Sunday, February 10, 2008

The Money You Make and the Accident of Birth

Ian Walsh over at Firedoglake has a post up explaining how the Libertarian scream of "It's my money!" is hogwash:

[I]f you're American, a large chunk of the reason you make a lot of money (relative to the rest of the world) is that you are American. The main cause of your relative wealth is not that you work hard, or that you're innately smarter than members of other nations (though you may be since you weren't starved as a child). It's because you had opportunities given to you that most people will never had, and those opportunities existed due to the pure accident of your birth or because you or your family chose to come to the US. The same is true of most first world nations.

Immigrants understand this very well. There's a reason why Mexicans, for example, are willing to risk death to cross the border. Their average income is $7,310, compared to the US average income of $43,740. They won't make up all the difference just by crossing the border, but they'll make up enough that it's more than worth it. They haven't personally changed, they don't work harder now that they're across the border. They aren't smarter and they aren't stronger. They just changed where they lived and suddenly the opportunities open to them were so much better that their income went up.

So let's bring this back to our typical Libertarian with his whine that he earned it, and the government shouldn't take it away. He didn't earn most of it. Most of it is just because in global terms, he was born on third and thinks he threw [sic] a triple. That doesn't mean he doesn't have to work for it, but it does mean most of the value of his work has nothing to do with him (and Ayn Rand aside, it's almost always a him).

Now what a government is, in a democratic society, is the vehicle that the population as a whole chooses to use to organize collective action. Government is, imperfect as it is, the closest approximation to the "will of society" that we've got.

Since the majority of the money any American earns is a function of being American, not of their own individual virtues, the government has the moral right to tax. And since those who are rich get more from being American than those who are poor, it also has the moral right to take more money from them.

More importantly than the moral right, it has the pragmatic duty to do so. The roads and bridges that government builds and maintains; the schools that it funds, the police and courts that keep the peace; the investment in R&D that produced the internet; the sewage systems that make real estate speculation possible, and on and on, are a huge chunk of what makes being American worth so much more than being a Bengali. Failure to reinvest in both human and inanimate infrastructure is like killing the golden goose, and America, for decades now, has not been keeping its infrastructure properly maintained, let alone building it up.
Besides muddling his sports references, this is a great piece that incorporates my own argument that "the government is the will of the people, so therefore it's still your money," yet goes even further to deal with this talking point. Astute readers will note that, in my previous post, I only claimed about a hare-brained decision on the part of the IRS and not about paying taxes in and of itself. Government exists to do things on behalf of the public, and it requires the public's funds to do so. To say otherwise is just silly.


Fonso_2006 said...

I believe that it does need public funds, but taxes should be fair. Now I'm in one of the lowest tax brackets because I don't work too much and I go to school, but I do believe that I the wealthy should not pay a higher percentage than I pay. If I pay 15 or 20 percent then should should someone making 300,000 a year. They would still pay more but it would be fair. I just don't like the Democratic idea of "taxing the rich" to fund everything.

The Squire said...

First off, the rich get lots of benefits from being on top of a stable society, which is made possible through government. Therefore, they should pony up. It's only fair.

Secondly, the taxes levied on people should be dependent upon their ability to pay. Poor people really can't afford to pay an income tax, and asking them to pay taxes instead of feeding themselves would be grossly unfair. Because of this, they're not assessed any income tax. Those who have more can part with more and, as covered earlier, they're getting just as much, if not more, benefit from having a strong, stable government than those at the bottom.

Thirdly, taxes serve as a wealth redistribution mechanism. In these days of executives earning 200+ times the salary of their lowest workers, someone has to provide a mechanism to keep the money from piling up at the top, and that's the government. With such disparities, a graduated income tax introduces fairness into the system.

Now, we can argue about fairness until we're blue in the face. Myself, my guess as to why you're bemoaning the unfairness of taking chunks of the wealth that these meek and humble rich people have earned, leaving them with merely gobs of money, is that you're looking at a considerable increase in income once you graduate. Either that, or you've drunk from some seriously doctored kool-aid.

Possibly pertinent question: You're a 20 yr old married college student with two young children. How on God's blue Earth are you paying for all that? (Corollary: out of curiosity, what made you think any of that beyond being a 20 yr old college student was a good idea?)