remember point b): you'd be unfairly taxing hard-working short people at the same rate as lazy tall people who are cruising on their innate advantages.

(Clearly, the argument can be extended to include taxes on good-looking people and on men.)

So: should we tax tall people? If not, why not?

[ 12 December 2007: Message edited by: Stephen Gordon ]

The ALMIGHTY TALLEST pay no taxes WHATSOEVER!!

How DARE a pitiful waterbag like you question the superior IRKEN way of life?

ZIM is amused at your insolence!!!

[ 12 December 2007: Message edited by: Lard Tunderin' Jeezus ]

quote:

---

Originally posted by Stephen Gordon:
So: should we tax tall people? If not, why not?

---

quote:

---

Originally posted by Fidel:
I think wealthy people should pay more taxes...

---

It's long been my opinion that we focus too much on very specific types of discrimination (i.e. racism, sexism) and not enough on discrimination itself. Left unchecked, people will carry on with the same amount of discrimination. That's what ageism, lookism, and "intellectism" are on the rise. I've had it with people in "polite company" who talk about anti-racism for example, but then do things like being rude to the waiter, or disparaging an individual they find personally annoying. It's very hypocritical.

[ 12 December 2007: Message edited by: 500_Apples ]

quote:

---

Originally posted by Sven:

When is a person "rich"? Or "wealthy"?

---

I think someone is rich when their net worth is a million dollars not including real estate.

In addition, I think Michael Moore's video showed , for example, that a physician in France or Britain lives pretty well on $175, 000 a year.

quote:

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Originally posted by 500_Apples:
Wow, that's brilliant. I'm happy to see these issues are being discussed in academia. (In case anyone is wondering, no I'm not short, I'm 1.81 meters).

It's long been my opinion that we focus too much on very specific types of discrimination (i.e. racism, sexism) and not enough on discrimination itself. Left unchecked, people will carry on with the same amount of discrimination. That's what ageism, lookism, and "intellectism" are on the rise. I've had it with people in "polite company" who talk about anti-racism for example, but then do things like being rude to the waiter, or disparaging an individual they find personally annoying. It's very hypocritical.

---

A tax based on height is absurd. You're going to argue that it makes sense to increase a tall janitor's existing tax rate because he's tall and decrease a surgeon's existing tax rate because she's short? Riiiiiiight.....

How about if you just look at what they earn?

As far as "lookism" goes, I don't doubt that relatively handsome people have an advantage over relatively ugly people. The key (practical) question is: What the hell do you do about it? In the tax context, are you going to increase a handsome janitor's existing tax rate because he's "handsome" and decrease a surgeon's existing tax rate because she's "ugly"?

Again, how about if you just look at what they earn?

quote:

---

Originally posted by Sven:

A tax based on height is absurd. You're going to argue that it makes sense to increase a tall janitor's existing tax rate because he's tall and decrease a surgeon's existing tax rate because she's short? Riiiiiiight.....

How about if you just look at what they earn?

As far as "lookism" goes, I don't doubt that relatively handsome people have an advantage over relatively ugly people. The key (practical) question is: What the hell do you do about it? In the tax context, are you going to increase a handsome janitor's existing tax rate because he's "handsome" and decrease a surgeon's existing tax rate because she's "ugly"?

Again, how about if you just look at what they earn?

As far as being snooty to waitrons, again, it happens. People are jerks. What are you going to do, fine people for being jerks?

---

quote:

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Originally posted by Fidel:

I think our market system for remuneration is out of whack when a university professor earns as much as they do, and yet there are qualified students who can't access post-secondary education.

---

Are you actually saying that ~$60, 000 is too high a starting salary for an assistant professor?

quote:

---

Originally posted by Sven:

A tax based on height is absurd. You're going to argue that it makes sense to increase a tall janitor's existing tax rate because he's tall and decrease a surgeon's existing tax rate because she's short? Riiiiiiight.....

How about if you just look at what they earn?

As far as "lookism" goes, I don't doubt that relatively handsome people have an advantage over relatively ugly people. The key (practical) question is: What the hell do you do about it? In the tax context, are you going to increase a handsome janitor's existing tax rate because he's "handsome" and decrease a surgeon's existing tax rate because she's "ugly"?

Again, how about if you just look at what they earn?

As far as being snooty to waitrons, again, it happens. People are jerks. What are you going to do, fine people for being jerks?

