Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Published on November 29, 2008 By Draginol In Politics

For most people, discussing politics is like discussing football. Sure, it's interesting but it has very little actual affect on their lives at first glance.

But in reality, people rarely recognize the unintended consequences of their beliefs.

For instance, nearly every conversation with a tax hike supporter inevitably goes something like this:

Me: I'm against raising the taxes on anyone, including the top 5%.

Tax Supporter: Why? You can afford to pay more in taxes. You've got a big house and a fancy car, etc.  You got way more than you need.

Me: Yes, but I'm still one person, one vote. At some point don't you consider the equality there? That is, I use the same services as you do. I'm not suggesting no taxes or equal taxes but if my tax bill this year is >$1 million and your total tax hit is less than $3k how can you seriously argue that your opinion is the opinion of someone who's compassionate or concerned when all you're doing is arguing for me to pay for your beliefs?

Tax Supporter: But the money taken from you helps all of us because that money can then be given to people who need it more. You can live with less.

Me: Are you sure of that? When I pay taxes, it's just another expense. My lifestyle is unaffected. When taxes go up, I hire fewer people or am forced to lay people off.

Tax Supporter: Well then you're just being greedy. You should take a cut before laying people off.

Me: But I'm not the one causing it. It's the government's taxation -- supported by you. Do you live for your job? Is your job the ends unto itself of a means to an end?

Tax Supporter: I work so I can buy food, clothing, shelter.

Me: Same here. Working is a means to an end. I work so that I can have the big house and the fancy car. I don't exist as a public asset to be used by the "body politic".

Tax Supporter: I'm not saying you should.

Me: Sure you are. You support higher taxes on me. You expect me to continue to do what I do best - create jobs and employ people but at a lower salary. You unconsciously see me as something that is expected to work to create jobs as a higher priority than work as a means to an end. You expect my motivation to work to be singularly unique amongst mankind - you work so you can buy stuff, you expect me to work to provide you and yours a job.

Tax Supporter: I just don't think it's fair you should have so much while others have so little

Me: Nothing's stopping someone else from trying to do what I do. I got no special breaks. I worked hard, took calculated risks, stuck to it and built over time a successful business. It's just that not too many people are willing to do that. There's a lot of risk involved in starting a business after all.

Tax Supporter: Yea but now you make more than you need.

Me: Who decides "need"? You? You who has the latest iPod, latest-gen video games and other consumer goods. Putting that aside, concepts like fairness or need are in the realm of philosophy, not reality. The fact is, when you raise taxes, you are having the government take from those who are the best at taking money and creating more money with it that inevitably gets spread out one way or the other. 

In short, your beliefs do have consequences whether you realize it or not.


Comments (Page 2)
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on Nov 29, 2008

cactoblasta


Would you work harder and pay a higher tax rate if you could be Sir Bradley of Michigan?
What I'm getting at in a roundabout way is that there is more to the pursuit of wealth than wealth itself. Status and pride can be effective motivators. If you think the rich don't get enough in exchange for their taxes, perhaps the US needs to make better use of soft motivators in convincing the well-off to part with their cash.
That way you could modify your conversation to say that, in exchange for paying $1 million more in tax, you are also entitled to be addressed as Sir Bradley, or if it's more than $20 million (just picking figures here at random), as Baron or Lord Bradley. You get a hefty payoff in status, which demonstrates your wealth to the world in an appropriate way, while still extracting the maximum amount of cash for government coffers.
What do you think?

No.  A job is a means to an end.  I work so that I can earn money to support my family. Pretty much like everyone else.

on Nov 29, 2008

Moderateman


Seems to me the people that support higher taxes on the so called rich, don't have to shell out more money, so higher taxes do not affect them. While the so called rich do not use any of the perks of goverment and still be forced to pay higher taxes, don't sound fair to me at all.

Even taking the underlying unfairness aside for a moment. What people don't realize is the effect it has on everyone else.

The single biggest problem with our society is how few people understand economics. Look at what ThinkAloud said in comment #1. It really highlights the lack of understanding about wealth creation.

The phrase "make money" is well known in our society but apparently not understood.

People who are rich are people who get $1 and can produce a lot more than $1 in wealth.  The greater the ratio, the richer they are.  I'm not super-rich by any standard. I'm a little fish.  But there are people who can take $1 and turn it into $1000's.

And we ALL benefit from those people because they get their wealth by producing things we all want and ultimately can have the opportunity ourselves to create our own wealth by leveraging what those big fish have produced (like me making computer software - I stand on the shoulders of giants who broughts us today's consumer-centric Internet, personal computers, friendly operating systems, etc.).

