What is the fairest form of tax?

Blisterman

I was just thinking this. In terms of taxes which can raise a substantial amount of money overall (i.e. not things like bin charges, cigarette and alcohol duty, as their overall contribution to government earnings could only ever be a small percentage), which one is the fairest?

Income tax seems fair on the surface, those who earn the most money pay in proportion to how much they earn but in effect it's the companies who provide jobs who end up paying it, as they have to raise wages to compensate for the money lost to tax. So it could be viewed as a penalty for providing jobs.

VAT is often said to be an unfair tax as it's not means tested, but so long as basic necessities are exempt, I don't see why that's a problem, as it becomes a tax on luxury. The difficulty is that it acts as a disincentive to spend money.

Council tax, as found in the UK is deeply unfair in my opinion, as the overall cap is quite low, meaning that as a percentage the amount paid by poorer people is much much higher. In my borough, a person living in a shack worth under £40,000 pays £800 a year, whereas a £200m mansion in the same borough pays only 4 times that.

Property tax and inheritance taxes are also often criticised, though they both fundamentally have the same effect. That is to discourage the accumulation of wealth, something which I don't see how it benefits society. So I actually think, as a whole, they are the fairest taxes.

Chuck Stone

Blisterman wrote: »

VAT is often said to be an unfair tax as it's not means tested, but so long as basic necessities are exempt, I don't see why that's a problem

For people who live in caves, travel on foot, and wash their clothes in rivers VAT is a fair tax. VAT disproportionately taxes those on lower incomes.

I'd largely agree with the rest of your post.

Peregrinus

Income tax is obviously related to ability to pay, but as pointed out it can tend to disincentivise economic activity.

Expenditure tax (like VAT) is related to ability to consume, but it tends to favour the wealthy, since they can to spend less of their income on consumption (and more on saving and investment, which does not attract expenditure tax).

Asset taxes (like rates on land) are also related to ability to pay - if you have large amounts of assets, you should be able to generate a return from them, and you shouldn’t
avoid your obligations to society by failing to generate a return, and so avoiding income tax. But they tend to have a narrow tax base, since a large proportion of society has no substantial assets.

I think’s it’s a mistake to assume that one form of tax must be fairer than the others. It seems to me that the fairest system will combine a number of different forms of tax, will tend to ensure that the burden is shared by all, regardless of their circumstances.

Victor

Peregrinus wrote: »

I think’s it’s a mistake to assume that one form of tax must be fairer than the others. It seems to me that the fairest system will combine a number of different forms of tax, will tend to ensure that the burden is shared by all, regardless of their circumstances.

Agreed. A range of taxes that covers all forms of income and all forms of wealth is the ideal. Load the tax in one particular direction and you merely discourage that area, to the benefit of others.

However, it needs to be kept somewhat simple.

http://www.businessdictionary.com/definition/taxation-principles.html
http://www.electronicflattax.com/?PageID=165

The Corinthian

Define 'fair'.

Victor

Victor wrote: »

Load the tax in one particular direction and you merely discourage that area, to the benefit of others.

Also, if you load the tax in one particular direction, it incentivises avoidance / evasion.

Blisterman

The Corinthian wrote: »

Define 'fair'.

That's the point of the thread! Discuss what you consider to be "fair".

p1akuw47h5r3it

I believe that a flat tax system is the most fair.

mitosis

Rates. Pay per sq metre of land you own/occupy.

The Corinthian

Blisterman wrote: »

That's the point of the thread! Discuss what you consider to be "fair".

That's the thing; before one can even consider a 'fair' strategy for taxation, one must decide upon what is a 'fair' principle of taxation.

Is it that the wealthy should carry a larger burden of the tax bill, for the sake of the poor? Or is that in reality 'unfair', after all, if a person has spent years studying, unpaid (even paying for the honour), instead of going out and getting a job straight after their LC, to get the qualifications necessary for a job that now pays a lot of money, should we punish them for their industry? Or reward indolence, as has been highlighted on many Dole related threads here?

Or at the other end of the scale, a purely meritocratic (or Darwinian) approach, would see everyone paying an equal share, or ideally paying for what they personally consume, regardless of income or wealth. Yet would this not leave some unable to afford basic state services?

Or somewhere in-between? And if so, where in-between?

