"Taxman was when I first realized that even though we had started earning money, we were actually giving most of it away in taxes."
-- George Harrison
I'll tell you who can probably sympathize with this -- Peter Eastgate. Never heard of him? He's a 22 year old Dane that recently won the World Series of Poker title along with a cool $9.2 million in prize money. Mark Perry points out, however, that after taxes Mr. Eastgate will actually take home less money than the second place finisher. Denmark (one of the famous Scandinavian social welfare models that the American left would love to import), you see, will force Eastgate to pay an effective tax rate of 72.77 percent while the second place finisher, a Russian, will pay the country's 13 percent flat rate.
Now economists love to argue about the efficiency of various tax schemes and what the optimal rate should be, but often times lost in the debate is the philosophical aspect. The taxation that Eastgate is being forced to pay is simply immoral. He earned it, it's his, and the fact that he will only be able to keep a minority of his earnings after the government gets its take is simply disgusting.
Ask a left-winger why the rich should be forced to pay higher tax rates than everyone else and as likely as not they will respond that it is fair. Similarly, ask them why cutting taxes for the rich is wrong and they will respond that it is unfair.
Excuse me?
Let's talk about what is fair. Fair is treating everyone the same. Deviate from that simple rule and you get into some murky territory. If you believe that the rich should pay more, well how much more? During the Clinton Administration the top marginal tax rate was 39.6 percent. I love that last .6 percent. Would 39 percent be too little? It was similarly amusing to witness the kicking and screaming when Bush proposed reducing the rate to 33 percent -- an even one-third. That, liberals explained, was too little. But how do you justify that? It's completely arbitrary.
Beyond how ridiculous the notion is that treating people differently is fair, what I also find disturbing is the impingement on people's freedom from high taxation. Money is freedom. The more you have the more stuff you can do. This is so obvious that it doesn't require any further elaboration. We all know this. Take away people's money and you take away their freedom. You reduce their options and the choices available to them.
Any defense of the rich, meanwhile, immediately prompts responses along the lines of "Oh, like Bill Gates would really miss that extra $10 million? That's what you're likely to find in the cushions of his couch." Whether Bill Gates would miss it or what he would otherwise do with the money is irrelevant. It's his, he should be able to make a bonfire with it and dance around the flames naked if he wants to.
But since the point has been raised, who would really make better use of the money, Bill Gates or the government? Warren Buffet or the government? Hell, Paris Hilton or the government? After all, the rich tend to get that way by either providing products or services that people like. Let an investor keep more of his money and you are likely to get more investment. Let the government take that money and you are likely to get a bridge to nowhere.
In these economic times I know which scenario I prefer.
Update: More on fairness here.
-- George Harrison
I'll tell you who can probably sympathize with this -- Peter Eastgate. Never heard of him? He's a 22 year old Dane that recently won the World Series of Poker title along with a cool $9.2 million in prize money. Mark Perry points out, however, that after taxes Mr. Eastgate will actually take home less money than the second place finisher. Denmark (one of the famous Scandinavian social welfare models that the American left would love to import), you see, will force Eastgate to pay an effective tax rate of 72.77 percent while the second place finisher, a Russian, will pay the country's 13 percent flat rate.
Now economists love to argue about the efficiency of various tax schemes and what the optimal rate should be, but often times lost in the debate is the philosophical aspect. The taxation that Eastgate is being forced to pay is simply immoral. He earned it, it's his, and the fact that he will only be able to keep a minority of his earnings after the government gets its take is simply disgusting.
Ask a left-winger why the rich should be forced to pay higher tax rates than everyone else and as likely as not they will respond that it is fair. Similarly, ask them why cutting taxes for the rich is wrong and they will respond that it is unfair.
Excuse me?
Let's talk about what is fair. Fair is treating everyone the same. Deviate from that simple rule and you get into some murky territory. If you believe that the rich should pay more, well how much more? During the Clinton Administration the top marginal tax rate was 39.6 percent. I love that last .6 percent. Would 39 percent be too little? It was similarly amusing to witness the kicking and screaming when Bush proposed reducing the rate to 33 percent -- an even one-third. That, liberals explained, was too little. But how do you justify that? It's completely arbitrary.
Beyond how ridiculous the notion is that treating people differently is fair, what I also find disturbing is the impingement on people's freedom from high taxation. Money is freedom. The more you have the more stuff you can do. This is so obvious that it doesn't require any further elaboration. We all know this. Take away people's money and you take away their freedom. You reduce their options and the choices available to them.
Any defense of the rich, meanwhile, immediately prompts responses along the lines of "Oh, like Bill Gates would really miss that extra $10 million? That's what you're likely to find in the cushions of his couch." Whether Bill Gates would miss it or what he would otherwise do with the money is irrelevant. It's his, he should be able to make a bonfire with it and dance around the flames naked if he wants to.
But since the point has been raised, who would really make better use of the money, Bill Gates or the government? Warren Buffet or the government? Hell, Paris Hilton or the government? After all, the rich tend to get that way by either providing products or services that people like. Let an investor keep more of his money and you are likely to get more investment. Let the government take that money and you are likely to get a bridge to nowhere.
In these economic times I know which scenario I prefer.
Update: More on fairness here.
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