Taxes
 

I know tax philosophy runs across the spectrum on the tfp. I myself think that taxation is a necessary part of living in a formal, codified group. That at some point resources can and must be pooled to serve the greater good.

I know that some people think that taxation is tantamount to being raped and i'm not really certain why.

I'm just curious as to peoples opinions on taxes and their justification for said opinions. Please keep partisanship and conservative v. liberal out of it.

Re: Taxes
 

Some taxation may be needed, I will not argue that, but taxes should not be used to take money from one group of people to give to another, for the sake of buying votes. That is robbery.

Taxation is neccesary to keep government running, police running, and all the services we have running. I agree though, that taking my taxes and giving them to others is wrong, special interest groups, other countries.. all of it. If I want to donate to charity, I will do it myself

Taking money and giving it to others for the sake of votes is wrong.

On the other hand, I think that welfare is sometimes necessary, but should be a crutch to help people until they can walk on their own feet, not a wheelchair with a personal driver who pushes the chair to and from the liquor store.

To which others do you speak?

Are you speaking of welfare? Paying soldiers? Subsidizing education? Creating jobs?

I guess i don't see how these are any different. They all provide potential benefits to society.

A capitalist society functions on the basis that rights will be upheld--that people can leave their house and be reasonably confident that they won't get killed and that their stuff will still be there when they get back. Therefore I believe in taxation for services that provide personal and property protection (police/fire/EMS and military). Public roads are also a necessity as a transportation infrastructure for the military.

And that's where public funding should end as far as I'm concerned. The government does not have the right to play Robin Hood, pay people to drop crucifixes in jars of piss, spend millions to protect frogs and owls, etc.

I think it can be argued that protecting the environment and helping people not starve to death or freeze to death can be beneficial to society as a whole.

I guess i'm confused as to how the line is drawn. Let's say we give everybody a free college education(hypothetically it works just fine). How much better of would we be as americans if everybody who wanted to had a college degree? How much better off would the economy be?
The environment is important for obvious reasons. Without it, roads and military seem like moot points.

Obviously people are entitled to their opinions. I just don't understand how some things can be justified based on their obvious benefit to the general populace, while other things aren't justified uses of tax dollars despite the fact that they can have a demonstrable benefit to society. How is the line drawn?

Re: Re: Taxes
 

First off, I'd like to say:

Taxes are the price we pay for a civilized society.
-Oliver Wendell Holmes

This happens ALL the time. Corporate bailouts, Farm subsidies, Nation Building: the list goes ON and ON and ON and ON. Should we have given billions to bail out the airline industry after 9/11? How about the tens of Billions in subsidies for farms, the majority of which doesn't go to small farmers, but rather to the gigantic so-called factory farms. And then there is the tens of billions we are spending rebuilding Iraq and Afghanistan.

Now, some of this spending I agree with, some I don't, but it should be included in the list when we talk "taking money from me and giving it to others," because to say that only unemployed scumbags get the federal dole, and to use that as an excuse to decry the high state of taxes, is asanine.

Taxes are required to operate the government, but taxes should be applied equally. I am in favor of the flat tax as outlined by f
Forbe's when he ran for Prez.

Hallelujah!

Yes, the government needs money to provide these services. No, the government does not need money for handouts, etc. or to pursue an agenga contrary to the goals implicit in "personal and property protection."

Taking money from the citizens to fund such handouts and agendas is, in my view, morally unconscionable.

And there are other ways for a government to make money. Part of property protection is using the courts to enforce contracts; perhaps a "contract registration fee" that must be paid to file a contract with the courts and guarantee its enforceability. Maybe a national lottery, run by the federal government. Maybe taxes, but at a flat proportion across the board, without the loopholes that make current taxation seem that much more unfair.

Either way, if the government limited its spending to the necessities for function and protection, and cut out the rest, they'd need less money to spend.

Hell, I'm just ranting here, but, well, there you go.

The main purpose of taxation is redistribution of wealth, to take resources from those who have the most, and give them to those who have the least. I completely support this, and we need to be much better at doing it. When tax is unfair is when it is charged at a flat rate, regardless of ability to pay - taxation should not only be at percentage of income, but those with higher income should pay a higher percentage.

The thing I dislike is flat taxation, and the very wealthy (including corporations) being able to dodge paying tax, these tax criminals need to be persecuted, the loopholes closed, their property confiscated and used to fund the social fund. I would also support cutting military spending to a third or its current rate, and funding a full and complete welfare and national health system, public housing, eliminating homelessness, hunger, and avoidable sickness completely.

As a civilised society, we have a requirement to create a basic standard of living which people are not allowed to fall below. I am interested in the views who say they do not want ANY of their taxation to go to "hand outs" to people who do not have enough.

Should the elderly be left to die when they can no longer work to support themselves?

Do we want to live in a society where the children of those who cannot get work die of starvation or malnutrion? (there are societies in the world where this happens, but do we want America to have the same level of social welfare support as Malawi or Ethiopia?)

Why? Is it fair for those who have earned more (through either hard work or good fortune) to have what they've earned taken away forcibly and given to someone who can't--or won't--earn it themselves? Does poverty or inability somehow make you a more deserving person? Does success make you less so?

FC,... yes, in my opinion

From each what they can, to each what they need.

This is what I define as a fair means of distribution in a civilised society. We do not live in a meritocracy, we know that wealth is often based on privaledge of birth or social class, but the ideal of a perfect meritocracy is something I reject completely, for resources to be distributed on the basis of the contribution each person makes is completely unfair... in such a system the more capable get more than they need, the less capable less than they need - this is unfair. A fair system is one in which each person works as hard as they can, and is rewarded with the resources they genuinely need to enjoy a good standard of living. The motivation to work hard becomes pride, and decency, and free creative spirit, not naked greed. All people deserve a good standard of life, all people should be required to work.