Ultimately, you can't suggest a tax system until you've decided on what is 'fair' in this regard or not, and even with the small number of responses here, we can already see differences in opinion in this regard.

Peregrinus

Well, there are prior questions even to these, such as why any tax at all should be considered “fair”. This raises pretty fundamental questions - what do we mean by “property” or “ownership”, and what moral significance do we attach to it? (In what sense is the euro the state takes from me in tax “mine” to begin with?) What is the relationship of the individual to the community, and do I have any moral obligation at all to support (financially or otherwise) community endeavours and activities? If so, what is the limit of that obligation?

Victor

Peregrinus wrote: »

and do I have any moral obligation at all to support (financially or otherwise) community endeavours and activities?

I would say yes, because we all benefit from those endeavours and activities. Not necessarily the same endeavours and activities or to the same extent, but we all benefit (directly or indirectly) from, say, public health efforts.

If so, what is the limit of that obligation?

How long is a string?

The Corinthian

Victor wrote: »

I would say yes, because we all benefit from those endeavours and activities. Not necessarily the same endeavours and activities or to the same extent, but we all benefit (directly or indirectly) from, say, public health efforts.

We don't though; many of these endeavours do not benefit us at all (e.g. emigrant rights groups) and some actually do the opposite for some of us (e.g. the NWCI). Would charity not be a more meritocratic means to handle much of this funding?

How long is a string?

That's kind of the point here; many would feel that it's really not up to them to pay for someone else's string.

Victor

The two cases you mention may not benefit you, but there are others that do benefit you - I presume you availed of education here.

The Corinthian wrote: »

That's kind of the point here; many would feel that it's really not up to them to pay for someone else's string.

So you would like to have smallpox, provided it wasn't anyone else's smallpox?

Permabear

This post has been deleted.

Victor

Permabear wrote: »

This post had been deleted.

Slightly disingenuous. The Troika have told the government to stop calling PRSI and USC 'not-a-tax' and we should do the same.

At present, anyone earning over €32,800 is taxed at an effective marginal rate of 52 percent, when income tax, PRSI, and Universal Social Charge are factored together. Such a taxation arrangement obviously has motivational implications. Why work hard to get a promotion and earn an extra €10,000 a year, only to keep just €4,800 of that?

Because you get another €4,800?

The Corinthian

Victor wrote: »

The two cases you mention may not benefit you, but there are others that do benefit you - I presume you availed of education here.

First of all, I'm playing Devil's Advocate here - certainly I understand that redistribution of wealth for the greater good is necessary in any modern society, so I certainly would not be advocating social Darwinism.

But then again, I'm not doing that; just because I point out that your statement was false (we don't actually all benefit from those endeavours and activities), doesn't mean that I oppose all distribution to all endeavours and activities. That's a straw man, I'm afraid.

Personally, I have no desire to live in a Charles Dickens novel, where life is short and brutal for most. Neither, on the other hand, do I wish to live in some socialist paradise, where indolence is rewarded and you are forbidden to reap the fruits of your labour. But that does not mean that my middle ground between these two points is the same as yours.

Ultimately, this discussion is based upon a false premise; that we already agree upon what level of redistribution is 'fair'. If we did, we could well debate the most equitable and efficient way of collecting taxes.

But we don't; even if most people broadly agree, you'll find no shortage of threads even here where people disagree to what degree - some people are willing to pay for more of that string than others - which makes this discussion a bit impossible to have.

And that is the point I'm making.

The Corinthian

Victor wrote: »

Because you get another €4,800?

When faced with such dilemmas, you find most people won't bother. One of the things I noticed about people from the former DDR is how few of them had degrees (or got them only after reunification). There was little point in going to college, studying for years, just to leave and enter a job that paid at best marginally more than the local factory that you could work in the moment you finished school.

You see the same economics in Ireland today, with some on social welfare favouring making a little less, instead of having to do a 40+ hour week for maybe a few thousand more per year.

Victor

A (West) German friend commented on (East) German kids that were in a youth group where she was a leader - I'm not sure, but I suspect they were in the 8-12 year old group. She proposed to a bunch of them that they play a game. The children asked what the prize was. She said it was only a game and there was no prize. The children refused to play.

I'm not sure if that is an indictment of capitalism or communism.