Fortunately, the government didn't take so much from those men and women that they didn't have enough to risk and invest in promising new endeavors. And so they took their dollars and created vastly more of them.

That is why we're so much richer today -- all of us in the US -- than people were 100 years ago.

It's also worth wondering how much better off we could have been if the government hadn't taken so much of the nation's wealth to re-distribute it.

on Nov 29, 2008

stevendedalus


A great nation that made it possible for them to accumulate wealth--where's the gratitude?

It is delivered every April 15th.

on Nov 29, 2008

They just invest a little less in their business whether it be in the form of workers or buying equipment or whatever.
I'll give you that, but the fact remains government has an agenda as well--we can't expect China to continue to bail us out far into eternity.

It is delivered every April 15th.
hilariously pointed.

on Nov 29, 2008

I stand on the shoulders of giants
I thought it was one giant--the inventor of the internet, Gore. Just kidding.

on Nov 29, 2008

No.  A job is a means to an end.  I work so that I can earn money to support my family. Pretty much like everyone else.

In actual fact then you're not like everyone else. There's a study cited here http://www.accel-team.com/motivation/ (I couldn't make a link for some reason) which ran from 1945 to 1965. What it discovered was that while security was the highest factor in work motivation (and therefore presumably money for the family), advancement, the type of work and the reputation of the company were also important.

From the last three factors we can see that recognition of effort, the desire to be in a certain industry and acknowledgement of good employment choices are important.

The government may only be able to get more money from you through coercion because you have no interest in working beyond the bottom line, but the evidence suggests they should be able to get more from others through appealing to the non-monetary motivators. Titles are simply an effective method of recognition. Higher taxes for popular industries and positions might also be an option.

EDIT: I've neglected to mention the psychological toil of unemployment here. You say that people only work because they need the money, but the societal influences are also heavily biased towards working. This is one of the factors behind the high level of depression among the unemployed.

on Nov 29, 2008

I'll give you that, but the fact remains government has an agenda as well--we can't expect China to continue to bail us out far into eternity.

The government's agenda seems a bit unclear to me.  But it doesn't seem to be doing a very good job at it.

The government may only be able to get more money from you through coercion because you have no interest in working beyond the bottom line, but the evidence suggests they should be able to get more from others through appealing to the non-monetary motivators. Titles are simply an effective method of recognition. Higher taxes for popular industries and positions might also be an option.

EDIT: I've neglected to mention the psychological toil of unemployment here. You say that people only work because they need the money, but the societal influences are also heavily biased towards working. This is one of the factors behind the high level of depression among the unemployed.

Certainly people like to DO things.  I enjoy my job and all the factors you mention are certainly motivators.  But at the end of the day, people get up and go to work first and foremost to trade their labor/abilities for other things that they want.

It's not about materialism. The point is that when people have less to spend, the first thing they do is zap any spending they deem non-essential.  Less on that 401K. Less vacationing. Less NEW things right?  Well, business owners are the same way. If they have less to spend, they invest less (hiring new workers), they may cut unnecessary expenditures (those employees that they don't really absolutely need - and anyone who has a job probably has coworkers that they know aren't really essential).

In short, it's a falacy when someone argues that the "rich can afford it" because that's not the right way to look at it. The question is whether the middle class can afford it?  I'd say right now, not bloody likely.

on Nov 29, 2008

But at the end of the day, people get up and go to work first and foremost to trade their labor/abilities for other things that they want.

I guess so, but then you look at the truly wealthy and this doesn't appear to be the case. I'm not sure if you're at this stage yet, and really it's none of my business, but eventually you will reach a level of wealth where you don't make much of your money from actually working. You're mostly just reaping the rewards of investments. At that stage - when your work isn't particularly relevant to your ability to trade for things you want - the fascinating thing is that most people still work.

If we can find a way to harness that by making them pay more taxes in exchange for something they want, we can boost revenue streams without alienating them or reducing their productivity. It's just a matter of finding the right trigger.

In short, it's a falacy when someone argues that the "rich can afford it" because that's not the right way to look at it. The question is whether the middle class can afford it?  I'd say right now, not bloody likely.

The middle classes are the bedrock of a nation and the wealthy its financial heart, sure. But I think it's more a question of how to get money out of people without breeding the creative resentment you argue is the inevitable result. In the current political and economic climate, I think you can do this by offering a product you can't get any other way which offers prestige in spades but costs government little. I think many wealthy people would pay to be able to have "financial saviour", "patron" or somesuch after their name on official correspondence.