---

Sven,

I don't think good-looking people should pay a higher tax rate.

quote:

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Originally posted by Fidel:
I think someone is rich when their net worth is a million dollars not including real estate.

---

Actually, Fidel, you're one of the few people who have even tried to answer that question. Kudos to you.

As far as a million dollars goes...well, it doesn't "go" as far as it did when being a "millionaire" used to mean something (like 1950).

Let's say you're a conservative investor (although some wouldn't want to "invest" money in even a bank account--but that's another story) and you get $70,000 a year in income (7%) off of that $1 million. There are quite a few union guys making seventy large a year. So, for starters, the income off of that money is not outrageous.

But, with even modest inflation (say, 3% per year), that $70,000 (in real-dollar terms) will only be worth about $33,000 in 25 years (or a mere $26,000 if inflation ticked up by just one more percentage point).

So, are you going to tax the hell out of that $33,000 that some retiree is living off of? Or, are you going to tax the hell out of that person's base wealth (the million dollars) so that the income is even less than $33,000?

Now, a million dollars back in 1950 really meant something. After accounting for inflation, a million dollars in 1950 (with a US CPI Index of 23.5) would be like having $8,613,446 dollars today (with a US CPI Index of 202.416). Now, $8 million is a substantial amount of money. It would throw off $560,000 in annual interest income (at 7%) and would still, after 25 years, throw off a (real-dollar value) of about $270,000 per year (assuming 3% inflation). I would agree that $8 million is "wealthy" but that $1 million is not "wealthy", with a dividing line somewhere in between.

Now, of course, for someone earning $30,000, a quarter million dollars seems to be "wealthy". But, how would you like to be a retiree living off of the income generated by $250,000? At 7%, that's an incredibly "rich" $17,500 per year.

quote:

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Originally posted by 500_Apples:
I don't think good-looking people should pay a higher tax rate.

What I meant by brilliant, is that I'm happy that academics and thinkers are now accepting the reality of these alternative discriminations.

---

quote:

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Originally posted by Sven:

Okay. So, you don't tax them any differently. The question remains: What (practically) do you do about those discriminations?

---

quote:

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Originally posted by 500_Apples:
[Off-Topic]
Are you actually saying that ~$60, 000 is too high a starting salary for an assistant professor?

---

I said nothing about TA's or their payscales. What I said was, that, there are a lot of immigrants to Canada with advanced degrees who are underemployed and even unemployed. Ryerson studies say over 650K well educated and skilled Asian emigres have returned to Asia from Canada since the late 1990's and with many citing lack of opportunities in Canada. There aren't enough university professorships or TA positions to go around. We can't afford to build new hospitals or universities across Canada, even though we've become a hewer of wood and drawer of water nation once again since about 2005 according to economist Jim Stanford.

And, we have thousands of qualified Canadian kids who are deciding not to go attend post-secondary because of the high cost and high probability they will incur a quarter century or more of student loan debt sentence. They need big paying jobs to pay off outrageous student loan debt, or they face a life of indebtedness, bad credit and underemployment. Asian emigres with undergrad and advanced degrees don't know what student debt is until they come to Canada or the U.S.[/off topic 1]

quote:

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thanks to the fortune of being in the top 25% of your field???

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I notice that their reference to the study that showed the dependence to be on height at age 16 noted that controlling for socioeconomic status simply had the correlation remaining strong. I would assume there was some correlation with class, especially given that food quality and quantity during the growth years are significant requirements for height achievement.

quote:

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Originally posted by jrootham:
What's the evidence that hard work produces high incomes? Tossing garbage at $8.50 an hour tends to leave one suspicious of that correlation.

---

quote:

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Originally posted by Sven:
So, are you going to tax the hell out of that $33,000 that some retiree is living off of? Or, are you going to tax the hell out of that person's base wealth (the million dollars) so that the income is even less than $33,000?

---

I'd tax the inheritance. And I'd rehire the IRS guys who USED to audit the superwealthy in America and who Bush laid off about a quarter or half of them in 2003 or so. You may remember my mentioning David Cay Johnson's interview with Forbes Magazine in 2004 or so. He mentioned one billionaire American bragging about not paying a dime in income taxes, and several instances where uber-wealthy Americans made tax deals with senators and probably around election campaign time.

quote:

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Originally posted by 500_Apples:

Typically, the highest paying jobs such as obstetrician or judge are not easy to get into if you spent your 20s slacking.

---

quote:

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Originally posted by jrootham:
What's the evidence that hard work produces high incomes? Tossing garbage at $8.50 an hour tends to leave one suspicious of that correlation.