Permabear

This post has been deleted.

The Corinthian

The Corinthian wrote: »

Ultimately, this discussion is based upon a false premise; that we already agree upon what level of redistribution is 'fair'. If we did, we could well debate the most equitable and efficient way of collecting taxes.

But we don't; even if most people broadly agree, you'll find no shortage of threads even here where people disagree to what degree - some people are willing to pay for more of that string than others - which makes this discussion a bit impossible to have.

I recall reading several years ago about an interesting experiment that showed that although people didn't precisely agree a definition of concepts like fairness, reasonableness or equity there was a broad norm to which they tended to gravitate.

I liked the experiment, and it would be a fascinating one to try to reproduce. It involved a game scenario, in which people were given roles in a society/economy (I think it was a village), where different people had varying levels of income and wealth, and had to engage and trade with others in the game. Some were rich, some poor, and many were in the middle.

At the outset, players could choose to set certain parameters that in effect determined how "left" or "right" the rules of the game would be. In essence, they could set tax rates, say whether healthcare and education would be publicly or privately funded, set welfare rates and levels and so on.

There were two versions of the game. In the first version, everybody knew what roles were available in the game and which role they would have, and then set the parameters. In the other version, everybody knew what roles were available, but were required to set the parameters and then find out what role they would have.

Not surprisingly perhaps, people behaved very differently in the two variants of the game. In the first, people tended to set the parameters to suit their game role, with some people setting according to their real-life beliefs or circumstances. But in the second, people tended to set the parameters in a way that "hedged their bets" in case they drew a less fortunate role in the game. People were hugely influenced by the role they would play (or thought/feared they might play), and tended to gravitate towards what we would call centre or centre-left settings when not knowing their game role. One of the views the researchers took from that was that there is a general notion of fairness that people have, but that it can only be read accurately in a blind test - otherwise their view of fairness will depend on what suits them personally.

This was years ago, and I read it in an actual book so I don't have a link. And maybe there have been many other experiments in the years since showing contrary findings. Perhaps the research is so well known that you've already heard of it. But in any event I thought the experiment was an interesting way of looking at the problem.

Peregrinus

The Corinthian wrote: »

When faced with such dilemmas, you find most people won't bother.

Two thoughts:

First, do we actually find this? If your thesis is correct, when we look at income distribution figures, we should see an otherwise unexplained drop in the numbers of (single, childless) taxpayers with incomes just over €32,800 as compared with those with incomes just under that. And, over time, we should see (single, childless) taxpayers tending to progress upwards in salary (due to career progression) until they reach €32,800, and for progression then to slow or stop.

Do we in fact see this? Or are you simply assuming that we do?

Secondly - and this is the bigger point - I think you’ve moved away a bit from discussing fairness. If the only criterion of fairness was that people were incentivized to work more by allowing them to keep their earnings, then the fairest tax system would be no tax at all. But, of course, incentivisation =/= fairness. Letting people keep the rewards of their labours is a Good Thing, both for them and for the community at large, but it’s not the only Good Thing. Having sustainably solvent public finances is a Good Thing, as is having roads, schools, hospitals, theatres, museums, parks and other public goods, as is caring for the weak and disadvantaged. The problem is that these Good Things can often be in tension, and if “fairness” means anything, it means finding the right balance between them.

It’s not a given that a tax system which changes the income level at which people decide that they prefer extra leisure to extra income (assuming it does change it) is “unfair”. In fact, that seems to me to have relatively little to do with the idea of fairness.

Blisterman

Permabear wrote: »

This post had been deleted.

A point you're missing is that it takes a lot more effort for a person to go from earning 15,000 to 20,000 than for a person earning 60,000 to 65,000.

And additionally, the 5,000 will generally mean more in terms of improving standard of living to the former person than the latter. Hence why it makes more sense to tax the latter by a greater amount, as you're penalising them to a lesser degree.

The Corinthian

Peregrinus wrote: »

First, do we actually find this? If your thesis is correct, when we look at income distribution figures, we should see an otherwise unexplained drop in the numbers of (single, childless) taxpayers with incomes just over €32,800 as compared with those with incomes just under that. And, over time, we should see (single, childless) taxpayers tending to progress upwards in salary (due to career progression) until they reach €32,800, and for progression then to slow or stop.

