## The morality of taxation

For discussions of culture, politics, economics, sociology, law, business and any other topic that falls under the social science remit.

### The morality of taxation

So we all know that taxation is theft if you're pro-Capitalist and property is theft if you're anti-Capitalist...

Consider the flat-to-progressive taxation that we currently get in the actual mixed economies that we get in the West though.
The whole point of for-profit business is for the employer to make money from employees - that's the whole incentive. It's the compensation for risking your capital, right? These are the arguments you usually hear.

But that's the thing: given that an employer makes a choice to derive their income from the practice of distributing expenses to employees in such a way that they amount to less than the total revenues earned by said employees (the definition of profit), is it therefore morally justifiable for them to complain when they pay more tax the more the disparity between earned employee wages and employee drawings? Ought they not to be disincentivised from free-loading out of a sense of entitlement - by the only body powerful enough to do so?

What if the employer contributes towards the work that earns revenues? Then why not pay themselves a wage in proportion to the revenue that they actually contributed to making, no differently to the way that all other participants are compensated in proportion to the revenues that they attracted? A difficult balance to judge for sure, but the fairness of such a distribution method could easily be agreed upon by all contributing parties if the transparency and agency existed - and an employer is only going to be rewarded for their ability to hire the most reasonable employees in this respect - ones who will recognise the efforts and results of their employer and respect and allow a higher proportion of earnings whenever deserved. Actual meritocracy.

But surely the employer is entitled to draw from the earnings of their company with private discretion because it is their capital investment that allowed others to earn anything at all for themselves? In the same way that charging rent is charging others for not being as rich as you and not being able to afford their own home, a desire to use capital to add value doesn't only happen to those who can afford to realise it. Ideas for adding value happen to those who can't afford to do so as well - in what way is it a free market if so many are not free to enact their own entrepreneurship? Let's not kid ourselves that real money is in business with low capital expenses anymore (apart from cons of course).
Besides, it is the choice of the employer to risk his own riches by investing it in their company or any other company - nobody is forcing them. Their choices are to spend it on consumables, save it and gain nothing but a feeling of security, or to use it as capital and potentially gain more from it - and just like with any gambler, the highest risk is part and parcel of the highest reward. Otherwise it's just Socialism for the greedy, eh? Of course the rich are going to continue to choose this option no matter how much they are taxed, there's zero risk of tax countering the incentive for the rich to invest. How else are they going to corner and maintain their own dominance?

These have been arguments in favour of hard work and fairness, meritocracy and freedom, and against greed without accountability. All of these are achieved through, if not co-operative partnerships or sole-trading, the simple act of flat-to-progressive taxation (the more progressive the taxation the more one's morality is grounded in the values I have put forward). There is no compromise to competition, quite the opposite - it's just channeled into performance instead of loss aversion (the only justification whatsoever for the level of social immobility that is currently the most rewarded outcome that we see in the current Western economic model). Economies in their entirety cause them to turn out how they do, not just employers, not just one's company and employees, everyone - and taxation is the way to feed back to indirect causes of wealth where drawings and wages are for the direct causes.

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### Re: The morality of taxation

So who actually pays tax?

To begin in much the same way as the opening post, we all know the pro-Capitalists will argue that the richest pay it all and Social Democrats will argue that they don't pay enough. But I want to push these notions further.

Consider, to start with, if employees incurred income tax, if that tax was removed and transferred to corporation tax and/or to sales tax incurred by the employer (to keep tax revenues the same), the effect would cancel out. The employer would simply reduce what was formerly gross wages to what was formerly net wages. The employee would take home the same amount and the employer would pay no more in wage expenses than before.

Now let's say if this accumulated corporation tax and/or sales tax is removed and added to any existing purchase tax, to keep tax revenues the same, the extra profit or the reduced expenses from no tax being applied to either would be cancelled out by having to reduce prices so that with the extra tax added onto them, the consumer wouldn't be put off their purchases by having to pay more. So far the burden of taxation has been passed on from employee to employer to consumer.

But now let's say if purchase tax were removed it could.... be transferred to income tax to keep tax revenues the same?! And prices could be put back up from what was formerly the net price to what was formerly the gross price, to keep them the same too. But now let's say instead of income tax being transferred to a tax paid by the employer like before, what if wages were decreased so that together with tax they cost the employer the same. Now employees have less money to spend on consumption, meaning employers can't charge the same prices and still sell in the same volumes. Their revenues are hurt, meaning they can't afford to pay as much in wages and so on - showing how taxation can just as easily cause deflationary effects as inflationary. Usually inflation is assumed to occur due to taxation, because adding tax increases the numbers that were formerly in play.

So tax neither necessarily causes inflation or deflation, and the effects are also passed around the whole economy indefinitely - meaning it doesn't actually land or pool in any one area over another. The same inequality distribution emerges with or without it. In fact all that does happen as a result of tax is that money is diverted through a government body and then back into the private sector as though it never left.

How can taxation be considered immoral (or even moral) if it ultimately has zero economic effect? It's economically amoral.

The argument that force is immorally being applied when somebody is taxed now comes into serious question.
How can an effect that is cancelled out be an application of force? Taking nothing from someone without consent cannot be considered forceful.
So both the notions that the rich pay all the tax, or that the rich ought to pay more tax are meaningless in an unplanned economy - numbers are simply adjusted to compensate wherever tax is applied, preserving proportionality throughout.

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### Re: The morality of taxation

To make this into a trilogy, why don't I close with some stats.

I recently gathered some data about tax revenues for each country and compared this, per population to GDP per person in the same country.