---

Hard work doesn't guarantee a high income.

quote:

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Originally posted by Fidel:
You may remember my mentioning David Cay Johnson's interview with Forbes Magazine in 2004 or so. He mentioned one billionaire American bragging about not paying a dime in income taxes

---

quote:

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Originally posted by Fidel:

Oh that's just ageism. There's a doctor in the U.S. who graduated medical school in his sixties. Clarence Nicodemus is a doctor of osteopathy today. We have so much underutilized and unused potential in North America it's not funny anymore.

---

And, I know a woman who received her Ph.D. at age 75.

Ha!

quote:

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Originally posted by Sven:
A tax based on height is absurd. You're going to argue that it makes sense to increase a tall janitor's existing tax rate because he's tall and decrease a surgeon's existing tax rate because she's short? Riiiiiiight.....

How about if you just look at what they earn?

---

[ 13 December 2007: Message edited by: Stephen Gordon ]

quote:

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Originally posted by Vansterdam Kid:
I think he, and Stephen, were being somewhat sarcastic.

---

Actually, no. I support an inheritance tax, and the reason why I do is the same logic that would lead me to support a tax on height: I can't see any logical reason for accepting one and rejecting the other. So I'm kinda stumped here. At this point, I'm more inclined to accept the tax on height than to reject the inheritance tax.

quote:

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Originally posted by Stephen Gordon:
If all you tax is income, then you're taxing a combination of effort (something we don't want to tax) and things like height, rich parentage and good looks (things we do want to tax).

---

I guess if we find that the amount of motivation or effort that someone puts out is in part contributable to genetics then we better tax that too. It would be unfair otherwise. And intelligence, don't even get me started, I know for sure that there were kids in my highschool that got better grades then me with the same or less effort. I better get a rebate.

There is a big difference, in my opinion anyways, in between an inheritence tax and a height tax: Is it unfair that someone who is 6'3 vs someone who is 5'7? Maybe, but what if the shorter person has inherited more intelligence, has a better fashion sense, is more charismatic, has more energy and drive? What if the tall person is ugly and the short person is good looking? Many of those traits are genetic. Would it not now be unfair to tax the taller person a higher amount and give the shorter person a tax break.

The very best indicator of success is social class. Despite the relentless propaganda about the classless society, or myth of class mobility, the fact is that capitalist societies are rather rigidly class-based (and none more so than our U.S. neighbours).

quote:

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Originally posted by Stephen Gordon:
That's missing the point, as I noted in the OP. Having the good fortune of being blessed with certain innate/unearned characteristics gives you a better chance of having high-paying jobs in the first place. If all you tax is income, then you're taxing a combination of effort (something we don't want to tax) and things like height, rich parentage and good looks (things we do want to tax).

[ 13 December 2007: Message edited by: Stephen Gordon ]

---

Where is your evidence that effort is significant in terms of income distribution?

I am not being facetious. My personal experience is that you can spend large amounts of effort on doing things that don't pay well, and very little effort on things that pay very well indeed.

quote:

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Originally posted by Stephen Gordon:
Learning a skill takes effort. And the link between income and skills is well-established.

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Learning does, indeed, require effort.

quote:

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Originally posted by Stephen Gordon:
Learning a skill takes effort. And the link between income and skills is well-established.

---

You are still not responding to my point, and you are not providing any evidence.

Are you really making the claim that anyone without financially valued skills doesn't have them only because they did not make the effort to acquire them?

quote:

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Originally posted by Sven:

Learning does, indeed, require effort.

---

quote:

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Originally posted by Stephen Gordon:
All you need to make the argument work is that at least some part of your income depends on your decisions/effort/free will/what-have-you.

---

Kids in:

• Sweden
• Norway
• Finland
• Denmark
• Germany
• France
• Turkey
• Russia
• Spain
• Portugal
• Ireland
• Scotland and
• Cuba

... just go to school and get down to business with the hard work end of it.

Arizona State U expands free tuition program(2006) for students from families with less than $18,850 incomes.

And I see most voters in Newfoundland and Labrador support free tuition.

Alberta is toying with the idea of free tuition.

Manitoba's NDP government tax rebate on tuition fees is even more generous than a similar scheme in New Brunswick.

PSE funding, with it's inefficient gauntlet of red tape and bureaucracy resulting in over $10 billion dollars in outstanding student loan debt, has been broken for a long time.