Not quite as simple as that. Were someone to essentially reach their earning zenith at, say, €40k, then we probably would see that behaviour. However, there's technically no 'upward' limit on salary, so that marginal increase could well be seen as a stepping stone to €50k or €60k.

Nonetheless, you do actually statistically see drop offs at the tax bands, but it's difficult to say if it is as a result of the substitution effect or some other factor - such as tax avoidance practices.

You certainly do see this effect though where the choice is between social welfare benefits for one or two short meetings per month, versus marginally more money for working full time.

Secondly - and this is the bigger point - I think you’ve moved away a bit from discussing fairness. If the only criterion of fairness was that people were incentivized to work more by allowing them to keep their earnings, then the fairest tax system would be no tax at all. But, of course, incentivisation =/= fairness.

No one suggested that incentivization is the same as fairness. It's actually only an term used to describe behaviour in labour economics.

The question is over the taking of wealth (and how much) from one person's labour to pay for another. That certainly does beg the question of whether it is 'fair' or not.

The problem is that these Good Things can often be in tension, and if “fairness” means anything, it means finding the right balance between them.

Not how the original discussion was framed though. It was framed with the assumption that an apparently unspoken model for redistribution of wealth was already agreed upon, and this discussion would instead concentrate on the best way to collect taxes for this.

It's not agreed though, so it makes the subsequent discussion moot.

The Corinthian

Blisterman wrote: »

A point you're missing is that it takes a lot more effort for a person to go from earning 15,000 to 20,000 than for a person earning 60,000 to 65,000.

Not entirely true.

Often the reason that someone is in the 60k rather than 20k salary bracket is because of other factors. Education is one example; where that person may have spent years, and money, getting qualifications, when they could have gone out and started earning straight away. For an entrepreneur who chooses to give themselves a raise, they went through years of risk at the start of their career, perhaps also not paying themselves much, if anything, to keep their venture afloat, or suffering several failed ventures before hitting on a successful one.

In both cases, much of the effort of going from 60k to 65k is not immediately apparent, because it was carried out long ago. But it's there.

Peregrinus

The Corinthian wrote: »

. . . Not how the original discussion was framed though. It was framed with the assumption that an apparently unspoken model for redistribution of wealth was already agreed upon, and this discussion would instead concentrate on the best way to collect taxes for this.

It's not agreed though, so it makes the subsequent discussion moot.

I take your point, though I disagree that the “subsequent discussion is moot”.

As I see it, there are two related but nevertheless distinct ethical questions around tax.

1. How much tax should we be raising to devote to common goods and social solidarity? What is the proper share of national resources to be applied to these purposes? (And concerns about disincentivising economic activity are obviously relevant here.)

2. Given that an amount of tax is to be raised, what is a fair way of raising it?

You do need to answer both questions in order to have a fully-developed tax policy. Nevertheless, you can consider the second question (indeed, either question) on its own. Assuming the appropriate amount of tax to be raised is going to be some amount greater than nil, you can usefully consider fair mechanisms for raising tax (Capital taxes? Income Taxes? Expenditure taxes? Poll taxes?) without necessarily having identified the sum to be raised. And I think that’s what the OP is directed at.

(Disincentivisation arguments are relevant here, too. For example you might feel that an expenditure tax disincentivises consumption and incentivizes saving (when compared with raising the same amount through income taxes) while capital taxes would tend to work the other way around. And, depending on the prevailing economic circumstances, you might want to incentivize consumption, or to incentivize saving, so what you think would be optimal might vary according to where we are in the economic cycle.)

Blisterman

The Corinthian wrote: »

Not entirely true.

Often the reason that someone is in the 60k rather than 20k salary bracket is because of other factors. Education is one example; where that person may have spent years, and money, getting qualifications, when they could have gone out and started earning straight away. For an entrepreneur who chooses to give themselves a raise, they went through years of risk at the start of their career, perhaps also not paying themselves much, if anything, to keep their venture afloat, or suffering several failed ventures before hitting on a successful one.

In both cases, much of the effort of going from 60k to 65k is not immediately apparent, because it was carried out long ago. But it's there.

Yes, but there's not always a correlation between effort and salary. There's a huge amount of luck involved. Somebody may have spent years getting qualifications only for circumstances to change, and the only job available down the line pays 15k. Whereas sombody else, through sheer chance may have found their skills highly in demand.