Unsurprisingly (to me at least) there is a marked positive correlation between tax revenues per person and GDP per person - that is to say, the more tax is charged to each person overall, the more these people tend to create in output of goods and services. The correlation actually ranges from merely distinct like with Taiwan, Singapore and Hong Kong to quite extreme like with Scandinavia, Luxembourg and other rich European countries, compared to countries of the world with low GDP per person and low tax revenues - basically all the third world through Africa, Asia and to South America. America ranks similarly with Canada in the mid-bottom tier of Europe with countries like the UK and Germany.

Basically, the more social democratic a country, the more efficient it is. The more the private sector is kept in check by taxation that acts economically as nothing more than a buffer and pays for everything that the private sector can't make a profit out of, the better for everyone.

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### Re: The morality of taxation

dam it.....don't you hate it when those pesky facts have a liberal bias.....

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### Re: The morality of taxation

I would offer the obvious response here, but by this point I rarely make the mistake anymore of assuming a living mind sits on the other side of the forum text window that I see here on my screen, and I am not very well equipped, psychologically speaking, to speak to chimps as if they were humans. I find such behavior far too insulting to actual chimps, that I simply refuse to engage in it any longer.
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### Re: The morality of taxation

EIHWAZ PERTHO NAUTHIZ

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### Re: The morality of taxation

Whether libertarians or extreme capitalists in their horrid perception of individualism accept it most of the time not taxation is needed to collectively maintain public society as it is a collectivist not a individualist network of people. What I do understand from them to which I'll agree upon is the fiscal misuse and misappropriation of public tax revenues that is rampant. I agree that there should be huge taxation reforms all across the board in society. The talk however from libertarians and extreme capitalists especially of the anarchist variety of zero taxes or that taxation is theft is ridiculously absurd.

Also, it is the poor low income people that pay the bulk of the taxes and taxation is largely in the favor of the wealthy all across the west. Theft is perfectly acceptable and legal when it means the theft of the poor or low income, this sick hypocritical duplicity must end.

The wealthy parasites of the upper echelons of all societies should be executed for their crimes against everybody else and one day hopefully soon they'll come to know vengeance by all the lives they have destroyed for their sense of entitlement that has been going on for many numerous decades.
Last edited by Zero_Sum on Thu Feb 08, 2018 10:24 pm, edited 1 time in total.
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Zero_Sum
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### Re: The morality of taxation

UrGod wrote:I would offer the obvious response here, but by this point I rarely make the mistake anymore of assuming a living mind sits on the other side of the forum text window that I see here on my screen, and I am not very well equipped, psychologically speaking, to speak to chimps as if they were humans. I find such behavior far too insulting to actual chimps, that I simply refuse to engage in it any longer.

So you can't formulate a response due to psychological reasons, and you would only have the obvious to offer anyway. Ok, fits pretty well with the impression you've made of yourself up until this point. Well done for putting together a couple of sentences though, even though they amount to nothing, have a banana. It's obviously unsatisfying though, congratulating yourself so much just to yourself by yourself, since you feel the need to come here and do it in front of us... but hey it was probably just the fault of recent media attention to such issues on your obviously impressionable mind. Baby steps though, I have faith in you

Silhouette
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### Re: The morality of taxation

Silhouette wrote:Ought they not to be disincentivised from free-loading out of a sense of entitlement - by the only body powerful enough to do so?

A couple things I don't think this section of your analysis takes into account:
First, the owner of a business is taking on risk in exchange for her returns. While that taking on of risk is directly compensated, it's also socially beneficial to have people take on risk, because it encourages experimentation and innovation and progress. There are positive externalities to productive risk taking, so rewarding it is good for society.

Second, the value of risk isn't fixed or known. Business can attempt to set the return on investment at whatever level they want, but the market won't bear arbitrary levels of return. If the industry is competitive (and it should be if we've encouraged people to take on the risk of entering the market), then a business that has too much disparity between earnings and wages will lose out to one who either pays its workers more or charges consumers less. This competition establishes the value of the risk.

Silhouette wrote:So tax neither necessarily causes inflation or deflation, and the effects are also passed around the whole economy indefinitely - meaning it doesn't actually land or pool in any one area over another. The same inequality distribution emerges with or without it. In fact all that does happen as a result of tax is that money is diverted through a government body and then back into the private sector as though it never left.

This is a thought provoking argument, but I don't think this conclusion is correct. When a government taxes and spends, in spending it diverts productive labor away from what it would otherwise be doing, and so increases competition for that labor, and thus increases the price for labor. By taxing and spending, government is entering the market as another buyer, so they shift the demand curve and thus the price.

Silhouette wrote:there is a marked positive correlation between tax revenues per person and GDP per person...Basically, the more social democratic a country, the more efficient it is.

You've jumped here between correlation and causation. Such a correlation could well run in the opposite direction: wealth may lead to higher taxes, rather than vice versa. To tease out causation, we could look at a time series, or try to control for other variable to rule out common causes (e.g. maybe country age or system of government leads to both higher wealth and higher taxes).
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Carleas
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### Re: The morality of taxation

Carleas wrote:
Silhouette wrote:Ought they not to be disincentivised from free-loading out of a sense of entitlement - by the only body powerful enough to do so?

A couple things I don't think this section of your analysis takes into account:
First, the owner of a business is taking on risk in exchange for her returns. While that taking on of risk is directly compensated, it's also socially beneficial to have people take on risk, because it encourages experimentation and innovation and progress. There are positive externalities to productive risk taking, so rewarding it is good for society.

