On Taxes and the Current Proposals


A Democrat Friend of Mine Proposed

See the WaPo’s piece in which the Obama and McCain tax plans are compared at: http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

It’s simple enough – if you make less than $226,981 per year then your taxes go down under Obama’s plan. If you’re one of those lucky enough to have a personal income in the top 5% tax bracket, you’re taxes are going up.

In a nation where the ratio of CEO pay to that of the average employee is 465:1, this doesn’t bother me in the least. Wealth redistribution is *not* exclusively within the domain of socialism, rather by definition it’s a part of any system of taxation. What’s important to me is that this system be fair. Is it fair that in 2007 Steve Jobs’ income was more than $640 Million? That’s more than 5,000 times what I made in 2007. So… maybe, maybe not. I think it is – he’s very good at what he does – but that’s just me. However, he would never be in such a position without benefit of the hundreds of shoulders upon which he rode, and was able to do so because of us taxpayers. Warren Buffet has written/spoken a number of times on what’s called The Myth of the Self-Made Man. One obvious example: no tax money, no DARPA. No DARPA, no Internet.

Jobs can afford to kick in a little extra for his very fortunate (and fortune is the right root word) circumstances. It is when we taxpayers assume all the risk but reap none of the benefits that our kind of government is called something other than democracy.

And that doesn’t even mention the $440,000 in taxpayer dollars recently spent on the executive management retreat in Palm Springs by AIG. In 2006 McCain voted for Bush’s privatization of social security. Assume for a moment that you don’t have the benefit of hindsight where literally tens of thousands who now rely on social security as a source of income (about 28% of households in ‘Joe the Plumber’s neighborhood, it appears) would be in even more serious financial difficulty *IF* privatization had occurred. In the words of Sam Harris, “It would seem that many a camel would expect to pass through the eye of a needle on Wall Street.” Do you support the GOP direction of privatization? Is this in alignment with your own “presuppositions”? Speaking of these – you mention them three times in your last reply – can you layout for me what your presuppositions consist of?

My Response

I like the WaPo graph – very simple. I like the Republican’s side of the graph better than I like the Democrat’s side. I very much echo your sentiments “What’s important to me is that this system be fair.” I believe the Republican proposes a (more) fair tax proposal and that the Democrat proposes a tax proposal that allows voters to vote themselves “more gifts from the treasury.”

This is one of those areas where our presuppositions clearly come into effect. How does one determine what is “fair”? You even begin drilling into this with the Steve Jobs analogy. Is it fair that Steve makes so much more money that we do? For that matter is it fair that anyone make more money than I, or that I make more money than anyone else? To bring it into perspective, you and I are some of the richest people on the face of the earth (top 5%) is that fair?

I grew up in a trailer park in Mississippi, a friend lived in the same trailer park. According to High school Transcripts he (graduating with a 3.? gpa)  was smarter than I (graduating with a 2.? gpa) more athletic than I, and all-round better looking and well liked. His mom was single parent and thus he qualified for “free lunches” throughout school, while my father worked two jobs and my mother worked one and I remember distinctly wondering each week how we would pay for my lunches and being jealous that he didn’t have to worry about that.  He subsequently obtained a government scholarship and went to college (was that fair that the government sent him to college and not I?) while I joined the Army.

He graduated college with a bachelor’s degree and 20 years later continues in the exact same job (literally, same company, same shift, and stands in the same place on the line) he had when we graduated high school. I believe he is now making ~ $17/hr with minimal vacation and benefits. On the other hand, I make significantly more money, have phenomenal benefits, and an enviable vacation package. Is it fair that I prosper while he does not? Is it fair that I will have a nice nest egg when I retire and he will continue to be living on a social security fixed income?

Is it fair that he received far more funds from the government coffers than I? Is it fair that he did so little with what he did receive and failed to profit from it and ultimately fails to put back into it what he took out of it? Is it fair that I, who benefited far less from the government coffers am required to put an overwhelmingly large amount back into those coffers? I paid more in federal taxes last year than my buddy makes in year, and the year before that, and the year before that, and the year before that, and ….

My hermeneutic convicts me that this is all “fair”, a good worldview should transition well across domains though.

How do our presuppositions transition to other topics outside of money? (Fame, Knowledge, Art, Wisdom, etc.)

Some will naturally have skills that other will not naturally have. Some will be afforded opportunities that others will not. Some will leverage their skills while others will choose not to. Some will take advantage of opportunities that others missed. If this didn’t occur, we would all end up being carbon copies of each other with no diversity and essentially no individuality. The result of the diversity in personality/talent/motivation/etc is that some will “profit” more than others – and I believe that this is “fair”.