The point I was making anyway is that, regardless of what effort has previously been invested, somebody on a tenner an hour will need to work 500 extra hours to earn 5k, whereas somebody on a hundred euro an hour would only need to work 50 extra hours for the same amount.

Valmont

Given that 'tax' is just a fluffy synonym for stealing, the idea that there could be a 'fair' tax is bizarre. It's all well and good scientifically discussing how to pluck the optimal number of feathers from the goose but as soon as you bring the word 'fair' into the discussion we have to ask: fair for whom? Politicians and their dependants, of course. But what about the hard-working victims? The only 'fair' option here is to leave them alone and let them keep what they have worked for.

The act of taking a person's property against their will and under the threat of violence is theft, and any attempt to argue otherwise relies on faulty logic, double-standards, and a frightening rejection of the function of nouns. If you accept the premise that stealing is fair then I really can't see the point in discussing the fairest way to steal. I feel it's a discussion more suited to the world of Tony Soprano than to our supposedly free society.

The Corinthian

Peregrinus wrote: »

You do need to answer both questions in order to have a fully-developed tax policy. Nevertheless, you can consider the second question (indeed, either question) on its own. Assuming the appropriate amount of tax to be raised is going to be some amount greater than nil, you can usefully consider fair mechanisms for raising tax (Capital taxes? Income Taxes? Expenditure taxes? Poll taxes?) without necessarily having identified the sum to be raised. And I think that’s what the OP is directed at.

I see your point, but unless the first question is agreed upon, it becomes impossible to discuss the second in any but the most basic and general terms.

For example, I would probably not use means tested taxation for much other than income tax and this is principally because I do not agree with you on your definition of fairness.

Simultaneously, the question of what this money is spent on is relevant. There are many services that are in need of further funding out there, but there are many others that should frankly be cut or abolished altogether, which further affects how tax needs to be collected, because it may well mean that less tax needs to be collected.

So we can talk about the best way to handle taxation to an extent, but without agreement on the first question, we're not going to get far.

Blisterman wrote: »

Yes, but there's not always a correlation between effort and salary. There's a huge amount of luck involved.

I know there is - I specifically mentioned risk. And like it or not risk has a value.

The point I was making anyway is that, regardless of what effort has previously been invested, somebody on a tenner an hour will need to work 500 extra hours to earn 5k, whereas somebody on a hundred euro an hour would only need to work 50 extra hours for the same amount.

Yet you are discounting the unpaid hours studying that brought them to a point where they could charge 100 p.hr. Or the risk of ending up earning nothing p.hr.

The Corinthian

Valmont wrote: »

The act of taking a person's property against their will and under the threat of violence is theft, and any attempt to argue otherwise relies on faulty logic, double-standards, and a frightening rejection of the function of nouns. If you accept the premise that stealing is fair then I really can't see the point in discussing the fairest way to steal. I feel it's a discussion more suited to the world of Tony Soprano than to our supposedly free society.

Well no, tax isn't always stealing. The Hobsian contract is one whereby the citizen freely sacrifices rights and property to the state, in return for protection and services. In a democracy, this means a sufficient democracy has agreed to do this, so that minority dissenters may be forced to go with the flow, but that's life - even if they went off and set up their own state, they'll have their own dissenters before long.

So it's not necessary against their will and under the threat of violence, in many counties it's seen as a fair trade, decided upon through democratic consultation with the citizens.

Where I'd agree with you is where the citizen no longer freely sacrifices, because the options to democratically dissent are lost. As Western democracies become increasingly more technocratic, you're seeing more and more of this, and in turn a loss of community spirit.

The result of this can become a modern interpretation of Atlas Shrugged, which we commonly call the brain drain. I've known more than a few who have left Ireland because of this; because of the introduction of certain fiscal and social laws that have meant that moving abroad became attractive. Actually, I'd be one of those.

Victor

Valmont wrote: »

Given that 'tax' is just a fluffy synonym for stealing,

Some would argue that property is theft or the proceeds of past theft.

The act of taking a person's property against their will and under the threat of violence is theft, and any attempt to argue otherwise relies on faulty logic, double-standards, and a frightening rejection of the function of nouns. If you accept the premise that stealing is fair then I really can't see the point in discussing the fairest way to steal. I feel it's a discussion more suited to the world of Tony Soprano than to our supposedly free society.