Second, the value of risk isn't fixed or known. Business can attempt to set the return on investment at whatever level they want, but the market won't bear arbitrary levels of return. If the industry is competitive (and it should be if we've encouraged people to take on the risk of entering the market), then a business that has too much disparity between earnings and wages will lose out to one who either pays its workers more or charges consumers less. This competition establishes the value of the risk.

Silhouette wrote:So tax neither necessarily causes inflation or deflation, and the effects are also passed around the whole economy indefinitely - meaning it doesn't actually land or pool in any one area over another. The same inequality distribution emerges with or without it. In fact all that does happen as a result of tax is that money is diverted through a government body and then back into the private sector as though it never left.

This is a thought provoking argument, but I don't think this conclusion is correct. When a government taxes and spends, in spending it diverts productive labor away from what it would otherwise be doing, and so increases competition for that labor, and thus increases the price for labor. By taxing and spending, government is entering the market as another buyer, so they shift the demand curve and thus the price.

Silhouette wrote:there is a marked positive correlation between tax revenues per person and GDP per person...Basically, the more social democratic a country, the more efficient it is.

You've jumped here between correlation and causation. Such a correlation could well run in the opposite direction: wealth may lead to higher taxes, rather than vice versa. To tease out causation, we could look at a time series, or try to control for other variable to rule out common causes (e.g. maybe country age or system of government leads to both higher wealth and higher taxes).

Tell me Carleas, what is the risk of a business owner in comparison to workers who live their entire lives in abject poverty? Oh that's right, you don't know anything about poverty, do you? Nobody willingly will pay their workers more in any great number which is why minimum wage laws were created to begin with because of lack of social or political will amongst business owners. Market equilibrium creating an environment of fairness for all individuals in terms of wages? What are you smoking?!
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### Re: The morality of taxation

Carleas wrote:This is a thought provoking argument, but I don't think this conclusion is correct. When a government taxes and spends, in spending it diverts productive labor away from what it would otherwise be doing, and so increases competition for that labor, and thus increases the price for labor. By taxing and spending, government is entering the market as another buyer, so they shift the demand curve and thus the price.

I'm not a fan of the language of "productive labour" as something that government detracts from, as though people employed by government somehow don't perform services or produce goods but people employed by capitalists do.
And it's not like wage labourers don't compete for jobs in the public sector and only do for a job in the private sector. Wherever it's available, if you need/want a job, you go for it. And of course, it matters not to non-shareholding workers who they work for, they're still managed by the best managers that either sector can attract, and government just matches pay incentives that equal the private sector - there's zero difference for all operational staff. The only difference whatsoever is that private sector companies are owned privately, and public companies aren't. The head of a public business is under pressure to meet targets in order to justify themselves as worthy of the job rather than all the competition who want it instead, he is fighting for prestige and monetary gain. The head of a private business has more to gain but also more to lose - and the argument is that this, combined with the freedom to just set up whatever legal operations you want, is the superior model and the superior incentive.

In terms of game theory, the private owner takes the gamble that is less likely to pay off and more likely to end up in a bad loss, but when they win the gamble they can win big: high risk, high reward. This is exemplified by those stats about how new businesses usually fail within the first few years, but when they succeed the riches are demonstrably obscene (needlessly?). I believe that loss aversion is felt much more prominently to, and is less effective than an attraction to gain, correct me if I'm wrong. But the head of a public business has more of the latter, they are incentivised by prestige, less extreme but still very highly desirable. And if they fail, they don't lose any capital so there is FAR less loss aversion going on in the psychology of their incentive. It's not like they aren't incentivised to take risks, but there is less bredth and depth of risk available and incentive to take it. It's safer and slower in its innovation, so apply to that what you will - whether it be grandiose philosophies about nobility and greatness, or the realities of how the poor lose a great deal despite having nothing to do with it when it goes wrong on a big enough scale - as history and theories show that it does as it goes through its periodic cycles of boom and bust. Is higher risk positive for society? Yes. And no. What about optimal risk?

Carleas wrote:You've jumped here between correlation and causation. Such a correlation could well run in the opposite direction: wealth may lead to higher taxes, rather than vice versa. To tease out causation, we could look at a time series, or try to control for other variable to rule out common causes (e.g. maybe country age or system of government leads to both higher wealth and higher taxes).

Ha, I knew somebody would try that one, but I checked my language before I submitted to make sure I wasn't stating any causation. Reading it again, I still don't think I even imply causation in either direction, just correlation. I agree that it would be interesting to study if there is any causation though.

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### Re: The morality of taxation

There is No Law Requiring You to Pay Income Tax

https://youtu.be/1UCcW0RoNdc

Yet the IRS displays their willingness to use enormous power against individuals to collect tax revenue. If there was a way out, why hasn't anyone successfully exercised their right to refuse the payment of taxes.
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### Re: The morality of taxation

A Shieldmaiden wrote:There is No Law Requiring You to Pay Income Tax

https://youtu.be/1UCcW0RoNdc

Yet the IRS displays their willingness to use enormous power against individuals to collect tax revenue. If there was a way out, why hasn't anyone successfully exercised their right to refuse the payment of taxes.

There may be no law but there certainly is the threat of violence everywhere to maintain it on all individuals.
The temple mount will be rebuilt in Jerusalem and all the nations of the world will be ruled from there. All races, cultures, leaders, and nations will come to bow before the new messiah yet to come. All will come to know the chosen of God who refer themselves as Jews. For every Jew there will be a thousand goyim that will be their slaves as it was ordained by God. Every man, woman, and child will convert to Zionism.