[ 13 December 2007: Message edited by: Fidel ]

I await the "ism".

quote:

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Originally posted by Stephen Gordon:
All you need to make the argument work is that at least some part of your income depends on your decisions/effort/free will/what-have-you.

---

And it doesn't matter at all how big that proportion is? I have tossed garbage at $8.50 an hour, and I'm currently working on a project I fully expect to make me tens of millions of dollars. My life is outside the normal bounds of instability but even so, I don't think effort is the crucial determinate of outcome, certainly not to the point where you want to try to design a tax system that doesn't tax effort.

quote:

---

Originally posted by jrootham:

And it doesn't matter at all how big that proportion is? I have tossed garbage at $8.50 an hour, and I'm currently working on a project I fully expect to make me tens of millions of dollars. My life is outside the normal bounds of instability but even so, I don't think effort is the crucial determinate of outcome, certainly not to the point where you want to try to design a tax system that doesn't tax effort.

I understand that you have a bunch of self esteem wrapped up in the idea that hard work got you where you are, and I have every appreciation of the fact that you have worked hard, however, accidents of birth and upbringing got you to the point of that hard work paying off, it's not intrinsic to the level of effort.

---

Your comments sound very strange. Some counterarguments:

quote:

---

The top nine slots of the list of highest paid professions worldwide are medical professions, starting with anesthesiologists, who in 2006 earned a median of $145,600 US Dollars (USD) per year. Further down the list can be found General Internists, Obstetricians/Gynecologists, Oral and Maxillofacial surgeons, Orthodontists, Prosthodondists, Psychiatrists, Surgeons, and Physicians. The 10th slot goes to Chief Executives, with a median income of $142,000 US Dollars (USD) yearly.

---

Medical school requires hard work. You need excellent grades to get in... and then residency.

Correlation between GPA and salary:
http://tinyurl.com/33pwex

The issue, jroothman, is you're using anecdotal examples. But anecdotes are not scientific. What you need is mass data, and mass data indeed finds a correlation between effort and performance.

This, by the way, is the first time I've ever seen anyone suggest that effort and performance are independent variables.

Wikianswers has a lot of the top 23 highest paying jobs as well:

1. Mutual-Fund Manager: $500,000-$1,000,000/yr
Surgeons: $65.89/hr; $137,050/yr
2. Investment Banker: $64.42/hr; $134,000/yr (entry level)
3. Obstetricians and gynecologists: $64.15/hr; $133,430/yr
4. Anesthesiologists: $63.31/hr; $131,680/yr
5. Internists, general: $61.03/hr; $126,940/yr
6. Actuaries, certified: $57.52/hr; $119,680 (base salary only)
7. Pediatricians, general: $56.03/hr; $116,550/yr
8. Psychiatrists: $54.60/hr; $113,570/yr
9. Family and general practitioners: $52.89/hr; $110,020/yr
10. Dentists: $53.28/hr; $110,820/yr
11. Pharmacists: $53.00/hr; $110,240/yr
12. Chief Executives: $51.77/hr; $107,670/yr
13. Airline pilots, copilots and flight engineers: (N/A); $99,400/yr
14. Podiatrists: $45.43/hr; $94,500/yr
15. Lawyers: $44.19/hr; $91,920/yr
16. Optometrists: $42.35/hr; $88,100/yr
17. Computer and information systems managers: $40.33/hr; $83,890/yr
18. Physicists: $40.26/hr; $83,750/yr
19. Air traffic controllers: $40.07/hr; $83,350/yr
20. Petroleum Engineers: $39.33/hr; $81,800/yr
21. Nuclear Engineers: $38.56/hr; $80,200/yr
22. Judges, magistrate judges, and magistrates: $38.24/hr; $79,540/yr
23. Marketing Managers: $37.70/hr; $78,410/yr
http://wiki.answers.com/Q/What_are_the_highest_paying_jobs

quote:

---

Originally posted by jrootham:
I understand that you have a bunch of self esteem wrapped up in the idea that hard work got you where you are, and I have every appreciation of the fact that you have worked hard, however, accidents of birth and upbringing got you to the point of that hard work paying off, it's not intrinsic to the level of effort.

---

I can appreciate that inventing comforting fantasies about what I believe is easier than trying to do some hard thinking about an important issue, but could you at least make an effort?

[ 13 December 2007: Message edited by: Stephen Gordon ]

quote:

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Originally posted by bliter:
Only width.

I await the "ism".