Then how should street lighting be paid for? I don't think anyone can argue that it doesn't benefit them (directly or indirectly). If they don't contribute to the cost of street lighting, then surely they are the thieves?

Blisterman

The Corinthian wrote: »

I see your point, but unless the first question is agreed upon, it becomes impossible to discuss the second in any but the most basic and general terms.

For example, I would probably not use means tested taxation for much other than income tax and this is principally because I do not agree with you on your definition of fairness.

Simultaneously, the question of what this money is spent on is relevant. There are many services that are in need of further funding out there, but there are many others that should frankly be cut or abolished altogether, which further affects how tax needs to be collected, because it may well mean that less tax needs to be collected.

So we can talk about the best way to handle taxation to an extent, but without agreement on the first question, we're not going to get far.

I know there is - I specifically mentioned risk. And like it or not risk has a value.

Yet you are discounting the unpaid hours studying that brought them to a point where they could charge 100 p.hr. Or the risk of ending up earning nothing p.hr.

I'm not. I'm referring to the idea that people are disincentivised from trying to increase their salary past a certain point. The unpaid hours and risk had already been invested by this point whether the person took the option to increase their salary or not, so were therefore not really relevant.

I know you could argue that people could have been discouraged from studying etc in the first place due to potential future taxes, but I doubt something that far ahead would have much affect on their initial decision.

Blisterman

Valmont wrote: »

Given that 'tax' is just a fluffy synonym for stealing, the idea that there could be a 'fair' tax is bizarre. It's all well and good scientifically discussing how to pluck the optimal number of feathers from the goose but as soon as you bring the word 'fair' into the discussion we have to ask: fair for whom? Politicians and their dependants, of course. But what about the hard-working victims? The only 'fair' option here is to leave them alone and let them keep what they have worked for.

The act of taking a person's property against their will and under the threat of violence is theft, and any attempt to argue otherwise relies on faulty logic, double-standards, and a frightening rejection of the function of nouns. If you accept the premise that stealing is fair then I really can't see the point in discussing the fairest way to steal. I feel it's a discussion more suited to the world of Tony Soprano than to our supposedly free society.

But it's not against their will. In a democracy, by being resident in a country and electing officials, the people as a whole are giving them a mandate to take taxes and spend them.

Valmont

The Corinthian wrote: »

Well no, tax isn't always stealing. The Hobsian contract is one whereby the citizen freely sacrifices rights and property to the state, in return for protection and services. In a democracy, this means a sufficient democracy has agreed to do this, so that minority dissenters may be forced to go with the flow, but that's life - even if they went off and set up their own state, they'll have their own dissenters before long.

It's not a contract though in the actual sense of the word. I didn't sign anything and I haven't been given a choice. And I reject the idea that theft and coercion are ok because 'that's life' -- especially considering we're talking about fairness. That I have a vote doesn't legitimise any of this as I'm robbed whether I vote or not -- I just get to choose who robs me.

The Corinthian wrote: »

So it's not necessary against their will and under the threat of violence

I understand that some people don't mind being taxed but I do and I only pay because if I don't I'll end up in jail and have my assets taken from me. So it is necessarily against the individual's will with the threat of violence if that individual is only complying because they are being forced to do so. I just don't believe it's fair to have a system based on coercion in any form. To me, the absolute democracy of voluntarism is the only fair system possible.

Valmont

Blisterman wrote: »

But it's not against their will. In a democracy, by being resident in a country and electing officials, the people as a whole are giving them a mandate to take taxes and spend them.

So I'm not being robbed because the majority think robbing is ok? What if there was a democratic mandate for rape? Would rape be ok if the people gave politicians a mandate to rape everyone? I'm really confused here.

Victor

Valmont wrote: »

To me, the absolute democracy of voluntarism is the only fair system possible.

Surely that is anarchism?

Should the policing and courts service also be voluntary?

Blisterman

Under your logic, who says anyone has a right to "own" anything? An asset is only an asset because you have legal protection over it as a result of living in a state.

Otherwise it would be fair game for anybody to take it off you if they wish.

Permabear

This post has been deleted.

Permabear

This post has been deleted.

