Saturday 11 January 2003

Pic of the day: Another fine day at the castle. (Screenshot from Dark Age of Camelot, since there isn't much riches to photograph at home!)

Take from the rich?

There is some "Bush-whacking" these days, as the latest round of big tax cuts mostly benefit the rich, and especially the very rich. People accuse the President of the USA of listening to his CEO friends rather than common people. I believe he does. But is it certain that his CEO friends are wrong? While some of them are crooks, this is a separate matter (for the courts) and should not be mixed up with the tax system. You cannot assume that a whole group of citizens are crooks and then fine them through taxes.

There are two basic approaches to taxation, though there are many variants. One approach is that the money belongs to the state, which lets its citizens have as much of it as the common good dictates. (Give Caesar what belongs to Caesar.) The opposite view holds that money belongs to the people who earn it or otherwise get it in any legal way. Taxation is simply a way to finance collective projects that would not be practical to leave to market forces, such as military and police. In theory at least, most Americans would probably agree with this second view.

If the money belong to the people who earn it, then the rich should not be taxed much harder than the common people. After all, life and freedom has the same value to all. The rich have more property to lose in the absence of police and military, so they have a greater interest in having these institutions around; but only to a degree. Most of the value of public protection is probably in the category of life and freedom. As for other public services ... if the rich want better health care than public hospitals, they pay the difference out of their own pocket. If they want to send the kids to better schools, again they pay for this separately. They drive on the same roads. By and large, the common goods of society do not give the rich extra benefits. Why then should they pay more for them?

The short answer is, because they can. The poor are simply not able to pay their way, so someone has to take up the difference. There is a symmetry in this: Since the dirt poor cannot pay their share, the filthy rich should pay their part too. And there tend to be fewer of the rich too, so if they are to pay for all the poor, it soon amounts to large sums.

***

But can we take from the rich just because they can afford it? Say you are a waiter at a restaurant, but one evening you see an obviously wealthy man losing his wallet on the floor. Since he is richer than you, are you in the right to take the wallet? He can most assuredly live without it. But can you live with stealing it?

Now, if we say that the money belong to those who earn it, then excessive taxation is nothing but collective theft. The rich may have a moral obligation to help the poor, but this should be left to their own discretion. The government might establish ways to encourage charity, such as making it easily visible when people give to the poor. (Most people want their good deeds to be seen by as many as possible.) Some societies used to have festivals in which the rich donated to the poor in the sight of all. Those who hid their money were held in low esteem, while those who gave much were admired. In fact, giving is one of the main ways of racking up honor in several "primitive" societies. Perhaps we have something to learn from them?

Now you may say that there is a reason why these cultures are only found in history books or remote jungles. And I don't mean that we should copy them in every detail. But there is probably also a reason why Switzerland is so much richer than Albania, not to mention South Korea compared to North Korea. You can't eat the rich and have them too.