I believe this view transitions well across domains. I consider it fair that:

· Tesla understood Electricity and Magnetism better than I ever will
· Marshall Bruce Mathers III (aka Eminem, Slim Shady) is a far better lyricist than I
· Leonardo da Vinci was far more brilliant that I
· Christopher Columbus more famous
· Alexander was a greater strategist
· Epaminondas a more skilled tactician

Others propose a core belief that this is “unfair”. Perhaps they have an altruistic view of “all men are created equal”, or perhaps they resent the fact that others have “more” or “better” than they have.  

These people might propose that due to the fact that Skeeter is more wealthy than they are, Skeeter’s wealth should be redistributed such that they share in Skeeter’s profit.

Or that, if playing a game of chess with Alexander, he should be penalized in order to allow them to obtain a draw. Perhaps by sharing his strategy with them and working out an opposing strategy that would neutralize his own.

Well, the exercise quickly becomes fruitless, because it is impractical to redistribute brilliance, fame, skill, etc. like that – pragmatically speaking, it is just silliness. At this point, the majority will begin qualifying fairness and we quickly discover that individual’s have a highly relativistic sense of fairness that results in collectively relativistic senses of fairness. Fuel the relativistic sense of fairness with an innate sense of self centeredness – and “fair” becomes boiled down to “ok if it doesn’t overly impact me, even if it does overly impact you”.

Or as you put it, “In a nation where the ratio of CEO pay to that of the average employee is 465:1, this doesn’t bother me in the least. ”

It does bother me. Tax Brackets provide a simplified view of the current tax system. Basically, the more taxable income you make, the larger percentage that you donate to the national coffers. Here is how the brackets change in 2008.

For married couples filing jointly*


If taxable income is at least . . .

But not more than . . .

Your tax is:



10% of the amount over $0



$1,605 plus 15% of the amount over $16,050



$8,962.50 plus 25% of the amount over $65,100



$25,550 plus 28% of the amount over $131,450



$44,828 plus 33% of the amount over $200,300


No limit

$96,770 plus 35% of the amount over $357,700

* Or qualifying widow or widower


According to the WAPO table


60% of the taxpayers fall in the under $66K family income per year or the bottom two tax brackets. Which means that the majority of people paying taxes in our country are donating 10% of their income or $1,605 plus 15% of the amount over $16,050 to the federal coffers in an effort to support our country.

Skeeter falls into that 60% so, the maximum amount in real dollars that Skeeter will donate is roughly $9,000 this year.

Bubba doesn’t fit that 60%. Bubba fits into the $44,828 plus 33% of the amount over $200,300. To maintain the same comparison as with the 60%, the maximum amount in real dollars that Bubba will donate is $97,000, not quite 11 times more cold hard cash than Skeeter. Can we claim in this context that Bubba is doing 10x more to financially support America than 60% of Americans?

Let us assume that Mr. Jobs grossed $640 Million, and further assume (for the sake of argument) that only half of it ($320M) was taxable. If the math is correct, according to the 2008 tax bracket, we expect Mr. Jobs will donate $111,971,575.00 to the national coffers. In this context, is that roughly 12,441x more than 60% of taxpaying Americans?

While the rate of CEO Taxable income to average Employee income may indeed be 465:1, it appears that the CEO’s are likely providing fiscal support to the nation at a far greater ratio than the Employee’s are.

The Democrat’s plan says, “We as a nation will allow Skeeter to knock $1K off his taxes, decreasing the total he is expected to donate to the coffers to $8,000 this year (a 12% decrease). Bubbas donations to the coffers appear to be fine, let us not change it. Mr. Jobs can “afford to kick in a little extra” so let us increase his expected donation to 112,673,460.00 this year (0.63% increase).”

Under this plan, Bubba now does slightly over 12x more than 60% of Americans to fiscally support the nation, and Mr. Jobs is doing 14,084x more than 60% of taxpaying Americans?

You claim that this doesn’t bother you in the least while at the same time stating that “What’s important to me is that this system be fair”. We will then assume that this situation does indeed meet with your definition of fairness, and you continue to feel that we should agree he can “afford to kick in a little extra”. We will also infer that you believe the Republican’s proposition to be, perhaps not unfair, but certainly less fair than the Democrat proposition.