Victor

Permabear wrote: »

This post had been deleted.

So it's not all that far from mid-way?

Moreover, Ireland's 52 percent marginal rate applies to relatively low wages (i.e., anything over €32,800), whereas someone in the UK can earn up to €187,000 before being taxed at such a rate.

The problem here being that the taxes from the boom were wasted and we are now paying what we should have paid long ago.

Should have paid according to whom? Would it still be should if the govt hadn't wasted the money? Why should even more be given to people who waste it? How does their incompetence mean our forced giving is 'should'?

Permabear

This post has been deleted.

Valmont

Valmont wrote: »

I'm really confused here.

That's where your mind is at, and I wouldn't criticise someone for that. But most people aren't confused, which is why developed societies have functioning tax collection systems, and accept that there are collective and individual benefits from so having.

Valmont

Deleted User wrote: »

That's where your mind is at, and I wouldn't criticise someone for that. But most people aren't confused, which is why developed societies have functioning tax collection systems, and accept that there are collective and individual benefits from so having.

I highly doubt that the existence of a tax collection system is dependent on people not being confused about an unrelated issue. In fact, you're not being very clear -- what are you trying to say exactly?

Any positives from a 'tax collection system' are squarely on those receiving more than they put in. There are no benefits for the net tax contributors.

But that is besides the point; my confusion was regarding the comment suggesting that an act is fair solely on the basis of majority decree. If this is so, then surely killing all ginger-haired children is a fair act if a government has been given a 'democratic mandate' to do so. I'm confused as to how something as obviously abhorrent as this could be judged as fair in any sense of the word.

Valmont

Valmont wrote: »

I highly doubt that the existence of a tax collection system is dependent on people not being confused about an unrelated issue. In fact, you're not being very clear -- what are you trying to say exactly?

I'm saying that your confusion is a poor basis for policy making.

Valmont wrote: »

Any positives from a 'tax collection system' are squarely on those receiving more than they put in. There are no benefits for the net tax contributors.

This is something you hold to be self-evident - but it is not so. Could you put forward some evidence?

I say this as someone who puts in more than he gets out. There are benefits, and there are costs, just as there are costs and benefits to many of the things in life with which we engage, whether by choice or involuntarily.

Valmont wrote: »

But that is besides the point; my confusion was regarding the comment suggesting that an act is fair solely on the basis of majority decree. If this is so, then surely killing all ginger-haired children is a fair act if a government has been given a 'democratic mandate' to do so. I'm confused as to how something as obviously abhorrent as this could be judged as fair in any sense of the word.

You seem to have the idea that there is a "reference standard" of fairness that exists outside of personal constructs and societal norms. There isn't.

Peregrinus

Valmont wrote: »

But that is besides the point; my confusion was regarding the comment suggesting that an act is fair solely on the basis of majority decree. If this is so, then surely killing all ginger-haired children is a fair act if a government has been given a 'democratic mandate' to do so. I'm confused as to how something as obviously abhorrent as this could be judged as fair in any sense of the word.

The flaw in your position, I think, is that you fail to recognize that property is a social construct; it rests, if you will on “majority decree”.

“Valmont owns blackacre” means that people other than Valmont can enter on blackacre, sow crops there, reap crops there, graze livestock there, etc only with Valmont’s permission. But of course if Valmont is the only person who thinks that his permission is needed for all these things, then Valmont doesn’t own blackacre; he only owns it if society at large accepts that his permission is needed for all these things. The foundation of Valmont’s ownership of blackacre is other people’s consent.

And other people’s consent doesn’t just establish Valmont’s property; it limits it. If society feels that people have a right to walk across blackacre in order to get to somewhere else provided they do no harm to crops, livestock or fencing, then Valmont’s property in blackacre does not extend to giving him the right to prevent them from doing that. “Property” is a bundle of rights, and precisely what makes up that bundle is socially determined. Society can perfectly legitimately determine that ownership of blackacre does not include the right to exclude harmless passers from blackacre.

Similarly, if society feels that Valmont’s ownership of blackacre is subject to a requirement to pay rates assessed on blackacre, then requiring him to pay the rates is not an infringement of his property rights, and is not theft, and is not unfair. There is no basis for Valmont’s claim that he is entitled to occupy blackacre without paying rates.