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### Re: The morality of taxation

Zero_Sum wrote:what is the risk of a business owner in comparison to workers who live their entire lives in abject poverty?

Let's say we increase taxes on business owners so that the best they can hope for from their investment in a business is to break even. In that case, they won't invest, because they would take on risk with no expected return. So they won't open a business, hire workers, and organize activity to produce useful things. The employees are all left as unemployed as they would be if the business had tried and failed. That's bad for workers. If we want workers to have work, we should want investors to have incentives to invest.

Zero_Sum wrote:Nobody willingly will pay their workers more in any great number which is why minimum wage laws were created to begin with because of lack of social or political will amongst business owners.

The share of workers earning minimum wage or less is like 1% of all workers, and less than 3% of hourly workers. So clearly a lot of people willingly pay their workers more.

Silhouette wrote:I'm not a fan of the language of "productive labour" as something that government detracts from, as though people employed by government somehow don't perform services or produce goods but people employed by capitalists do.

It's not that they aren't performing services, and in some cases government labor can provide more value than the private sector labor it displaces (e.g. maintenance of the commons). But it always shifts the demand curve. The public sector jobs compete against the private sector jobs, and the same pool of labor is spread across more productive outlets. Again, this is not always negative-sum.

Silhouette wrote:In terms of game theory...

I like this way of framing the question, and I agree that the risk profile differs for public vs private, and that there are cases where public sector profile is better. But as you might have guessed, I think the private sector usually does a better job of getting the right answer. Again, I agree there are exceptions, there are cases where incentivizing risk is a bad thing and where we'd prefer the incentive profile of public funding. But the private sector tends to do better, including by answering questions like "what is the optimal risk?" That question is about values, and by letting people choose for themselves what their risk is worth, we end up with the market settling around an optimal risk.

Silhouette wrote:Ha, I knew somebody would try that one, but I checked my language before I submitted to make sure I wasn't stating any causation. Reading it again, I still don't think I even imply causation in either direction, just correlation. I agree that it would be interesting to study if there is any causation though.

I took the following to be a causal implication:
Silhouette wrote:The more the private sector is kept in check by taxation that acts economically as nothing more than a buffer and pays for everything that the private sector can't make a profit out of, the better for everyone.

If you flip the sentence, it makes the implied causal relationship stand out:
"The better for everyone, the more the private sector is kept in check..."

As I read the flipped sentence, it's saying that prosperity will tend to keep the private sector in check, which tells me that the original sentence implied that keeping the private sector in check benefits everyone.

It's semantic, though, and I accept that it wasn't your intention. But it's important to point out, because I see the point presented as an argument for a larger welfare state. Yes, we have larger stabler governments who exert more control over the market wherever we see wealthier societies, but we also see more efficient markets and freer trade. Look at the Nordic countries, thought of as a socialist utopias, but with significant levels of privatization and market freedom.

If you'll permit me a personal anecdote: I worked for a little while at the FCC with the team rewriting the satellite industry regulations. My impression of it was that it wasn't adversarial at all, neither between the FCC and the businesses that would be covered by the regulations, nor between the businesses themselves. What the companies wanted, and what the FCC provided, was a set of common standards that kept people from running into each other or drowning out each others signals. Compare it to the drive-on-the-right rule in the US: every driver is made better off by the government enforcing that standard, because otherwise there is a coordination problem and driving becomes more dangerous and less efficient. A lot of law functions this way, and wealthy countries with large functional governments are able to establish these conventional rules more broadly, to make private players more efficient. But the bottleneck for these things isn't how much we're taxing, it's having stable and trusted institutions with the resources to put the conventions into place. We can't generate beneficial social institutions through higher taxes, even though as those institutions grow it will benefit society to increases taxes to support them.
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Carleas
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### Re: The morality of taxation

Taxation spawns from militarization and protection costs.

Everybody pays for protection. If your tribe or country has no army, then another will invade, rape, kill, steal from you. Thus taxation is always a vital requirement throughout humanity. Taxation is the cost of security, first and foremost. Thus the "morality" of taxation is also the morality of protection, security, and defense. Can you defend yourself? Hypothetically, if an individual or society could defend itself (militarily) then it would NOT "need" taxation, as the cost of defense would be incurred upon the body itself. However most people cannot do this, cannot defend themselves, women and children for example.

In order to justify "no taxes whatsoever" you must also immediately justify no Defense. And that is anti-natural, unnatural. Anybody who leaves themselves completely defenseless, will soon have all their assets stripped away from them. Because humanity is predatory on the base level. Order is imposed through (the threat of) violence.
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### Re: The morality of taxation

Carleas wrote:The share of workers earning minimum wage or less is like 1% of all workers, and less than 3% of hourly workers. So clearly a lot of people willingly pay their workers more.

That's an inaccurate assessment for failing to take into account that state minimum wages are often higher than federal, so it's not so clear that "a lot of people willingly pay their workers more." According to this, 42.4% of workers make less than $15/hr. Pew estimated in 2014 that approximately 30% of hourly workers make less than$10. I'm confident it was an honest mistake since you typically exhibit such equitability in deliberation which is, btw, admirable.

I feel zero-sum is correct that employers will not be philanthropic in their wage offerings (hence min wage laws in the first place) and with automation stealing jobs and the pervasion of college educations, supply of competent workers far-exceeds demand allowing employers further leverage. I suspect this development is heavily contributing to the opioid epidemic by engendering a sense of hopelessness in the lower tiers of the population.

