Monte wrote:
Stathol - I think the argument is pretty simple. Let's say I am very wealthy, and have a lot of property. The value of my property is significantly greater than the value of another, significantly less wealthy person's property. Therefore, I get more value for my taxes in terms of protection of property than a poorer person. The military that my taxes pay for are watching out for a lot more than a minimum wage worker. The police and fire are protecting a significantly higher value of property when they protect my home. I get more bang for my buck.
This is mathematically unsupportable.
Let's say that I own a house worth $400,000 and make $100,000 a year and you own a house worth $200,000 and make $50,000 a year.
Let's further say that the tax rate is completely flat on both property and income. We'll say there is a 5% tax on property and 25% on income.
I pay $20,000 per year on my house and $25,000 on my income for a total of $45,000 out of my total assets of $500,000. $45,000/$500,000 = 9% of my total assets per year in taxes.
You on the other hand pay $10,000 per year on the house and $12,500 in income tax. $22,500/$250,000 = 9% of your total assets per year in taxes.
So, just from that simple calculation we can see that I'm
not getting any more "bang for the buck" than you. I'm getting the same amount because I'm paying more bucks to get the extra bang. If my tax rate were higher than yours I'd be getting
less bang for the buck because now I'm paying more bucks not just in absolute terms but in relative terms as well, to get the same amount of "bang".
Now, lets say that we get these incomes because I own a grocery store and you work for me as the manager. Are you really going to tell me that my job requires twice as much expense in terms of police, fire, and military protection as yours does at the same grocery store? How about my house? Is it twice as hard for those agencies to protect a $400,000 house compared to a $200,000 one?
You might argue that "well, you benefit more because if they didn't protect those things you couldn't make that money and live there in the first place" but that makes no sense because if I didn't provide that grovery store, you couldn't work there, nor could my other employees, nor could anyone purchase food there, and if that were because there was no police, fire, or military, no one else could open a grocery store either!
So, no, I, in the above example do not benefit any more from this "social contract" than you in the same example. In fact I benefit
less because I pay the same amount proportionally on my assets as you, but the government gets a massive economy of scale in terms of providing me with protection for them.
It's even wose if we assume that under the above system there's public healthcare. If you and I both break our legs unloading a grocery truck and go to the hospital, I'm paying twice as much money for public healthcare as you(since I make twice as much and we are taxed the same rate). Does it cost twice as much for the hospital to treat my leg as yours?
The idea is absurd.