I am not saying that the rates are necessarily “fair”; they may not be. But they are not shown to be unfair merely by pointing out that Valmont owns blackacre. And the same goes for other taxes, and the property they are levied on.

The Corinthian

Blisterman wrote: »

I know you could argue that people could have been discouraged from studying etc in the first place due to potential future taxes, but I doubt something that far ahead would have much affect on their initial decision.

Don't doubt it. As I already pointed out, it's something I've witnessed talking from former citizens of the DDR - the lack of gap in salaries meant that very few bothered to go to college, given a factory job paid only slightly less than a 'white collar' one.

You can also see the same dynamic in Ireland; during the boom years, the number of students going onto third level plummeted. Why? Because there were so many jobs, they didn't need a degree to get one.

With regard to entrepreneurship, I discovered in conversation with a Swedish businessman a few months back a related disincentive; Sweden is apparently a fantastic country to set up a venture - they have a very high degree of government support for new companies, between grants, subsidized offices and the like.

Of course, once you're established, the taxes are high. The typical Swedish business solution? Relocate your business to another EU country, with lower taxes, once you reach a certain size.

Valmont wrote: »

It's not a contract though in the actual sense of the word. I didn't sign anything and I haven't been given a choice. And I reject the idea that theft and coercion are ok because 'that's life' -- especially considering we're talking about fairness. That I have a vote doesn't legitimise any of this as I'm robbed whether I vote or not -- I just get to choose who robs me.

Perhaps 'that's life' was the wrong way to put it. What I meant to impart was that within any collective society you have to have some form of collective decision making.

This may be authoritarian - the few imposing their choices on the many - or it may be democratic - the many imposing their choices on the few. Either way not everyone will agree, but without it a society literally cannot function.

Democratic decision making can work very well; in many countries the citizen is frequently consulted on policy and those policies are repeatedly reviewed, and this is reflected in the sense of common purpose or community.

Where I'd agree with you is where, as you put it, you only get to choose which group will steal from you; you have no actual choice in policy and the process becomes more akin to an authoritarian model masquerading as a democratic one - these are the societies that will tend twoards lack of common purpose or community feeling and typically will exhibit social ills such as democratic apathy, cynicism and corruption.

But absolute voluntary civic duty is even less viable. If you introduced such a society, many wouldn't bother paying any tax. People would cherry-pick which laws to follow and which to ignore. That's why you can't please everyone, all of the time - the best you can hope for is that even those you don't please will recognise their sacrifice for the greater good.

Valmont

Deleted User wrote: »

This is something you hold to be self-evident - but it is not so. Could you put forward some evidence?

Outgoing tax > Incoming Benefits. Would you like to see my tax receipts and bank statements?

Blisterman

I assume you were educated, have used public roads, not to mention the intangible benefits such as having police and fire protection, a relatively clean environment etc.

There's a lot more benefits than a cheque from the government.

The Corinthian

Blisterman wrote: »

not to mention the intangible benefits such as having police

In fairness, my experience of the Gardai is that their benefit is pretty 'intangible' at the best of times...

Victor

bluewolf wrote: »

This post had been deleted.

Permabear wrote: »

This post has been deleted.

Perhaps I misspoke when I mentioned only tax - I meant a holistic government income / expenditure and taxing opportunities.

Measures should have been taken to pay down debt during the boom, to give us a bit of breathing space for the inevitable end. Other than a few individual years and some technical measures taken by the central Bank / NTMA, those measures didn't happen. I'm sure there are other counter cyclical measures that could have been used like ensuring / encouraging that SSIAs were used to pay down debt and not spent on conspicuous consumption / imports.

Personally, I wouldn't have put in place tax breaks during a boom, especially like the ones for ghost estates in Leitrim. I wouldn't have dropped total tax take (incomes taxes, PRSI, levies, USC) below about 50% and would have increased taxes on capital gains / acquisitions in line with the rates for the above and implemented a property tax. This would have gone a long way towards solving both the booma nd hte bust.

But given that you apparently believe that the current tax burden is merited ...

I would say more 'necessary' than 'merited'.

The Corinthian wrote: »

In fairness, my experience of the Gardai is that their benefit is pretty 'intangible' at the best of times...

In fairness, it beats other protection rackets. :pac: