I’ve been thinking about the question of how to equitably distribute tax burden in society.
It may help you to know I'm a serious fan of the Dewey Decimal System not just for its ability to classify books in a library, but for the underlying philosophy that led to its categories. I don't even 100% agree with the categories that resulted—I just like the thought process Dewey went through in order to arrive at the categories.
Melvil Dewey conceived of an ordered series of questions that primitive man must have asked as he evolved socially, intellectually, and culturally from a cave dweller to a citizen of civilized society.
When trying to wrap my head around a conceptual space, particularly one that involves a series or evolution of steps, I sometimes find myself reaching for Dewey's list of questions to use as a kind of conceptual scaffolding while I try to devise something better to use. And that's what I found myself doing in this case.
One's economic life, it seems to me, follows a structurally similar evolutionary path to the one Dewey describes. Admittedly, some go to college and some don't. Some start families and some don't. So the details will differ. And even for the shared issues, we might each confront them in a different order. But that was true for Dewey's system, too. So use your imagination and you'll quickly see where I'm going.
We start life with our parents taking care of us, asking questions like this:
Finally we break free and set out on our own, struggling at first to become self-sufficient:
It's a good feeling to get these items under control, but it's not enough. Yes, paying for the basics is good, but we're still at the point of being hand to mouth, with no margin for error. We still have to plan for contingencies. If we can't handle those, we're only kidding ourselves in our belief that we're self-sufficient:
If we're lucky, we do eventually rise above it, but often it takes a long time. Ideally, though, once the above items are mastered, we start to have surplus income and can finally turn our attention from needs to wants:
At this same time, we may begin nesting:
Or our world may expand in other ways:
My point here is to portray life as a continuum from helping ourselves to helping others. And finally now with that in mind I can make some of the points I wanted to make.
First, it should be obvious that the first and most important thing each of us can do to help society is to eliminate society's need to help us. If we are not self-sufficient, we cannot help others.
I mention this because I've sneakily omitted taxation from the above lists of questions. This is because I want to make a point about where taxation is appropriate. It seems obvious to me that presently we tax people before they are able to help themselves. And I just don't see the point of that.
Taxing lower income people delays the time in their lives at which they can be self-sufficient. It also introduces inefficiency into the system: The entire process of taxation expends societal energy that is simply lost productivity. Taxing our weakest members is silly since they'll just turn around and ask for the money back—and the process of getting that money back to them will use up some of the money. Our tax revenue should come only from genuine individual surpluses.
And by surplus I don't just mean that people should have a few dollars left in their paycheck to go to taxes. I mean that everyone should try to fill a savings account with $100,000 for emergencies. If they haven't got that, and most people don't, then they aren't ready for the kinds of major expenses life is sure to dish out—unemployment, illnesses, accidents, retirement. Once they've provided for those, then they can begin generating a surplus.
They should be filling that account before they get to the point where they are allowed to pay taxes. Paying taxes should be seen as a privilege, a status symbol, something people aspire to do as part of their personal growth.
Of course, that might not leave a lot of taxpayers. What a burden that will be on those who are able to take care of themselves. Darn. That's awful. We hear all the time about how the economic system is not a zero-sum game, and how it's possible for someone to get rich and for others to do well. Fine, let's see it played out.
If the wealthy want to be taxed less, they should arrange for society to enrich as many others as possible, in order to have friends who share the “burden” of taxation. If enough people make a decent enough wage to achieve a surplus, it won't be so lonely at the top. If instead the present trend continues, concentrating the wealth in an ever-shrinking portion of the population, those few wealthy should expect to pay a steep price for membership in that elite club, because the rest of us can't afford to help pay the taxes until we can afford to take care of ourselves.
Author's Note: Originally published February 17, 2009 at Open Salon, where I wrote under my own name, Kent Pitman.
Tags (from Open Salon): taxes open call, jobs, retraining, unemployment, illness, accident, rich, wealthy, wealth, low-income, poor, tax burden, wealth redistribution, income redistribution, medical emergencies, retirement, tuition, college, education, finances, politics