---

Well, it certainly needs to be mentioned at this point. Thanks for ringing my bell.

quote:

---

Originally posted by Jrootham:
I have every appreciation of the fact that you have worked hard, however, accidents of birth and upbringing got you to the point of that hard work paying off, it's not intrinsic to the level of effort.

---

I'd add that being white and male helps too. Along with those that benefitted from publicly funded post-secondary education pre-1990.

Progressive taxation.

[ 13 December 2007: Message edited by: RevolutionPlease ]

quote:

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Originally posted by 500_Apples:

....
These require intense hardwork.

---

quote:

---

Originally posted by jrootham:

None of them require anything like the effort to toss garbage.

---

Are you actually saying tossing garbage requires more effort than medical school or nuclear engineering?

You're assuming sweating and challenging are synonymous. They are not. I've been in labour-intensive jobs, and they definitely require a lot more sweat. You come home, tired, and you're happy it's over. But you know, serious university study was much harder. Sometimes you work 8am to midnight 15, 20 or 30 days in a row. No, most undergraduates don't do that. But among those who become nuclear engineers or neurosurgeons, the ratio is much higher.

[ 13 December 2007: Message edited by: 500_Apples ]

quote:

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Originally posted by RevolutionPlease:
I'd start with giving women a large tax credit for the inequality that exists. Any problems with that?

---

quote:

---

Originally posted by Fidel:
I know a person who earned an advanced university degree. His mama paid for all his books, rent, tuition fees and incidentals for six years. He never broke a sweat all the while I knew him.

---

I also know someone, his mother is a radiologist, and she's paying for all the rent and food and books.

And he studies like a madman all the time because he spends less time worrying about the rest. A lot of all-nighters. One time he showed up to an exam late because he hadn't had enough time to finish reading the notes. He then got an A.

quote:

---

Originally posted by 500_Apples:

I also know someone, his mother is a radiologist, and she's paying for all the rent and food and books.

And he studies like a madman all the time because he spends less time worrying about the rest. A lot of all-nighters. One time he showed up to an exam late because he hadn't had enough time to finish reading the notes. He then got an A.

No, I don't think there's much "sweating" involved.

---

quote:

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Originally posted by Stephen Gordon:
This would go much better if you could actually state a position.

---

I thought I had. But it was in the form of a question and this is apparently not Jeopardy.

My position is that intrinsic good fortune is more important to economic outcomes than effort.

Note: I do not think that effort is irrelevant the question at hand concerns the relative contributions to economic well being of effort and good fortune.

Good fortune includes intrinsic skills, supportive (both economically and psychically) parents, an environment with adequate opportunities, height (to connect back to the start of this thread), and probably a bunch of others (I wanted to leave out the racism and sexism stuff because getting rid of them is a different fight and this argument is germane even in a world without those issues).

On the world level I think this is incontrovertable, where you are born is a huge factor in how well off you are.

There was a list above of high paying careers, with the assertion that they all required a lot of effort to achieve. This is not true in the mathematical sense of required, the classic counterexample is Stephen Hawking, who is one of the world's best physicists and was a notoriously lazy undergraduate.

I think if you looked at that list you would see that they all require a high degree of skill. Skills are both intrinsic and developed by effort.

[ 14 December 2007: Message edited by: Stephen Gordon ]

Or do you have a good measure of the cost of the privacy invasion?

And BTW, Stephen, you wimped out on answering my earlier question.

[ 14 December 2007: Message edited by: jrootham ]

First, doesn't it make a difference that the link between height and income is not definitely causative? If it is non-causative correlation (for instance, both can result from better nutrition during childhood, which in turn has other causes such as having a large inheritance) then it is already being taxed in other ways.

So I think you would first have to establish actual causation, otherwise being tall is not an advantage in and of itself. Also, that causative correlation would have to have a certain magnitude to be practical. For instance, having a large inheritance has a very clear positive effect on outcome. Take the average income of the top 1% in height and compare it to the average income of people with the top 1% of inheritances. Do we think they will be anywhere comparable?

quote:

---

Originally posted by Proaxiom:
First, doesn't it make a difference that the link between height and income is not definitely causative? If it is non-causative correlation (for instance, both can result from better nutrition during childhood, which in turn has other causes such as having a large inheritance) then it is already being taxed in other ways.

---

quote:

---

My second thought, which actually runs contrary to my own intuition but I'll bring it out anyway, is to ask why it is bad to tax people who have good incomes due to hard work?

