Monday, October 20, 2008

Taxes and Value


I would like to make an observation I hear no one else making. What is the point of taxes? I would argue to provide value to society. We are constantly hearing Obama and the rest of the liberals talk about the need to make taxes even more progressive.

"The rich are plenty well off, so they should pay more taxes."
"They can afford it."
"It is their moral responsibility, and it is only fair."

I argue that while that line of thinking sounds noble, it is fundamentally flawed. That philosophical stance makes the implicit assumption that in a capitalistic, free-market economy people do not get paid in accordance to the value which they provide to a society, which in fact they do. If they didn't, it wouldn't even be capitalism.

For example, if a doctor is making $400,000 per year, that means that the doctor is providing exactly $400,000 of value to society. Which means he is doing 4x more for society then someone making $100,000 per year. If this were untrue, and the doctor were to be making "too much", then what would expect to see? A flood of new doctors coming to gobble up the opportunity! Instead, we are currently seeing a shortage in doctors.

So explain to me, why should a doctor (or any wealthy person) have to pay an even larger percentage of his/her money to the government if he/she is already providing far more value to society to begin with? Shouldn't the person making $30,000 a year have to pay more taxes since they aren't providing nearly as much value to society? Wouldn't that be the "fair" thing?

What do you think?

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