Wednesday, May 04, 2005

As Matthew Yglesias noted a while ago, part of the reason that rich people in the United States (as judged by income) rate themselves as middle class is that they're acutely aware that the super-rich are so much richer than they are. It used to be that the gold standard for techies was to get "fuck you" money -- the amount of money that would allow you to live off your investments, and give you the security to say "fuck you" to any manager who was trying to jerk you around. But in the dotcom boom, there was a higher standard -- techies who left netscape to do a shopping site were quoted in the press as saying they wanted "airplane money". And folks with the money to afford a mere G5 -- what they're envious of is the people with airliner money. (That link is to an article in the Boston Globe which describes several pimped-out airliners, including someone who has already ordered a customized, private version of the new double-decker A380. But that plane has a room fitted out as a mock Sahara. Evidently, its owner has oil money).

Apropos of income distribution, Jim Henley asks whether there is any level of taxation that liberals would consider unjust. Personally, I think the question's a bit odd; my notion of whether a system of taxation is unjust has a lot more to do with how the tax load is assessed and distributed than on the particular levels of the rates. (For instance, I think that punitive tax rates are a perfectly reasonable way for government to discourage antisocial activities and trades where there's a social need, but where an outright ban would be awkward -- think gas tax to get people out of SUVs). After all, a ban on trade in anything (illegal or counterfeit drugs, unsafe food, whatever) which comes with fines but no jail time amounts to a tax with a very high rate (100% or greater). A tax which is unfairly distributed across residents of geographical regions or racial groups might strike me as unjust. So might capricious enforcement. So might a tax system (like Alabama's) which is actively regressive -- putting more of the burden on those least able to pay. But, as someone noted in Henley's comments, the idea of a numeric threshold on rates (50% just, 50.1% unjust) doesn't make a whole lot of sense.

But in the context of contemporary American politics, the question is moot. Taxes in America, particularly on the upper classes -- the guys with at least airplane money -- were already quite a bit lower in the U.S. than in, say, Europe under Clinton, and the party in power here keeps trying to drive them lower yet. Even if the Democrats had somehow managed to take back both the Presidency and Senate, they would have enough trouble restoring the Clinton tax rates (again, light ones by world standards), let alone raising them to a level where the question might arise.

One last note about "unfairly distributed across geographic regions" -- tax burdens in the U.S. are different in different states. But that's because of what the people in each state have voted for. I'm thinking more of a federal tax which somehow taxed the same activity differently in, say, Massachusetts and Wyoming...


Anonymous Anonymous said...

When Laffer drew his curve on the cocktail napkin he left off any numbers on the scale because they were unknowable. But everyone present just assumed that the optimum tax rate was somewhere below the prevailing one. At one time conservatives wistfully looked back at the '50s as an economic paradise. But from '54 to '63 federal taxes at all levels were the highest they've ever been.


9:42 PM  

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