Concerning the morality of taxation, the main purpose, if not the sole purpose of taxation is the redistribution of wealth for the engineering of society.

Here is G. Edward Griffin, the author of The Creature from Jekyll Island, saying what I just said: https://youtu.be/dsqGR31zoVA?t=17m59s

Without that redistributive mechanism, we'd devolve back to the bi-class society absent the of middle classes that existed at the dawn of the industrial revolution for the simple reason that money always flows uphill and without either a constant creation of money being funneled to the bottom or a redistribution from the top, the bottom would run dry. Wages alone are not enough to balance the tiers because employers hire employees for the purpose of making a profit. Employees, by definition, are compensated less than the productivity they contribute and therefore it's only a matter of time before all the money ascends to the top. In order to have a functioning society at all, taxation is absolutely necessary. And what is necessary to prevent suffering en masse is obviously moral.

As an example, I used to employ workers who I compensated $10/hr in exchange for their making$50/hr in revenue for me. So I net-benefited $40/hr from them and that doesn't count the$50/hr I made for myself as well. That's how money flows uphill and it's always the case because no employer would hire anyone unless they could generate a profit. So, therefore, the very act of employment necessitates redistributive taxation or money creation in order to fill the void generated by the profiteering of labor which is conveniently veiled by the guise of "providing a service to the community".

Hello, I see you're hungry and I'm willing to leverage your desperation to eat by offering you these peanuts in exchange for your mining some gold nuggets for me. Deal? We'll call it "providing a service to the community". Of course, you'll also have to pay your share of taxes as it wouldn't be "fair" if I carried the full burden.
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### Re: The morality of taxation

Carleas wrote:I took the following to be a causal implication:
Silhouette wrote:The more the private sector is kept in check by taxation that acts economically as nothing more than a buffer and pays for everything that the private sector can't make a profit out of, the better for everyone.

and I accept that it wasn't your intention. But it's important to point out, because I see the point presented as an argument for a larger welfare state. Yes, we have larger stabler governments who exert more control over the market wherever we see wealthier societies, but we also see more efficient markets and freer trade. Look at the Nordic countries, thought of as a socialist utopias, but with significant levels of privatization and market freedom.

Look up Tax/GDP ratios.

Norway, Finland, Denmark and Sweden are the top 2-5 - basically THE Nordic countries almost exclusively populate the very top of the scale. Timor-Leste is top, and for reference, the USA is about 1/3 of the way down. Whilst Norway only claims just over 1/2 of its GDP in tax, I don't think you can honestly make an argument that its "significant levels of privatisation and market freedom" aren't smaller relative to most other countries of the world. They literally are a model of Social Democratic (not Socialist) success. Anyone trying to put their success down to the "significant levels of privatisation and market freedom" would be somewhat ridiculous considering that even the most successful countries with lower degrees of Social Democracy output less value per person. If anything, we ought to be questioning just how much more successful could Nordic countries be if their economic model of Social Democracy was enhanced even further! I think if you believe these people who are trying to give you the impression that Nordic countries are successful because of "significant levels of privatisation and market freedom", you are being deceived.

Whether or not the correlation is in fact causation, you have to remark at just how much the data appears to support the hypothesis that it is in fact a causal relationship - at first glance at least. It at least bears looking into! But are we? It seems like the Capitalist powers that be are trying very hard to stop this. It might very well be the case that there are other factors at work, or that any causation goes in a different direction. I am in favour of finding out and absolutely against those who are trying to stop us from finding out.

Carleas wrote:Let's say we increase taxes on business owners so that the best they can hope for from their investment in a business is to break even. In that case, they won't invest, because they would take on risk with no expected return. So they won't open a business, hire workers, and organize activity to produce useful things. The employees are all left as unemployed as they would be if the business had tried and failed. That's bad for workers. If we want workers to have work, we should want investors to have incentives to invest.

And if the private sector can't afford more workers, this is exactly because the public sector now can. The workers just work for the public sector instead of the private sector.... there's no negative impact to job availability. The public sector gets the incentive to invest instead - and they're the same people who equally want to advance in the world, they just don't have the autonomy and the high risk high reward of doing it privately.

Carleas wrote:by letting people choose for themselves what their risk is worth, we end up with the market settling around an optimal risk.

Only partly true. This assumes competence, and moreover - foresight. No matter how competent a risk taker is, they cannot see the future and their failure affects more and more people the more money that is risked. There is no such thing as both autonomy in risk, and consequences independent of others. All financial decisions affect others. Individuals (in)famously do not have as good an idea of how things are and how they will go as they often think - restricting risks in line with alternative opinions, especially the highest risks, is statistically optimal. The only thing that complete autonomy has in its favour is that even the wisdom of the crowd is flawed, and happy accidents happen. New frontiers can be broken much better with more autonomy, but at what cost? If you're speaking of "optimal risk", this involves restricting people.

Silhouette
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### Re: The morality of taxation

Serendipper wrote:That's an inaccurate assessment for failing to take into account that state minimum wages are often higher than federal, so it's not so clear that "a lot of people willingly pay their workers more." According to this, 42.4% of workers make less than $15/hr. Pew estimated in 2014 that approximately 30% of hourly workers make less than$10. I'm confident it was an honest mistake since you typically exhibit such equitability in deliberation which is, btw, admirable.

I feel zero-sum is correct that employers will not be philanthropic in their wage offerings...

