Progressive Taxation

I recently began a debate with a friend of mine concerning the nature of progressive taxation.  I stated that I believe, and quite strongly, that the rich should always be taxed more than the poor.  The fellow disagreed.  I, of course, fail to see why, but the debate was cut short because he wanted to talk about it later.  Of course, I will.  However, I’m going to organize my thoughts here.  I am going to base this essay on the premise that progressive taxation is vital to modern nations, because it allows for a larger tax base, it is less harmful to the poor, and because Canada already implements regressive taxation via consumption taxes.

First and foremost, it just makes more money.  We’ll use numbers to highlight this premise.  Suppose the nation has a population of ten million people.  One million of these people make $250,000 gross per year; the other nine million make only $20,000.  Extreme numbers, but it will allow the point to be highlighted.  We’ll use two brackets for this example: the rich pay 35% taxes on income, where the poor pay 18%.  This is exemplified in the income tax system in Canada.  The total tax income received by the government in this case is $119.9 billion.  Taxing with a flat rate of 26.5%, the average between the two extremes, produces a total of $113.95 billion.  Therefore, it can be seen clearly that a progressive tax system will generate $5.95 billion more in tax dollars that can be devoted to a wide variety of purposes.

One of the best purposes this money can be directed towards is social services.  By social services, I mean those services that help the poor: welfare and employment insurance, food banks, shelters.  However, the best social service we can offer is to prevent them from ever needing those things listed above.  We’ll use the same numbers above to highlight this effect.  For reference, the poverty line in the average Canadian city is measured at $17,515 for a single individual.  A man who gains a net income of $250,000 and is taxed at 35% brings home $162,500, or 9.28 times the poverty threshold; a man who grosses $20,000 and is taxed at 18% will bring home $16,400, or $1,115 less than is considered poverty.  He’s obviously poor.  Now let’s say we averaged the tax rate again: the rich man now brings home $183,750, placing him at 10.49 times the poverty line, whereas our poor man brings home only $14,700, pushing him under the line by $2,815.  This man was going to have a hard enough time as it was, being more than a thousand dollars under poverty; now that we’ve “balanced” the taxes, he’s another $1,700 away from it.  He will be hard pressed to stay alive.

Finally, Canada already has a regressive tax scheme, in the form of consumption taxes.  Thus far we’ve only spoken of income taxes, which are obviously progressive in this country.  However, consumption taxes, popularly known as sales tax, are entirely regressive: they are the same for everyone making a purchase of similar products.  These taxes hurt the poor more than the rich.  Everything in Ontario that is not considered a necessity is taxed at a harmonized sales tax rate of 13%.  You want the shoes?  That’s another 13% on the price.  It’s the same for the sports car.  Things like milk, bread, and other staple foodstuffs are exempt, as are baby clothes, diapers, and medicines.  Sin taxes, applied traditionally to tobacco, alcohol, and motor fuels, are even higher, and just as equal to both the rich and the poor.  Given that these taxes apply to everyone, it may be fair to give the poorest among us a break on their incomes, particularly as averaging the income tax rate gives him far less money to spend on the things he needs, never mind the things he wants.

By this point, it should be pretty obvious that progressive taxation is the way to go; most modern nations do it, to some degree.  Some people will claim that it’s somehow unfair that those people who make exorbitant amounts of money be taxed so highly, but I see that argument as hedonistic.  The additional tax taken from the rich man could literally feed a family down on its luck for a year, and all he had to give up was twenty grand he didn’t really need in the first place.  A country is a group of people united under a common banner, and hopefully under common ideals; unwillingness to give up something in order to help those of your countrymen who need it smacks of selfishness.  Clearly, progressive tax makes more money for the government, it helps keep those at the bottom from slipping into complete destitution, and it’s applied where it counts the most, on incomes.  As far as the fancy shoes are concerned, you can pay the same tax as everyone else if you want to buy them, regardless of your income.

The Cost of Anarchy

I had an interesting conversation with a “non-conformist” young man the other day, who was dressed quite similarly to the other “non-conformists.”  In thinking about the general idiocy of his responses I decided to write a short piece about my opinions on what it was he thought best for the world.  In moving forward, he claimed, the world should revert to anarchy.  I found this an interesting idea to refute, and so that’s just what I did.  Not surprisingly, he wasn’t interested in listening, despite the eloquence evidenced by my rebuttal.  I’m going to flesh out those ideas some here, in something of a short essay.  The thesis, you ask?  That general anarchy throughout the world would result in massive disruption in trade and trade revenues, that it would fatally hinder any attempt at progress from here, and that the population of the planet would crash, quite possibly to untenable levels.

First things first, complete anarchy would result almost immediately in the destruction of telecommunications, as well as other methods of communication.  You can’t very well enact international, or even interregional, trade if you’re unable to communicate the need.  Even in the off chance you could manage some form of conversation, say with post riders or carrier pigeons, how would you actually complete the trade, given that the lack of communication will likely destabilize any type of unified currency.  Perhaps barter would be the new old thing.  If you think it sounds bad already, just wait.  It gets worse.  Supposing you could trade your unrefined copper ore for their beaver pelts, how are you going to get it there?  Transportation, itself a form of communication, would have become quite difficult and potentially very dangerous; unreliable to say the least.  Besides which, given that industry would be a logical near-impossibility, how the hell do you intend to get the ore in the first place?  Of course, this leads us directly to our next point.

Progress, both technological and sociological, is based almost entirely on communication.  This is not to say that one cannot come up with something stunning and new, but simply that sharing it amongst the people of the world cannot be done without the ability to communicate.  You can develop some wonderful new thing and it scarcely matters if only you know about it; you’re going to die eventually, and no one will ever know that you made the best whatever it was ever.  This is evidenced by the fact that the rate of advancement during the first hundred and eighty five thousand years of human existence is less than that of the last ten thousand.  As the ability to communicate increased, the rate of progress increased with it.  The net effect?  A state of true anarchy, benign or otherwise, chokes progress.  Of course, this problem is further exacerbated by the following point.

Populations will crash.  Simple as that.  Society is an interrelated system, where one person relies on many completing jobs of their own, in order for the whole to work smoothly.  As an example, ask yourself: where did I get my lunch?  Did you grow the fruits and vegetables?  The grains?  Did you hunt for the meat?  Or did you go to the grocery store, wherein is stocked all these items, gathered by others?  Of course, without the ability to trade, how would the food get there?  But that’s the first point, and we’re working on the third.  When the population decreases below a certain threshold, those farmers are gone, or are concentrating on feeding themselves.  Without the progress civilization has wrought, you would not be able to go to the grocery store to get those things; you’d have to go out and hunt for them yourself.  This would leave less time to communicate with other parts of the world or to make any additional progress, indicating that the lack of population is not only a consequence of failures in the first two points of this essay, but also a contributing factor to the very same.  Below a certain population threshold, none of the conveniences to which modern humans are accustomed are possible.  Besides which, and this is the point that the young man really hated, under a state of anarchy only the strongest survive.  The very people who work every day to prevent a state of anarchy, those being individuals such as soldiers and police officers, are the ones best equipped to survive in it.  Pimply-faced, overweight teens eating Doritos in their mother’s basements are not terribly likely to thrive in a truely anarchic state.

And so it becomes quite clear that the destruction of useful communication networks, the lack of progress, and the simple fact that not everyone will get to survive is indicative of the fact that, while Emo kids may scream for it, anarchy is not something they would bear well.  In fact, pretty well none of us would.  People that feel marginalized by the existing society, that feel powerless and unheard, scream for it, not understanding that that very lack of personal empowerment means that they’d be the first to be eaten.  And that is how you refute an idiot in one thousand words or less.