As noted in my previous essay on this topic, those with the highest income in the United States currently pay about 1/3 of their income in taxes. There have been serious proposals on the left to increase this rate to 40% or even as high as 45%. Most conservatives are opposed to any increase to the taxes of the wealthy while many on the left favor such increases. As in the previous essay on this subject, I will focus on arguments against increasing the tax rate.
One way to argue against increasing taxes (or having any taxes at all) is to contend that to increase the taxes of the wealthy against their wishes would be an act of coercion. There are more hyperbolic ways to make this sort of argument, such as asserting that taxes are theft and robbery by the state. However, I will use the somewhat more neutral term of “coercion.” While “coercion” certainly has a negative connotation, the connotations of “theft” and “robbery” are rather more negative.
If coercion is morally wrong, then coercing the wealthy into paying more taxes would be wrong. As such, a key issue here is whether coercion is wrong or not. On the face of it, the morality of an act of coercion would seem to depend on a variety of factors, such as the goal of the coercion, the nature of the coercive act and the parties involved. A rather important factor is whether the coerced consented to the system of coercion. For example, it can be argued that criminals consented to the use of coercive force against them by being citizens of the state—they (in general) cannot claim they are being wronged when they are arrested and punished.
It could be claimed that by remaining citizens of the United States and participating in a democratic political system, the richest do give their consent to the decisions made by the legitimate authorities of the state. So, if Congress creates laws that change the tax rates, then the rich are obligated to go along. They might not like the specific decision that was made, but that is how a democratic system works. The state is to use its coercive power to ensure that the laws are followed—be they laws against murder, laws against infringing the patents of pharmaceutical companies or laws increasing the tax rate.
A reasonable response to this is that although the citizens of the state have agreed to be subject to the coercive power of the state, there are still moral limits on the power. Returning to the example of the police, there are moral limits on what sort of coercion they should use—even when the law and common practice might allow them to use such methods. Returning to the matter of laws, there are clearly unjust laws. As such, agreeing to be part of a coercive system does not entail that all the coercive actions of that system or its laws are morally acceptable. Given this, it could be claimed that the state coercing the rich into paying more taxes might be wrong.
It could be countered that if the taxes on the rich are increased, this would be after the state and the rich have engaged in negotiations regarding the taxes. The rich often have organizations, such as corporations, that enable them to present a unified front to the state. One might even say that these are unions of the wealthy. The rich also have lobbyists that can directly negotiate with the people in the government and, of course, the rich have the usual ability of any citizen to negotiate with the government.
If the rich fare poorly in their negotiations, perhaps because those making the decisions do not place enough value on what the rich have to offer in the negotiations, then the rich must accept this result. After all, that is how the free market of democratic politics works. To restrict the freedom of the state in its negotiations with rules and regulations regarding how much it can tax the rich would be an assault on freedom and a clear violation of the rights of the state. If the rich do not like the results, they should have brought more to the table or been better at negotiating. They can also find another country—and some do just that. Or create or take over their own state.
It could be objected that the negotiations between the state and the rich is unfair. While the rich can have considerable power, the state has far greater power. After all, the United States has trillions of dollars, police, and the military. This imbalance of power makes it impossible for the rich to fairly negotiate with the state—unless there are rules and regulations governing how the rich can be treated by the greater power of the state. There could be, for example, rules about how much the state should be able to tax the rich and these rules should be based on a rational analysis of the facts. This would allow a fair maximum tax to be set that would allow the rich to be treated justly.
The relation between a state intent on maximizing tax income and the rich can be seen as analogous to the relation between employees and businesses intent on maximizing profits. If it is acceptable for the wealthy to organize corporations to negotiate with the more powerful state, then it would also be acceptable for employees to organize unions to negotiate with the more powerful corporations. While the merits of individual corporations and unions can be debated endlessly, the basic principle of organizing to negotiate with others is essentially the same for both and if one is acceptable, so is the other.
Continuing the analogy, if it is accepted that the state’s freedom to impose taxes should be regulated, limited and restricted by law, then it would seem that imposing limits, regulations and restrictions on the economic freedom of employers in regards to how they treat employees. After all, employees are almost always in the weaker position and thus usually negotiate at a marked disadvantage. While workers, like the rich, could try to find another job, create their own business or go to another land, the options of most workers are rather limited.
To use a specific example, if it is morally right to set a rational limit to the maximum tax for the rich, it is also morally right to set a rational limit on the minimum wage that an employee can be paid. Naturally, there can be a wide range of complexities in regards to both the taxes and the wages, but the basic principle is the same in both cases: the more powerful should be limited in their economic impositions on the less powerful. There is also the shared principle of how much a person has a right to, be it the money she keeps or the money she is paid for her work.
Like any argument by analogy, the argument I have made can be challenged by showing the relevant similarities between the analogues are outweighed by the relevant dissimilarities. There are various ways this could be done.
One obvious difference is that when the state imposes taxes on the rich, the state is using political coercion. In the case of the employer imposing on the employee, the coercion is economic (although some employers do have the ability to get the state to use its coercive powers in their favor). It could be argued that this difference is strong enough to break the analogy and show that although the state should be limited in its imposition on the rich, employers should have considerable freedom to employ their economic coercion against employees. The challenge is showing how political coercion is morally different from economic coercion in a way that breaks the analogy.
Another obvious difference is that the state is imposing taxes on the rich while the employer is not taxing her employees. She is merely setting their wages, benefits, vacation time, work conditions and so on. So, while the state can reduce the money of the rich by taxing them, it could be argued that this is relevantly different from an employer reducing the money of employees by paying low wages. As such, it could be argued that this difference is sufficient to break the analogy.
As a final point, it could be argued that the rich differ from employees in ways that break the analogy. For example, it could be argued that since the rich are of a better economic class than employees, they are entitled to better treatment, even if they happen to be unable to negotiate for that better treatment. The challenge is, of course, to show that the rich being rich entitles them to a better class of treatment.