I don't think this contradicts my assertion: it can simultaneously be true that employers voluntarily pay their employees more than the minimum they are allowed to pay them by law, and also that they pay them less than some larger amount. Though, perhaps there is some ambiguity in Zero's qualifier that no one pays more "in any great number". I took that to be about how frequently people are paid more than the legal minimum (i.e., great number of people), rather than how much more than the minimum they are paid (i.e., a great number of dollars-per-hour), but the latter interpretation is also possible, in which case your point is well taken.

Please note that I don't think this is evidence that employers are being philanthropic; it is pure rational self-interest. Employers pay higher than the minimum wages because it makes business sense to do so. More money can attract more and better applicants to a position, and can incentivize workers to stay. Though I must concede that the minimum wage probably has an anchoring effect, so that employers are offering "more money" than the minimum, because the minimum is the alternative against which they're competing to recruit and retain workers.

Serendipper wrote:Hello, I see you're hungry and I'm willing to leverage your desperation to eat by offering you these peanuts in exchange for your mining some gold nuggets for me. Deal?

I agree with this and with your comments on the necessity of redistributive taxation. I favor a basic income in large part for the reason you identify here: if you have to work to eat, it doesn't matter what the minimum wage is, you will always be extorted by the threat of starvation.

Silhouette wrote:Look up Tax/GDP ratios.

I did some quick comparisons between Wikipedia's list of countries by per capita GDP, and its list of countries by tax as a percent of GDP, and there isn't much correlation. The top twenty countries are:
Qatar
Macau
Luxembourg
Singapore
Brunei*
Ireland
Norway
Kuwait
United Arab Emirates
Switzerland
Hong Kong
San Marino*
United States
Saudi Arabia
Netherlands
Iceland
Bahrain
Sweden
Germany
There was no tax info for Brunei and San Marino, but setting those aside, there isn't a clear trend in this group for social democracy. Indeed, the correlation coefficient between per capita GDP and tax as a percent of GDP is actually negative (-.268). On the other hand, over all the countries that appear in the GDP list, the correlation is positive (.273). Not having much background in stats (I'm just using the Excel CORREL() function), I wasn't sure what to make of that. So I also looked at the Wikipedia list of countries by economic freedom, and found that it too had a negative (though less negative) correlation in the top 20 (-.037), and a similar (but slightly larger) correlation across the whole set (.278).

As I say, I claim no statistical expertize, so I can't say how statistically significant this is. I'm sure there are problems with the data set (and the economic freedom rankings are much less complete than either the tax rankings or the GDP rankings). Still, I'd say it's enough to reject the claim that there is a particularly clear correlation between wealth and taxation such that we should suspect the link is causal.

Silhouette wrote:This doesn't look far enough....

To start, I agree with some of your points here, and of course you are correct that some level of business taxation is socially optimal, if only because we have a system that allows people to create legal fictions that insulate them from the full consequences of their actions (which is also so socially optimal, but a tax recoups the risk that society bears as a result). And competition from the public sector can also be good, and you are right that it can actually improve the competitiveness of private businesses up to a point.

But shifting from private to public labor is not a free lunch. Some public industries operate well, others don't, and I don't think it's the case in any industry that displacing all labor from private to public is a good thing. The incentive to optimize that the private sector has is valuable, and can't really be simulated in the public sector. There are public choice problems in public sector employment that can get out of hand without the discipline provided by a competitive market. While there may be no negative impact to job availability (I'm not sure that that's the case, given that the tax collecting and spending bureaucracy is effectively a middle man), there is likely to be a negative impact on productivity because public employers don't have the same incentive to maximize output.
Silhouette wrote:This assumes competence, and moreover - foresight.

I may have been implicitly assuming those, but they aren't necessary for a functioning market. The market is an evolutionary process. As long as businesses vary in their approach, the market will select for the approaches that work. Incompetent managers and those lacking foresight will lose their shirts, and ones that are competent, or that just luck into the right answer, will get more investors to fund their future attempts.

I agree that some restriction is optimal (and here to it will vary by industry), but it's easy to underestimate the value of happy accidents. Like in all investing, the upside is worth more than the downside, because the downside is capped and the upside can be reinvested. If one unhappy accident loses everything and another happy accident doubles the investment, society is better off.
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Carleas
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### Re: The morality of taxation

Carleas wrote:I did some quick comparisons between Wikipedia's list of countries by per capita GDP, and its list of countries by tax as a percent of GDP, and there isn't much correlation.

Well in your first link (GDP/person) we can clearly see Norway coming in at 6th, Sweden in 16th, Denmark 20th and Finland 25th.

These are the top 2-5 in the tax/GDP stats in your second link - all rating in the top 25/187 in terms of GDP/person.

So whilst you might not be able to conclude that GDP/person relies on high taxation, you should be able to see that high taxation seems to coincide with significantly high GDP/person.

I am getting a similar correlation figure of about 0.3, not sure why yours is closer to 0.27 (maybe it's because I corrected a couple differently spelled country names between the two lists to get the extra information), which doesn't look like a significant correlation, I agree, though a positive correlation nonetheless.

However, if you remove just a few outliers, even including the Nordic Countries, this increases.

I removed just the top and bottom 5 countries in GDP/person, and the top and bottom 5 countries in Tax/GDP and got a correlation of over 0.5, which is starting to get pretty significant. I believe this is the case because the competition with the Nordic Countries' in terms of GDP/person is due to countries either sitting on natural resources or being micro states with particular attractions to foreign investment. Norway and Denmark even fall into this category to an extent, though certainly the Middle East + the smaller countries do. This is why I removed them just to see what this did to the correlation, and even though there still remain some oddities in the data, the increased correlation is showing an even clearer link between taxation and output per person.

