From: jwh@citi.umich.edu (Jim Howe)
Subject: Re: NO! Re: flat taxes - yes!!!
Date: Wed, 11 Nov 92 14:24:00 EST
Organization: IFS Project, University of Michigan
Reply-To: jwh@citi.umich.edu
Keywords: flat tax

In article <1992Nov11.103204.3702@ee.ubc.ca>, jmorriso@ee.ubc.ca (John Paul Morrison) writes:
|> In article <markts.721352037@mcl> markts@mcl.ucsb.edu (mark.) writes:
|> >
|> > flat taxes for everyone. people and corporations.
|> > the 13% idea from jerry brown was the only
|> > good idea out of the democratic primaries.
|> >
|> > you think this lets the rich off the hook?
|> > check out how much the really rich actually
|> > pay in taxes now.
|> >
|> > flat taxes will benefit the middle class.
|> 
|> 
|> shouldn't people who use a service, pay for it?

Yes.

|> 
|> Do the rich actually use more services?
|> 
|> I guess I'm in favor of progressive tax systems:
|> 
|> - people who use progressively more services pay progressively more taxes!!!

Taxes should approximate the level of services used.  Unfortunately
there are many things which are easy to assign to a particular person.
These sorts of things need to be covered by some form of general
taxation instead of a fee.  I do not, however, believe that in
general an increase in income correlates to a non-linear
increase in services.  A flat percentage rate requires those with
more income to pay more in taxes.  I think this can be justified.

|> 
|> I think the rich should pay more taxes in some areas: it costs more in 
|> policing to keep the rich at a comparative level of safety.

I disagree.  Ask yourself where most crime occurs.  It's not in
wealthy suburbs, its in poor neighborhoods.

|> After all,
|> they are more of a target. Rich people should probably pay more for
|> fire fighting: all those big houses take more firemen to put out
|> big fires when big houses catch on fire. (OK, perhaps I'm assuming
|> alot about crime patterns. But it does seem like there is more incentive
|> to rob and kidnap well off people)
|> 

Where do most fires occur?  Most likely in older buildings.  Who
tends to live in older buildings, the poor.

|> Perhaps the rich and middle class should pay a certain amount to 
|> subsidize the health , education and welfare of the poor. You could
|> call it compassion, or you could call it self interest, since I think
|> it is cheaper to subsidize the poor, than have the poor turn into
|> violent, rioting, gang joining criminals who will  car-jack your
|> BMW or sell crack to your innocent middle-class teenagers.
|> (funny, sounds just like the USA)
|> 

Interesting, you want the rich to subsidize the poor so as to discourage
the poor from committing crimes against the rich.  You also want the
rich to pay more for police because they are more likely to be the
target of crime by poor people.  Ignoring the actual reality of the
situation, isn't this an argument for *either* paying more for police
*or* paying a subsidy?  It doesn't seem that the rich should pay
for both.

|> Of course, off hand I don't know of any studies that prove this.
|> But it seems intuitive that there is a point where paying for more
|> police to suppress the poor, is not as cost effective as giving
|> the money to the poor for basic health and shelter, and so the children
|> of the poor get out of the poverty cycle. (spending more to hire that
|> 1 more policeman, might not buy as much safety as spending the same 
|> amount worker training, you get the gist)
|> 
|> I think some attitudes towards the poor are more out of spite , than
|> out of economically rational arguments. (ie let the bums rot!, vs
|> give them a break, help them to get out of poverty)

Most people are compassionate and generous.  However, people also don't
like to feel that their compassion and generosity is being taken for
granted.  When you subsidize the poor you create an environment where
some people who don't really need your support will take advantage of
it anyway.  I think this is what makes people angry.  This is also
why private charity is better than government charity.  Private charity
is much closer to the problem.  If the charity misuses funds, it will
have a hard time attracting new funds.  Look at the United Way.  It
didn't take long for their problem to correct itself.  Government
charity has no such constraints.  It will get the money no matter what.
It has no real incentive to do a good job.  I support the notion of
some level of government charity, administered through a negative
income tax, because I believe there is a free rider problem with
respect to charity.  However, I believe that private charity should
be the primary source of charity, not the government.


James W. Howe                  internet: jwh@citi.umich.edu
University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
Ann Arbor, MI   48103-4943         
Newsgroups: sci.econ