One of the political themes in the United States has been the matter of taxes. When the Bush tax cuts were set to expire, there was considerable support for keeping the cuts for the less wealthy Americans in place. Then there was an interesting surge to keep the tax cuts in place even for the wealthy and thus the tax cuts remained.
The Tea Party movement also has been involved (or directed to be involved) in pushing for tax cuts-especially for businesses and corporations. The theory is, of course, that tax cuts for corporations will create jobs and tax cuts for the wealthy will create spending (which will create jobs).
There is also a move to cut the size of government, although this seems to be more talk than action and seems to be directed mainly at small ideological targets rather than anything significant. However, there is at least talk of reducing spending. Given that there will be less income for the state, this is clearly a necessity.
Despite the tax cuts and the talk of cuts in spending, there is still clearly a need for taxes. After all, even the most staunch Tea Partier accepts that the state provides goods and services that they simply cannot do without. Since these do not come for free, there would seem to be a necessity for taxes. This raises the question as to what would be a fair tax.
Looked at in a rather simplistic and even naive way, the answer would be based on the business model in which a customer pays for the goods and services they use. For a tax to be fair, it should match the goods and services that a tax payer consumes. This could be called “pay as you go taxation” because it would be similar to pay as you go phone plans.
There are, of course, some obvious major flaws with this view. First, there is the rather practical matter of calculating the goods and services that a person uses. For example, people without children or who send their children to private schools might claim that they should not pay for public schools. However, they would seem to benefit from these schools in various ways-such as the education they provide to people they might hire. As another example, someone who opposes war might claim they should not pay for defense-however, they still receive the benefits of being protected by the state.
Second, there is the fact that some of the people who need these goods and services will be people who cannot afford to pay for them, such as children, the retired, the unemployed, and others. While it could be argued that they are thus not entitled to these services, this would seem to be inconsistent with the idea that the state should provide for the good of the people, even when those who benefit cannot afford to pay for these goods.
Another simplistic option is to tax everyone the same amount, regardless of their income. To use an analogy, this would be like the country going in on a pizza together-everyone has to chip in the same amount.
While this would be fair in one sense, it would seem to place an undue burden on the poor and put relatively little burden on the rich. As such, it would seem to be unfair in that sense. Unless, of course, the weight of the burden has nothing to do with fairness.
Another possibility is to simply have each person pay the same percentage, say 15%, of their income. That would be fair in the sense that each person is thus chipping in the same percentage. This, of course, means that people will be paying more or less in terms of the dollars they are paying in. However, each person will be contributing based on their income and this could be seen as fair. To use an analogy, it would be like people working together to lift a heavy object when some people are stronger than others. As long as each person is giving it their best, then it would seem to be fair.
Of course, this could also be seen as unfair. After all, a person who makes very little might not be left with enough to pay for their basic needs while someone who is very wealthy would still have a significant fortune. To use an analogy, if I have just enough water to survive while Donald has 10,000 times as much water as he needs to survive, giving up 15% would kill me but do nothing to Donald.
This, of course, suggests a variable income tax, in which the % goes up with the income. Sticking with the water analogy, if I have just enough to survive, then I should get to keep that. Donald can give up a lot without any hardship and hence it would not be an unfair burden.
Of course, it can be argued that it is unfair to punish people for their better fortune. If Sally has 100 times the water she needs and Donald has 10,000 times, then why should Donald have to hand over more water simply because he has more?
It might be argued that those who have more are thus under a greater obligation to contribute more both because they do have more and paying more will still leave them quite well off relative to other people.
Anyways, just some rambling on this matter. I’m still thinking about some theories of fair taxes and will put together something more developed soon.