I suggest this because it sidesteps your valid argument against raising taxes and creates value for money where in a tax rise the value can be hard to see.

on Nov 29, 2008

Thinkaloud: Your response is difficult to read because it is so incoherent.

C'mon now ... you can understand machine language and an unedited comment (btw, because of your editor doesnt work unless it is in the mood ... please fix it ) with few lines is hard for you to understand?... i dont believe that ...

anyway ... my argument still stands and so far i have not seen any response, from anyone, to disprove it ...

all responses so far is about totally different points not directly related to your article or to my response to it.

your article is about HIGHER TAXES on high-incomes, not about wealth creation or hard work or feeding the poor or fairness ...etc.

my responses give details about how those higher taxes on high-incomes sustain and increase that wealth and in the process make the country richer and better and without them the wealth is not sustainable and in fact decreases .... and the country regresses ....

regardless of anything ... please ask your team to fix the editor ...

 

on Nov 29, 2008

reducing their productivity
Should not be equated with taxes which are currently so moderately progressive. The Clinton increase in the 90s didn't deter productivity; actually it improved immensely. Besides, creativity, unlike business acumen, is not measured by the dollar. 

on Nov 29, 2008

The Clinton increase in the 90s didn't deter productivity; actually it improved immensely

and created 24 million jobs in the process !!!!!

all that is ignored and they talk about everything else under the sun and avoid the main argumnets

on Nov 30, 2008

I guess so, but then you look at the truly wealthy and this doesn't appear to be the case. I'm not sure if you're at this stage yet, and really it's none of my business, but eventually you will reach a level of wealth where you don't make much of your money from actually working. You're mostly just reaping the rewards of investments. At that stage - when your work isn't particularly relevant to your ability to trade for things you want - the fascinating thing is that most people still work.

Certainly. People want a purpose.

But let's be very careful here on how we define "working".  As ones wealth increases, their ability to hand off unpleasant tasks to others increases as well.  I'm certainly not super rich by any means.  But even with me, I've hired people who take care of a lot of the work I used to do on my own to focus more on things I'm particularly good at / enjoy.  

I don't agree with those who would argue that if we raise taxes that the rich simply won't work.  I do think there's a threshold where that is true but I don't think we're very close to that point.

The problem with raising taxes on the highest income earners (not the richest, Obama doesn't propose to do that, he is merely focusing on the highest income earners) are the unintended consequences.

on Nov 30, 2008

The middle classes are the bedrock of a nation and the wealthy its financial heart, sure. But I think it's more a question of how to get money out of people without breeding the creative resentment you argue is the inevitable result

I'm not arguing about creative resentment.

Here, look, let's walk through this step by step:

You make $N per week.

What do you do with that money?  Buy groceries, pay the rent, pay utilities, etc.

What do you do with the remainder?

Invest some in a 401K maybe? Purchase some non-essentials?

The problem I'm trying (but failing) to communicate is that to business owners, their equivalent of a 401K and non-essentials are hiring new people (investments) and laying off non-essential personnel (non-essentials).

There's no malice or spite involved.  

on Nov 30, 2008

anyway ... my argument still stands and so far i have not seen any response, from anyone, to disprove it ...

Now you have two false premises.

The first one which you just ignored - that economics is a zero sum game which it's not.

And secondly, that anyone, myself especially, cares about "proving" item #1 to you.

on Nov 30, 2008

The problem I'm trying (but failing) to communicate is that to business owners, their equivalent of a 401K and non-essentials are hiring new people (investments) and laying off non-essential personnel (non-essentials).

There's no malice or spite involved. 

I'm not trying to suggest there is. However I didn't pick up that you were talking about corporate taxes rather than personal taxes.

I thought you were talking personal taxes and the way they affect your willingness to go to work and be a CEO, in which case a prestige-based recognition of your input to the country might be a valid way to encourage further high tax revenue without reducing your dedication to work.

However, if we're talking you as in corporations giving the CEO a title isn't going to make him hire more people. Well, it might, but the company's financial status might not survive that.

Or do you as a business owner and CEO disagree that there is a difference (in practice or in theory) between business and personal incomes? I guess I'm not really seeing your angle, as the conversation seemed to be about personal incomes and work, while your embellishment with the 401k analogy seems to suggest the company's incomes and work can be considered in the same terms re: taxation.

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