A Thane's Taxes...

[jsburbidge]

Ripped from the headlines tonight: the Biden tax proposals include a 3% surtax on anyone earning more than 5 million (USD) per year.

There is an argument, if not for Commonweal levels of, um, levies, then at least for the pre-Thatcher UK where the top brackets were in the 99% category...

Comments

[graydon]

I am fairly sure you haven't missed that in the Commonweal "a thane's taxes" is a euphemism for being executed, rather than taxed. (Admittedly, being executed for trying to get rich.)

If it must be tax I would like to see tax brackets that do steady 10% increases without stopping at 100%. (100% kicks in at 10 times the lesser of the mean or median incomes.)

I would much rather to see a complete lack of faffing around with the tax system and real income and asset caps, with the penalty for exceeding them forced liquidation and being left with effectively nothing.

Laozi talks about how an ideal organization of society leaves people simple and generous, rather than intelligent and cunning, and this may have applicability to the design of tax systems.

[jsburbidge]

I thought of Thane's taxes because an income of five million is so obviously excessive. We live in a society where increases in capital are unsurprising at that scale - it happens all the time when companies go public - but income at that scale is another matter. (When one thinks about it, a return of 2% on 250,000,000 would get there, but the wealthy rarely structure their investments in that way; most of that would likely take the form of capital gains.). I had considered a pun on capitation and decapitation, but capitation as a concept is not close enough to taxation for it to work.

Median household income in Canada is about seventy thousand dollars, 93,000 for non-senior families; at a guess median individual income would be a bit higher higher than half that, and the mean would definitely be higher; mean household income is a harder figure to find but is about 104,000 in the Toronto area.

That's after tax; median market income is higher.

If we look at deciles, the top decile in Canada for individual incomes begins at 93,000 or so. The middle two deciles are from 40,500 to 53,700. Again, that aggregates mean values, and so would be higher than a typical median.

So on that basis taxes would top out at maybe about 500,000, and changes would affect only a smallish subset of the top decile. (That is a gross oversimplification; my tax professor would have said (did say, IIRC) that while income taxes get the bulk of the attention the most efficient taxes tend to be value added taxes. To avoid making them regressive, though, you have to exempt some goods or provide rebates.)

Taxes over 100 % are pointless; anybody receiving money above that line would literally just turn it down. You'd pessimize enough of your investments to avoid the hit from any such bracket, donate money at source to charities, and CEO contracts would shift to non-monetary ways of marking status above that magic line.

The right wing likes to talk about reward for productivity; in practice you have to make a lot at what you do and already do a lot before you get into those areas above, say, 200,000. (Some medical specialists do, but that also gets into questions of the costs to get there.) Above that point there's a decoupling between what people make and any form of merit. Most really high earners just lucked out. (I went to school with Jim Balsillie's brother David; Jim was a couple of years behind me. Both myself and the Dean of Men at Trinity at the time (which is where he went to study Business) have agreed that a more unlikely success story in terms of personal potential would be hard to find. Balsillie was very lucky where he happened to latch on to a possibility in a startup.)

And the bulk of money raised by taxes has to come from the relatively well off no matter what: the top quintile of the population has over 37 per cent of the share of income in Canada. As Dillinger said when asked why he robbed banks, "That's where the money is.".

It's not an obviously impractical idea, but you'd have to have a large-scale shift in thought first.

One is not quite inclined to go about discussing lampposts and hangings, but one almost has to ask when it becomes evident to enough people that the system is badly out of whack for something to happen. Unfortunately the evidence of the past five years or so suggests that when people do express their resentments, they blame those outside the system (immigrants) or on the lowest rung (with race and other proxies standing in as markers of the other, instead of blaming the people who own the country.

[graydon]

One of the things I think we are seeing is the creation of autocratic norms through corporatism; the reason you want to be a CEO is so everyone has to do what you say. And then you get extensive rhetoric about how government should be run more like a business; this is cast as a desire for greater efficiency, but I think it's mostly just a desire for greater autocracy. Not having to pay taxes -- not being subject to the duties of citizenship, from one angle, or not acknowledging the sway of the civil power, from another -- seems to be significantly driven by the same pressures that produce the drive for autocracy. (It doesn't seem to matter which specific reason people find most compelling for wishing to dispose of the civil power; they're collectively tolerant of each other.)

I agree that greater than 100% taxes aren't efficient, but it does establish that the guiding principle of the state is not mammonism. (Much as the problem with consumption taxes is that they're inherently regressive and will always be so, and the will or skill to correct this is much easier to lose than the existence of taxes.) Same sort of idea as defining anything in your sole control as either an asset or income, and thus subject to taxation.

Productivity is one fo those prescriptive things, like normal; it's not measured, it's asserted. Measure it and the most contributing people are not likely to be those with the greatest compensation.

I'm (unsurprisingly!) fine with income and asset caps; I figure it would only take a generation or so for people to start realizing that if they want to make more, they should figure out how to increase the general access to realizable choice. (since, at least until the Culture comes, that's what money functions to be.)

My take is that the upper edge of the incumbents simply cannot chose to lose either relative status or power, and that we're not going to get meaningful systemic change while, in effect, the majority of agency rests with the incumbents. Since the alternative is a choice of mass extinctions (we might make it through an Eocene Thermal Maximum analog; it's conceivable we could make it through an end-Cretaceous analog; we would not make it through an end-Permian event) I am rather surprised at the lack of bloody revolution rhetoric.

I don't know as when people are going to attach their construction of security to a major change of social systems; that's happened, but it's not easy to get there. And it's generally abrupt.

[ndrosen]

There is an argument that such high income tax rates will raise very little revenue; of course, some people will support them out of envy.