This clip was featured on PBS' Religion and Ethics News Weekly last January. It is short (10 mins.) and includes an interview with Michael Sandel (as well as others, offering opposing view points). It is worth a watch (or a read, as the link includes the transcript).
This was a very interesting clip. I found myself agreeing and disagreeing with all of the diff. opinions being tossed around. I agree with Forbes (did when he ran as well) that a flat tax is fair to all. By definition it is. The problem I see is that it would not be flat. Specail interest groups ( not just on the rich people "side" ) would get loopholes put into it to help the people they represent. This is why and how we got where we are. But lets not just look at these loopholes as helping the rich get richer. These loopholes that we currently speak about are also to help teachers, poor immigrants, every different group we can think of. So the society as a whole is to blame for the maze of tax code we deal with.
ReplyDeleteBut, I also agree with Mankiw's premise of a consumption tax. That would be a way to equal out the inequalities that a re present.
My biggest problem with all this talk on tax inequalities is that I dont think people are really aware of WHO makes up some of our population. I hate to open some eyes but all poor people are not people who work hard and just dont have the "privilege" of being rich at birth. Some people do get away with murder b/c of who daddy is, but flip the coin on that argument- there also people in our communities that work the system and spend their welfare money on drugs and booze and cell phones (to name a few vices") rather than work harder. They will get the benefit of equalling out the system, just as much as those truly deserving...just thinking out loud
Steve,
ReplyDeleteThanks for your comments. I think you are correct that the clip as a whole gives us much to think about when it comes to the tax code. For all the differences presented by the various speakers in the clip,there does seem to be general agreement that, as currently construed, our tax code is far too complex.
I think there is no question that there are people in the bottom that take advantage of the system, and these problems and loopholes should be addressed and closed. My concern, howver, is that among certain groups their is this pervasive sense that all poor people are lazy and milk the system and as such should not be entitled to benefits. This came out very clearly in Dec. of 2010 when Congress did not want to extend unemployment benefits too the laid off middle class workers because they thought it would discourage them from looking for a job. They ultimately did extend the benefits, but only because the Bush tax cuts that were set to expire were extended.
I just wrote a long commentary that was inadvertently erased ...Ill try to sumarize. If you look at the poverty in the southern hemisphere you know that wealth is squarely placed in the hands of the ruling class. Born into wealth from many generations, the ruling class has effectively oppressed the people of many latinamerican countries. Our country may be going down the same road. Our government agencies are no longer able to protect us from the greed. We will buy their poisoned
ReplyDeletefood and beverages because to regulate our food, air and water costs money that could go to manufacture weapons to sell to third world countries whose people are dying of hunger and disease. Yes,we should tax the consumers, but we should all pay our fair share! The tax burden should not be carried by those least able to contribute. We should all be able to designate what we would like a portion of our taxes spent on. I bet Pentagon funding would take a nosedive.
MB,
ReplyDeleteThanks for your thoughts. I think it is helpful that you can bring in a more global perspective because of your experience and knowledge of Latin American societies.
I think when you wrote: "Yes,we should tax the consumers, but we should all pay our fair share!", you hot upon the key point. I think most people agree we should pay our fair share, but the problem is how exactly do we cash out the notion of "fairness". As we saw in the video, some would argue that it is unfair for the government to take money from you in the form of taxes and use that money for anything beyond what amounts to the basic functions of government (the governmnet as "night watchman" as Robert Nozick termed it) i.e. to protect you (and perhaps enforce contracts). Others would argue that the government has a moral obligation to level the playing by helping less fortunate individuals make up for factors that are beyond their control. Ultimately it is a clash between liberty and egalitarianism.
Unfortunately, this is one of those situations that will never be solved. Of course, there are people on both ends of the spectrum who milk the system. A flat tax seems the fairest to me so long as what is taxed by the flat tax remains consistent across all socioeconomic levels. It is all too easy for people at the top to manipulate how they get their compensation -house, car, vacations, stock options, the list goes on.
ReplyDeleteThe problem I see with a consumption tax is four-fold. First, the people at the bottom (let's go with the idealized person, not the shirker) can only control so much of what they consume. They NEED to buy food, clothes, a place to live (rented or bought), medicine, etc. Second, again, it would be easy for the top "earners" to choose where to buy from. If it is all bought mail-order from overseas or all purchased in the name of a corporation or a foundation, OR given to them as compensation for their hard work, they wouldn't be liable for their taxes. They could end up "consuming" less than the people at the bottom even though we all know they don't live like that. Third, there is the entire question of what you do about illegally-purchased items. The black market would bloom if we had solely a consumption tax. Fourth, and finally, what do we do about second-hand consumption? Do garage sales, flea markets, and the like then get the responsibility of collecting a consumption tax at the time of sale?
This is really all moot though because too much is tied up in the current taxation system. Of course, there is the IRS and all of the employees. Then there are the people at every employer who spend part or all of their time dealing with tax with-holdings from salaries and filing the appropriate forms. Finally, there are all of the companies and people that in person or in software work to file the millions/ billions of tax forms, as well as the people whose jobs are to figure out how to avoid taxes. As if the economy weren't bad enough, a flat tax or a consumption tax would cripple the economy with the loss of all these jobs.
Still it is a nice dream.
There is something appealing about a flat tax, there is no question. I think you raise some good points about problems that we might encounter with a flat tax. I particularly thought 2 and 4 were interesting points. I think there are no questions that we need an overhaul of the tax system. Currently I would like to see a truly progressive tax code and I would like it to include higher rates on capital gains a fee on risky trades such as credit default swaps to name two. Alas, like you I am not hopeful that such a thing will happen.
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