Sunday, September 12, 2004

Tax and Altruism

The Grey Shade discusses poverty, inequality and taxation.

I have always been a supporter of a progressive tax system but know I'm not so sure.

Most people are altruistic enough to agree with taxation. This is to a degree just enlightened self interest but there is an aspect of doing the right thing for those not so well off.

But also most people spend a great deal of time minimising the tax they have to pay. There is a limit to our altruism.

It is interesting to consider if there is a level of taxation that would be considered "fair" by most people. I think there is and that this sits at around 25%. Anything more and there is a sense of unfairness. And its a percentage, not an absolute value so no matter how much a person earns they are likely to feel aggrieved if the rate greatly exceeds 25%.

And it is the sense of aggrievement that motivates the well off to hire accountants etc to reduce their tax obligations.

Working the other way, however, is our innate dislike of hoarders. This manifests itself in a desire for a progressive tax system rather than a flat rate. Its an indication of our belief that not all fortune is based simply on merit and that those that are well off are expected to pay more than their "fair" share towards the common good.

Two competing instincts that we seek to find a balance between through the democratic process.

1 Comments:

Blogger Lisa said...

Another Republican/Bush Supporter - I was beginning to think I was the only one. Nice to meet you!

Go Bush!

27 September 2004 at 9:34 AM  

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