---

Because as income becomes disconnected from effort, you work and produce less.

[ 14 December 2007: Message edited by: Stephen Gordon ]

quote:

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Originally posted by Stephen Gordon:
But the main point is about innate characteristics in general. Genetics may not explain 100% of the variation, but it certainly explains some of it.

---

You might be better off using one of your other examples, such as physical attractiveness, as the focus of your argument then. Confounding factors are going to make difficult the question of how much height affects income achievement.

This still leaves my other point about the strength of the correlation. There may be hundreds of uncontrolled factors that affect our income level, some weak and some strong. If we took every single one into account in the tax code then it would be immensely complex. You might be able to justify an inheritance tax but not an attractiveness tax by setting some threshold at which an attribute makes a really big difference in an individual's expected income. Only factors for which the correlation is above that threshold should be considered.

quote:

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Originally posted by Stephen Gordon:

Because as income becomes disconnected from effort, you work and produce less.

[ 14 December 2007: Message edited by: Stephen Gordon ]

---

That could explain why airport security in that country missed the box cutter guys piling on to passenger planes that fateful day. There just wasn't the pay incentive to do a better job.

quote:

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Originally posted by Stephen Gordon:

Because as income becomes disconnected from effort, you work and produce less.

[ 14 December 2007: Message edited by: Stephen Gordon ]

---

quote:

---

Originally posted by Stephen Gordon:
Learning a skill takes effort. And the link between income and skills is well-established.

---

quote:

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Originally posted by 500_Apples:

Are you actually saying tossing garbage requires more effort than medical school or nuclear engineering?

[ 13 December 2007: Message edited by: 500_Apples ]

---

quote:

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...as income becomes disconnected from effort, you work and produce less.

---

quote:

---

Originally posted by Lard Tunderin' Jeezus:
It's even more simple than that: Those who benefit most from society should give the most back to benefit others.

---

It's not irrelevant to question whether people generally respond to economic incentives, but if you think they don't, then you think economics as a whole is useless and all discussions such as this are irrelevant.

LTJ points out that there are other incentives than financial ones. This is true, but they are for the most part static. When you change financial incentives, you change some people's behaviour. The fact that many people won't change their behaviour doesn't change the fact that some people will. If I am trying to sell my house, and I lower the price, other people are more likely to buy it. If wages go up for a particular profession, more people will tend to enter it. If people receive less pay for their employment labour, they will tend to do less labour and spend more time doing things of higher perceived value.

quote:

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At what level of taxation does this effect occur in the real world? If taxation is less than 100% more work still equals more money. In fact, if the goal is a specific level of after tax income, the higher the taxes, the greater the effort.

---

I think we all know that nobody really knows the answer to that question. Certainly at a 100% tax rate most people are not going to bother working for income. People will work do work that only they themselves benefit from (growing their own food, etc), because that's the only way to get personal benefit from their labor. At 99% tax, people are doing the same thing, because its not worth the effort if you only get 1/100th of the value.

Likewise the difference between 1% and 2% is going to be quite negligible.

The goal isn't a specific level of income. It's a better quality of life. Taxes reduce the amount that my effort earns income with which I can buy goods and services. As taxes go up, it becomes more sensible for me to work less and provide those goods and services for myself. If I finish my own basement rather than hiring contractors to do it, then I avoid both the income tax and the consumption taxes associated with the cost of the labour. On the other hand if my employment income is more strongly linked to my effort, then I might be better off being productive at work and hiring someone to do my basement.

Ok, I'll go into this another time. This is exactly the problem with this kind of pre-programmed question. Your argument makes three fundamental errors I can see immediately. One is sidestepping part of its intial framework, in refering to those who may be born into more money than others, where "incentives" would have little impact either way. Another is your assuming that your "quality of life", which may or may not be improved by lower taxes (your lower taxes may also feed into dirtier, more dangerous streets and higher prison costs etc) reflects the other guy's, who may be motivated by entirely different factors. Third, "incentives" itself is a loaded term here. No-one of course has suggested close to one hundred percent taxes here, but we have referred to the fact that improving incentives for rich people doesn't necesarily translate into benefits for the less-well off (eg: they might reinvest the gravy offshore anyhow, given their impossible to match seventy to one differential in minimum wages), which is more of a concern for genuine progressives for what should-be obvious reasons.

