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Morality and Income Tax

John Simkin

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The most healthy societies are those where people who are well off contribute more to the general well being of society. I believe that even Adam Smith believed in this principle. Look how good society is in countries with high levels of taxation (Sweden, Finland etc).

For a powerful argument in favour of 'equality', see Polly Toynbee's review of Richard Wilkinson's new book, 'The impact of inequality, how to make sick societies healthier':


I think that it is a very powerful and effective piece of writing.

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The Morality of Taxation

The legitimacy of taxation depends in general on whether citizens are expected to contribute some fair share to the collective burden of civil society. Most people would, I think, agree that taxation in general is legitimate. What separates them are two questions. First, how should the common goods be apportioned (e.g., health care, education and physical infrastructure) and to what degree should taxation contribute to the redistribution of wealth from the wealthy to the poor.

Some will say that taxes should be allocated mainly to common needs. The maintainance of the forces of national defence, law and order, the protection of property and the maintainance of roads and sewers are essential to keeping a private, market economy alive. Few gainsay the importance of ensuring "free trade."

Others will insist that social justice demands the redistribution of wealth from the affluent to the poor, so that the worst miseries of inequality will not be visited upon the infirm, the desitute, the disadvantaged and the simply inept, incompetent and otherwise dim.

The problem, of course, is that all the chatter about equity is beside the point. Tax policies may take a larger proportion of income from the middle and upper-middle classes and simultaneously reduce the burden on the desitutute.

In the final outcome, however, the proportion of wealth accruing to the already rich is extraordinarily greated than the proportion going to people who actually work for a living, much less to those who fail to earn even a minimal wage.

In the United States - the most egregious instance among the "developed" nations - the Walton family have an accumulated wealth equal to three-quarters of a million times that of the median fortune of the average American family. Meanwhile the average American CEO brings home well over 400 times as much as his [sic] average employee.

Meanwhile, pressure is being put on various competitors for funding. Some "liberals," "leftists" and putative "socialists" urge that taxation be used as a means to rob from the rich and give to the poor. Empirical evidence suggests, of course, that in modern capitalist democracies the redistribution of funds has been from the poor to the rich while, at the same time, so-called fiscal conservatives - especially in the USA - have run up both a deficit and an overall debt unheard of in the era of "tax and spend" liberals. From Ronald Reagan to George W. Bush, US financial policies have amounted to "borrow from abroad" and "spend lavishly on your friends," while reading vapid moral lessons to the poor and dining out with the rich.

Anyone who agrees with me will also agree that all the talk about taxation as a moral question is fundamentally misplaced.

Anyone with an accountant's mind (which I cheerfully do not possess) will at least know that no part of the debate about taxation relies on how much or what proportion of money is to be collected. It only matters where and when and how such monies are to be retrieved.

Sales taxes are inherently unfair. Income taxes are somewhat fair - but are rarely assessed in an equitable manner. Corporate taxes are a cruel joke. Meanwhile, "taxpayers' money" is bundled out to political friends of existing authorities and global firms bilk the ordinary citizen out of earned income through fraudulent petroleum prices, international munitions trading and all manner of price gouging.

For those who cry foul about 40% (or 20% or 60%) income tax, I shed no tears. The people who make up the tax rules are the same ones who benefit from them, and I can assure you that I am not one of them!

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