[extropy-chat] Tax Burden Gap

J. Andrew Rogers andrew at ceruleansystems.com
Fri Aug 20 19:05:13 UTC 2004

>  It seems, and perhaps I am misreading you, that you are advocating an
>  essentially command economy as an ideal growth environment: You seem
>  to envision a system where a small elite controls vast portions of a
>  nations capital, where growth is achieved by their centralized
>  stewardship of the nation's wealth. Your arguement seems to be that
>  it is only by the wise and judicious calculations of a tiny monied
>  class, by their analysis of what ventures are to be pursued, that
>  growth is possible.

You may need to think about that some more.  I think that's the first
time anyone has read what I've written to mean that I am all about

My position is that *allowing* the vast accumulation of wealth under
normal market conditions is a very positive things because it is putting
the capital in the hands of those that generate substantial value either
directly or indirectly, and most people will take a shot at accumulating
some modicum of wealth given the chance.  Progressive taxes actively
inhibit the accumulation of resources by those who extracting the most
value out of them.  The cost of doing business shouldn't increase by
fiat the more successful a business is.  People with a track record
given capital are people you want to have capital, preferably something
proportional to past successes.

Generally, this puts wealth in the maximum number of hands possible and
encourages wealth churn even if the overall distribution is relatively
static.  It is still a Pareto distribution but one that greatly diffuses
the power of any small group of individuals.  In a healthy distribution,
at any level of wealth, there is an even larger group of people only a
little less wealthy than you, requiring the cooperation of only a few to
command more capital than those more wealthy than them.  In extremely
progressive taxation environments, the curve is so sharp (high alpha)
that at the upper percentiles of the wealth brackets, it takes a very
large number of people cooperating to have capital parity with a single
individual in the next percentile bracket.

It wasn't I who was suggesting that having a few people control the
wealth is a good thing, but anyone supporting steep progressive taxation
is tacitly supporting such a thing.  We don't get to pick and choose the
consequences of such things.  You will *always* have a Pareto
distribution of some type, and the lower the alpha, the greater the
wealth and benefit to the average person.  Steep progressive tax
functions greatly increase the alpha, thereby increasing the class gap
and further unbalancing the distribution.

The middle class is created in low-alpha environments.  If you are
worried about the loss of the middle class, work on that.  It slays me
when politicians try to "save" the middle-class by making taxes even
more progressive.  Wash, rinse, repeat when the problem becomes even worse.

j. andrew rogers

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