As Stephen Gordon has been told here before, government relies on tax revenues to provide services that only government is obligated to supply. (in theory) Tax revenues as they exist now, not as promised sometime in the future. So cutting taxation may or may not increase some people's immediate incomes, but it is not apparent that that in itself translates into more or better jobs for others, and neither necessarily translates into more revenues for government services that those who are more easily disemployed might still rely on. (concern for future unemployment being less of an "incentive" for those who are already "independently" wealthy...)

More or less guaranteed returns for more or less guaranteed services in other words, (at least up to some unknown point of diminishing returns, which wealthier Canadians are far from reaching as present numbers already indicate) which in turn provide a minimal social safety net for the working majority, maintaining a better balance (choice) in the job market between "employers" and labour. To "progressives" this is also a matter of social balance, or the apportioning of excess resources to where self interested "markets" may not work as well, not just of more "incentives" for a small and self serving minority who already have more than their fair share to invest or spend. (or squander)

[four fundamental errors I now see. For many perhaps most people increased taxation may be More of an incentive to work, not less. Some days I'm slower than others ]

[ 14 December 2007: Message edited by: Erik Redburn ]

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Originally posted by Proaxiom:
Does this have to get derailed? I want to hear Stephen's response to the idea of an IQ tax.

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If IQ were both innate and directly observable, then it's hard to see why you wouldn't add it to the list with height. I'm given to understand that conventional tests for IQ are not able to distinguish between innate and learned ability. And even if we could find a perfect test, you could imagine that few people will answer the questions honestly if they know that they'll be paying a higher tax if they score highly.

[ 15 December 2007: Message edited by: Stephen Gordon ]

I don't know to what extent it matters whether IQ is innate or learned, though. Either way it is not something we tend to get through hard work. The fact that in one person's childhood he is exposed to environmental factors that promote intelligence doesn't mean he earned it in any way.

Stephen's question concerns the possibility of reducing the productivity disincentive due to taxation without reducing tax revenue. The suggestion is that we maybe can shift the tax burden in crafty ways to accomplish this. So to say that you can't divorce the negative economic effects of taxation from the benefits of government spending is not constructive; that's exactly what this thread is about.

[ 15 December 2007: Message edited by: Fidel ]

The first assumption seems to be that difference in income or social economic status are primarily the result of differential in some kind of innate characteristic or capabilities combined with some kind of effort. In the article height stands in place for implied inherited characteristic such as intelligence or creativity or entreprenuerial drive.

Of course the philosophic rational behind progressive taxation and the concept of distributive justice as presented in the article are highly suspect implying that the redistribution is an act of charity in which the privileged payes more taxes merely because they are financial more able.

This obscures the observable reality that differentiation in income and SES is the result in the differential of access to opportunity and resources. The system is designed and maintained in such a way that wealth in power remains concentrated within a small minority and ensures limited social mobility. The implication is that progressive taxation is inherently inequitable rather than the social system being constructed on the basis and the necessity of built in inequality and exploitation. Progressive taxation is not seen as an attempt to address inherent social inequality.

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Because it's a puzzle. The same logic that leads me to support an inheritance tax would lead me to support a height/gender/skin colour/beauty tax.

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Neither gender nor race are internal personal characteristics they are social defined and located with the intent to delineate relationships of power and access to resources. The construction of Gender and Race are social mechanism that ensure that wealth and power is maintained within the hands of the designated elite.

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Learning a skill takes effort. And the link between income and skills is well-established.

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Skills are also something that need to be given a social context. The same skills even acknowledged and recognized within different people are the intelligence and leadership abilities of a black woman acknowledged in comparison to a white male. A male be perceived as decisive where a woman would be viewed as unnecessarily pushy. Ingrained cultural assumptions create a social perception in which some peoples skills and abilities are recognized while others are rendered invisible.The extent to which certain skills are recognized and rewarded are also gendered and racialized.

It's like a cap on hockey players salaries. Even the owners realized something was wrong over and above their own warped desires to be associated with real talent with owning a pro sports team. Look at Yashin after the Islanders handed him the big salary. Or Ed Balfour with his no trade clause and whopping pay package with the Leafs. That's way too much economic security for those guys to even bother striving anymore. Look at Jovo. He's an overpaid zombie on skates. He was a flameout before he was 30. At some point, there just isn't the incentive to be a productive uberstar any longer. The only guys with incentive to carry on living at that point are the conniving player agents, lawyers with dollar signs in their beady little eyes. The time for excessive living among a privileged few is over. It's time to get back to basics. It's late and high time this worker's revolution is globalized!

Viva la Revolucion!