The Republican’s plan says, “We as a nation will allow Skeeter to knock $319 off his taxes, decreasing the total he is expected to donate to the coffers to $8,681 this year (a 3.5% decrease). Bubba’s donations to the coffers will be cut by $4,380, the total he is expected to donate to the coffers to $92,620 this year (a 4.5% decrease). Mr. Jobs has already done a significant amount to support our nation, so let us decrease his expected donation by $269,364 – to $111,702,211 this year (a 0.24% decrease).”

I believe we would both agree that those who are smarter, faster, more clever, luckier, and/or ultimately more profitable have a greater responsibility to use their gifts and resources than those who are less fortunate (I liked your observation regarding the root word!). In all fairness I would prefer a flat percentage tax across the board – the result of which could/would be that those who are more fortunate would continue to provide a greater contribution than those who are less fortunate. Unfortunately, that approach has been deemed impractical and the majority (60%) would be more inconvenienced than the minority.

My presuppositions lead me to believe the Republican’s plan is aimed at a greater degree of fairness while the Democrat’s plan targets a pragmatic approach. I feel that both plans pander to the public in an attempt to sway those whose votes can be “bought”, and that the Democrat is proposing a better deal to a greater majority of those voters. I’d personally prefer for them to keep taxes as they currently are and not screw around with “reducing” taxes – short of a massive/major overhaul of the system, which isn’t likely. We can conclude with me maintaining that the opposite of your position, in that I believe the Republican plan to be “more fair” and the Democrats plan to be “less fair”?

If so, we both have the same facts/information in front of us, and come to different conclusions due to our presuppositions regarding what fair is and how it is defined.

With regards to wealth redistribution, you state that it “is *not* exclusively within the domain of socialism, rather by definition it’s a part of any system of taxation”. I concur that it is not exclusively in the domain of socialism. I can even follow that “by definition” it is part of any system of tax. However, the question begs itself, “At what point does wealth redistribution become socialist?” What percentage of the fortunate’s fortune can a government take and redistribute to the less fortunate without  being confused as socialist, and what percentage “crosses the line”?

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved.

Newman, Michael. (2005) Socialism: A Very Short Introduction, Oxford University Press, ISBN 0-19-280431-6

Is it inappropriate to observe that many Democrats share the belief that Republicans unfairly concentrate power and wealth among a small segment of Americans that controls capitol and creates and unequal society? If it isn’t unfair to make that statement and you begin coupling this observation with the current and proposed “wealth redistribution” in America – then the question regarding at what point we become socialist gains momentum. Each of us will have a view (presupposition) regarding socialism that feeds our collective answer to that question, some will set the percentage lower and others will set it higher.

With regards to those tens of thousands who now rely on the us Social Security services as a source of income, I personally wish the government had stayed out of it and that the various Social Security programs had been aborted prior to seeing the light of day back in 1935.

Please don’t get me wrong, I do not begrudge those who rely on it their benefits. Many of my aunts and uncles are dependent upon it and they all paid into it as we all do. I’m for them benefiting. As I have personally been required to pay into the program myself, I’d like to see some benefit from it as well. If I were allowed to take the money I’ve been required to put into SS and opt-out of the program for a privatized program – I would do so in heart beat. Ultimately, yes – I like the idea of privatizing it.

I don’t like the idea of the government “taking from the rich and giving to the poor” – even if the argument is that the rich “can afford to kick in a little extra”. The government should see to it that the wealthy are abiding by the laws of the land, and not profiteering off the poor or otherwise oppressing them. This does not mean that I believe the more fortunate shouldn’t “share the wealth” but that I believe the government shouldn’t force said “sharing of the wealth”. The greedy should be allowed to be greedy in as much as they are abiding by the laws in amassing their fortune. The magnanimous should be allowed to share as much of their fortune as they desire as well.

Tracey and I regularly give 10-15% of our gross income to assist the poor and the needy each year. We do not give any significant amount of that to a particular church, charity, or other organization that manages the payouts. In particular, we look for opportunities in our community (50 mile radius) to assist the elderly and the poor. We buy and install appliances for them, repair their homes, buy food and occasionally prepare it for them, have spent numerous hours working with recovering addicts and alcoholics, etc.

We are currently adopting three American children (4,3,2 years old) who were all born and come with – issues. Not simply because we desire more children, but because we are convicted that this is the correct thing to do with our time and resources. Perhaps one might take this as bragging; however, I offer it up as I feel comfortable that my lifestyle will bear out scrutiny to reveal a charitable heart. None the less, in much the same way as I don’t appreciate large charities dictating how my wealth gets distributed – I don’t appreciate my government dictating how my wealth gets distributed – I’d prefer to do the distributing myself.


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