I don't have time to look into whether higher taxation is better for more developed countries, and the Marxist theory is that the move towards Socialism naturally occurs after Capitalism, which I agree works well within less developed countries, so it would be interesting to see if this is the case - excluding outliers/exceptional cases that throw off the overall trend.

Silhouette
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### Re: The morality of taxation

Carleas wrote:Please note that I don't think this is evidence that employers are being philanthropic; it is pure rational self-interest. Employers pay higher than the minimum wages because it makes business sense to do so. More money can attract more and better applicants to a position, and can incentivize workers to stay. Though I must concede that the minimum wage probably has an anchoring effect, so that employers are offering "more money" than the minimum, because the minimum is the alternative against which they're competing to recruit and retain workers.

I have a friend who said "We perpetually have 30 positions open that pay almost twice the minimum wage that we cannot fill." The implication being that people are so "lazy" and "entitled" that they turn their noses up at approx $12/hr. I said simply, "If you can't find workers, raise the pay until you find workers." That's capitalism, right? Nope. Apparently people should be coaxed into accepting pay below their willingness or be accused of having crappy work ethic and desiring handouts... essentially shamed into slavery. Of course, some folks are overpaid as well. My local walmart store manager is compensated$250k for his ingenious expertise at hiding the horseradish with the sourcream. I dispatched an email stating the next time I go in and have to check myself out for lack of a cashier, I'm leaving a whole buggy of icecream in the pantyhose aisle then walking out. He can either pay for the ruined icecream, pay for someone to put it back, or pay for a cashier to check me out. That's bullshit that he's too cheap to pay even one cashier while making that much himself and pawning the extra work off onto me. I'm sure there are people here who'd be willing to do his job for half his pay... and probably do it better (definitely couldn't be worse).

And then we have these ceos who make 400x their average employee's pay as if they could possibly do anything 400x better than anyone else. There is no human on this planet who can do anything 400x better than another human, unless we're counting being a 400x bigger asshole who can steal 400x more money from 400x more grandmas (Enron, Wells Fargo, et al)

I favor a basic income in large part for the reason you identify here: if you have to work to eat, it doesn't matter what the minimum wage is, you will always be extorted by the threat of starvation.

Yup! Not only basic income, but the upper tier should bear all the taxation leaving the middle free from taxation. If the rich pay 80% of taxes, then they won't notice the extra 20%, but the middle will. The velocity of money would go to the moon with that strategy https://fred.stlouisfed.org/series/M2V

It isn't about what's good for society, but it's about wealth differential because what fun is it being rich if there is no one to be richer than? Keeping others down is therefore more important than lifting the self up. If a rising tide lifts all boats, then we must sink the other boats.

Check this out: (FWD to 10:20)

It's not that the older kids suddenly developed philanthropy, but they've learned a more clever and subtle way to get one-up by realizing the tokens are worthless and the real prize are acts altruism in front of cameras. Seriously, could you pick the selfish option while not feeling like a goober in front of the test administrator? The truth about humanity is revealed by the younger kids who haven't yet realized what feeling like a goober is.

So, people are willing to take less societal benefits for themselves so long as it means you get nothing.
Serendipper
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### Re: The morality of taxation

Taxation falls easily within the definition of theft.

Someone is forcing you to give them some of your money, and if you refuse, they will use force against you to get it. You have something, someone else wants it, they threaten you with force if you do not give it to them, so you give it to them. It does not matter if you want to give it to them or not, that does not even appear as a question. Some people claim to actually want to give their tax moneys to the government, but I bet if the government stopped forcing them to give it and they were free to write a check to the government for whatever amount they wanted, they would either write an amount far less than their current tax bill, or no amount at all.

None of that has to do with the question of whether or not taxation is actually good or not, of course. In some cases, perhaps, theft can be a "good" thing. It would depend on how we define theft, I suppose. And also looking more deeply into the means and ends.

Taxation is basically theft normalized. So is theft good if it becomes normalized and if it achieves ostensibly good ends? But of course the theft of taxation also achieves quite a large number and significant degree of bad ends, too.
EIHWAZ PERTHO NAUTHIZ

ANSUZ

URUZ
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### Re: The morality of taxation

Carleas wrote:
Zero_Sum wrote:what is the risk of a business owner in comparison to workers who live their entire lives in abject poverty?

Let's say we increase taxes on business owners so that the best they can hope for from their investment in a business is to break even. In that case, they won't invest, because they would take on risk with no expected return. So they won't open a business, hire workers, and organize activity to produce useful things. The employees are all left as unemployed as they would be if the business had tried and failed. That's bad for workers. If we want workers to have work, we should want investors to have incentives to invest.

Zero_Sum wrote:Nobody willingly will pay their workers more in any great number which is why minimum wage laws were created to begin with because of lack of social or political will amongst business owners.

The share of workers earning minimum wage or less is like 1% of all workers, and less than 3% of hourly workers. So clearly a lot of people willingly pay their workers more.

Silhouette wrote:I'm not a fan of the language of "productive labour" as something that government detracts from, as though people employed by government somehow don't perform services or produce goods but people employed by capitalists do.

It's not that they aren't performing services, and in some cases government labor can provide more value than the private sector labor it displaces (e.g. maintenance of the commons). But it always shifts the demand curve. The public sector jobs compete against the private sector jobs, and the same pool of labor is spread across more productive outlets. Again, this is not always negative-sum.

Silhouette wrote:In terms of game theory...