[ 15 December 2007: Message edited by: Fidel ]

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Originally posted by Proaxiom:

Stephen's question concerns the possibility of reducing the productivity disincentive due to taxation without reducing tax revenue. The suggestion is that we maybe can shift the tax burden in crafty ways to accomplish this.

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Well, that's what Stephen likes to suggest but I see reason to accept it.

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To dispute the underlying principle -- that higher taxes on productivity, taken by themselves, discourage higher productivity -- is to suggest that people don't respond to incentives, or you can pay less for something and get more of it. I don't think there's much empirical support for that position.

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Well, I would argue that there's lots of evidence already which suggest that all the tax decreases already given to those with disprortionate surpluses haven't exactly tricked down to the masses, and until neo-liberal ecomonists like Stephen can give one good emprical, statistical or commonsense reason why we should expect the reverse to be true in the future I won't be expecting a corporate potlatch anytime soon. Another hidden assumption being made is that we can only beg those with surplus income to invest in our working economy, rather than simply taking it off the top and allowing the most productive members of society, their "employees" mostly, to decide how and what needs to be financed now.

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NR.Kissed:

he first assumption seems to be that difference in income or social economic status are primarily the result of differential in some kind of innate characteristic or capabilities combined with some kind of effort. In the article height stands in place for implied inherited characteristic such as intelligence or creativity or entreprenuerial drive.

Of course the philosophic rational behind progressive taxation and the concept of distributive justice as presented in the article are highly suspect implying that the redistribution is an act of charity in which the privileged payes more taxes merely because they are financial more able.

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Good points I should have touched on too. This is where social democratic liberals would be wiser to remember the old socialist insight that all wealth ultimately derives from labour (and the earth) rather than capital "investment", or capital's supposed independence from certain services we all pay for and use.

Again, it's also about a more democratically ordered balance among all economic actors, as much as any "productivity gains" promised to "trickle down" back to the masses again, through some as yet-to-be explained mechanism beyond more vague assurances about "growth". The average CEO has made gains in income and shares and expense accounts way way beyond any growth rates in our general economies (or their companies) for example, but they continue to call for more cuts to the public sector.

[ 16 December 2007: Message edited by: Erik Redburn ]

Norway has a Petroleum Fund worth a gazillion dollars USD compared with a similar oil slush fund in Alberta. I don't want to quote the paltry amount in Heritage Fund here because it's just too embarrassing for us all to even ponder. And Alberta's x-rated per barrel oil royalties is directly related to our overall inability to meet Kyoto obligations to the rest of the world.

And Stephen Harper's corporate tax reductions will make siphoning off Canada's CO2-producing fossil fuels that much more lucrative for transnational energy companies.

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Originally posted by Fidel:

I don't believe our stoogeocrats in Ottawa would want to adopt Nordic tax policies so that Canada, too, could transform itself into an instant social democracy like Sweden, uh-uh. And they definitely wouldn't know what to do with tens of billions of dollars in surplus oil royalties, as is the case with Norway, a country that has not accepted those royalties with one hand and given them back to TNC's with the other by paring corporate tax rates to the bone. Our two old line parties don't want any extra money in government coffers that could possibly be earmarked for new social programs in Canada. Because that would run counter to the ideology. It's better to feign poverty while foreign corporations raid the ice box.

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Originally posted by Erik Redburn:

That I think may be the biggest difference Fidel, political will, culture and understanding. At this point though our corps are now paying less than the Nordics do again, thanks to Harper and yes, the Liberals too.

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Originally posted by Sven:

Hard work doesn't guarantee a high income.

But, hard work, making smart educational choices, and making smart vocational choices certainly increases the probability of a higher income than one would otherwise have.

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Originally posted by Stephen Gordon:

Because as income becomes disconnected from effort, you work and produce less.

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So can I put you on record as supporting a maximum wage for CEOs?

Because all they seem to do all day is sit on their asses in nicely-tailored suits on comfortable leather executive chairs and dream up more ways to ruin thousands of employee Christmases all for the sake of hauling down a zillion extra bucks for themselves instead of actually improving the business.

[ 21 December 2007: Message edited by: DrConway ]

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Originally posted by Stephen Gordon:
I don't know about a maximum wage (what would it be?), but I certainly applaud shareholder-led initiatives to align CEO pay with what they actually contribute. And I also think that there's lots of room to increase income taxes on those making over $500ki/yr.

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Originally posted by Brian White:
How do you measure what they contribute?

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