I like this way of framing the question, and I agree that the risk profile differs for public vs private, and that there are cases where public sector profile is better. But as you might have guessed, I think the private sector usually does a better job of getting the right answer. Again, I agree there are exceptions, there are cases where incentivizing risk is a bad thing and where we'd prefer the incentive profile of public funding. But the private sector tends to do better, including by answering questions like "what is the optimal risk?" That question is about values, and by letting people choose for themselves what their risk is worth, we end up with the market settling around an optimal risk.

Silhouette wrote:Ha, I knew somebody would try that one, but I checked my language before I submitted to make sure I wasn't stating any causation. Reading it again, I still don't think I even imply causation in either direction, just correlation. I agree that it would be interesting to study if there is any causation though.

I took the following to be a causal implication:
Silhouette wrote:The more the private sector is kept in check by taxation that acts economically as nothing more than a buffer and pays for everything that the private sector can't make a profit out of, the better for everyone.

If you flip the sentence, it makes the implied causal relationship stand out:
"The better for everyone, the more the private sector is kept in check..."

As I read the flipped sentence, it's saying that prosperity will tend to keep the private sector in check, which tells me that the original sentence implied that keeping the private sector in check benefits everyone.

It's semantic, though, and I accept that it wasn't your intention. But it's important to point out, because I see the point presented as an argument for a larger welfare state. Yes, we have larger stabler governments who exert more control over the market wherever we see wealthier societies, but we also see more efficient markets and freer trade. Look at the Nordic countries, thought of as a socialist utopias, but with significant levels of privatization and market freedom.

If you'll permit me a personal anecdote: I worked for a little while at the FCC with the team rewriting the satellite industry regulations. My impression of it was that it wasn't adversarial at all, neither between the FCC and the businesses that would be covered by the regulations, nor between the businesses themselves. What the companies wanted, and what the FCC provided, was a set of common standards that kept people from running into each other or drowning out each others signals. Compare it to the drive-on-the-right rule in the US: every driver is made better off by the government enforcing that standard, because otherwise there is a coordination problem and driving becomes more dangerous and less efficient. A lot of law functions this way, and wealthy countries with large functional governments are able to establish these conventional rules more broadly, to make private players more efficient. But the bottleneck for these things isn't how much we're taxing, it's having stable and trusted institutions with the resources to put the conventions into place. We can't generate beneficial social institutions through higher taxes, even though as those institutions grow it will benefit society to increases taxes to support them.

It all comes down to income and wages, taxation isn't the same when a millionaire or billionaire gets taxed 15% per year compared to when somebody makes \$20,000.00 a year getting taxed the same amount. It's not even close concerning financial risks or debt. Don't tell me that their risks outweigh more than workers as that is simply bullshit.

Wages and income in the United States have not been equalizing whatsoever where instead for workers they've been dropping or stagnating the last forty five years, get real!

The divide between rich and poor within the United States has been increasing the last seventeen years.
The temple mount will be rebuilt in Jerusalem and all the nations of the world will be ruled from there. All races, cultures, leaders, and nations will come to bow before the new messiah yet to come. All will come to know the chosen of God who refer themselves as Jews. For every Jew there will be a thousand goyim that will be their slaves as it was ordained by God. Every man, woman, and child will convert to Zionism.

Zero_Sum
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### Re: The morality of taxation

UrGod wrote:Taxation falls easily within the definition of theft.

If you want to participate in our economy in order to generate profits far exceeding that of average folks by taking advantage of the fact that we have a LOT of average folks, then you have to pay your dues which guarantee we will always have a LOT of average folks (middle class) and failure to pay is theft. You're stealing from the ecosystem and not giving back like a farmer sucking resources from the land and not refertilizing... and it would end the same way.
Serendipper
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### Re: The morality of taxation

Serendipper wrote:
UrGod wrote:Taxation falls easily within the definition of theft.

If you want to participate in our economy in order to generate profits far exceeding that of average folks by taking advantage of the fact that we have a LOT of average folks, then you have to pay your dues which guarantee we will always have a LOT of average folks (middle class) and failure to pay is theft. You're stealing from the ecosystem and not giving back like a farmer sucking resources from the land and not refertilizing... and it would end the same way.

You do realize that taxation is regressive, right? And that it isn’t necessary that I be taxed in order for me to work freely and produce profits for myself and my employer. No one needs to be taxed, except that we need to find a way to fund social systems and governments and the theft of taxation is basically the only way anyone has discovered how to do that.
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URUZ
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### Re: The morality of taxation

UrGod wrote:
Serendipper wrote:
UrGod wrote:Taxation falls easily within the definition of theft.

If you want to participate in our economy in order to generate profits far exceeding that of average folks by taking advantage of the fact that we have a LOT of average folks, then you have to pay your dues which guarantee we will always have a LOT of average folks (middle class) and failure to pay is theft. You're stealing from the ecosystem and not giving back like a farmer sucking resources from the land and not refertilizing... and it would end the same way.

You do realize that taxation is regressive, right? And that it isn’t necessary that I be taxed in order for me to work freely and produce profits for myself and my employer. No one needs to be taxed, except that we need to find a way to fund social systems and governments and the theft of taxation is basically the only way anyone has discovered how to do that.

Do you drive on a public highway?
The temple mount will be rebuilt in Jerusalem and all the nations of the world will be ruled from there. All races, cultures, leaders, and nations will come to bow before the new messiah yet to come. All will come to know the chosen of God who refer themselves as Jews. For every Jew there will be a thousand goyim that will be their slaves as it was ordained by God. Every man, woman, and child will convert to Zionism.

Zero_Sum
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