But if everyone is guaranteed "the resources they genuinely need to enjoy a good standard of living," what compels anyone to work as hard as they can in order to earn it? Why can't I just sit back, sip a margarita, and let others do the work? I'll still get my daily allotment, right?

I think that this is one of the inherent drawbacks of a welfare state. Any maybe I'm a cynic, but the people who would take this approach in a welfare state seem to me to be the ones that wouldn't be motivated by pride, decency and free creative spirit.

Anyway, who says that the people who do enjoy success aren't motivated by these things?

BTW: I've got no problem with people helping out those who they feel are less fortunate, provided it's voluntary. Taxation is compulsory. Charity is not.

Simply because my view of human nature is that people are basically creatibe and compassionate, and yours is that they are basically self interested? And the way people are now is determined by the capitalist values they live in, and is not the only, or the truest fulfillment of true human nature.

And taxation exists to force those who DONT want to pay to contribute. if I had my choice, I would only contribute to welfare services, and give nothing to the military or the police, I assume you would do the opposite - if as a society we require welfare, defence, and poilice, we must have taxes, so that both of us are forced to contribute to the things we dont believe we should.

The human species is engineered to get the most benefit while having to exert the least effort. This is not always a bad thing, because we wouldn't be here if our ancestors always did things the hard way.

Communism and socialism will never work as long as human beings are involved. There are just not enough people who will give their best simply because they enjoy the challenge. There is no incentive for an engineer to build a bridge over a huge river if he gets the same benefits as the guy who juggles fruit at the circus.

As for as taxation goes, here is my philosophy:

You spend your own money most carefully on yourself.
You spend your own money carefully on others.
You spend other's money less carefully on yourself.
You spend other's money least carefully on others.

The government spends other people's money on other people. They have no incentive to care if it gets wasted.

havn’t you folks heard of the working poor? Living at or below the poverty line is not an indication of laziness -- often quite the opposite. in the USA service employees (maids, waitresses, retail workers, meat packers, etc) are paid minimum wage to do exhausting physical labor for often over 40 hours a week (at 40 hours a week on minimum wage an employee will earn $10712 before taxes the poverty line for one person living in the lower 48 states is $8,980 for two people it is $12,120). I don’t think a case can be made that service work is easy and that all people in such jobs choose to be there because they are lazy. You may argue that the working poor deserve their lifestyle because they are stupid but such an attitude, beyond being elitists and selfish, ignores the existence of a caste system in our society. The fact of the matter is that we enjoy cheap goods and corporations enjoy hearty profits all at the expense of the working poor and their families. If companies were farced to pay a living wage we could drastically reduce the cost of social programs -- but until that happens I see no reasonable way to advocate letting poor children go hungry so that you can keep your money.

Who is John Galt?

I pretty much feel this quote, posted by Sparhawk says it well:

Taxes are the price we pay for a civilized society.
-Oliver Wendell Holmes

Besides that, I accept the will of the people as executed by duly elected officials.

In general, I think capitalism works better than socialism and communism doesn't work at all. So as a general principle, the less that is paid for by taxation, the better. That's my bias.

Taxation is necessary and I have no problem with it to provide security, infrastructure, administration of programs, and even a social safety net of sorts to take care of our aged, infirmed, and young when necessary.

The problem is that the government is nowhere near efficient. There are government organizations that literally lose track of billions of dollars. They can't keep their records straight, fraught with fraud, and there is little reason for them to become efficient since the congress will just raise taxes to cover the inefficiencies.

There are no effective means to limit inefficiency in the government right now. At some point the government will need to be forced into efficiency. Rather than spending the next 50 years dumping countless trillions of dollars into a black hole, I believe we should follow some of Greenspan's suggestions for improving the budget deficits. These steps should include:

Making Bush's tax cuts permanent.

Creating a law that requires increased spending to be offset by cuts in other programs.

And doing something to limit the inevitable failure of Social Security as baby boomers retire.

I guess i see the problem of ineffiency as being seperate from the tax rate. Lack of efficiency, i think, is a reflection of the politicians in charge.

I think if those who attempt to claim the moniker of fiscal conservative spent half the time they spend trying to cut taxes trying to increase efficiency we might be getting somewhere.

That being said, cutting taxes is a very half-assed attempt at increasing efficiency. It seems more like cutting taxes is an under-the-radar attempt to impose ideology.

Is it necessary to keep all government operations running though? I personally think government has gotten too big. Every president has increased the overall size of government and it needs to stop, (I am aware that presidents have axed programs, but as a whole they expand government, at least in spending). Take the FCC for example. I personally think they should make sure no one broadcats on another's waves. Thats it.

Where to start? First of all, these people are unskilled laborers. I will not argue that most of them work very hard. They have to. Anyone can do their job, they do not have skills that are in such high demand that only certain people can do said jobs.

A living wage is a bad idea. It makes everything more expensive. So these people will be paid more, but they will have to pay more for everything they buy. Their higher wages will drive prices up. And/Or less people will be hired, because companies can only afford to pay so much. More people will be jobless and having to work two jobs whenever possible. More people will be on welfare, since unskilled jobs will be harder to get.

I do agree that many companies could pay their workers better, but which ones? At what times? As for corparations, their profits only make up 9% of the nations income distribution. They use this for later ventures and business expenses. Proprietors make up another 9%. These small business owners make as much as corparations. Are they to blame, too? 18% is not that much considering only 9% is corparations. Rents are 2% and interest is 8%. 72% of income goes to wages and salaries. Out of that 72%, the top 10% pay 64% of the taxes and the top 50% pay 96% of taxes. I do not know where you get your information, but I get mine from my textbook, which uses statistics from 2002.

1.Do you mean 'From each what one can, to each what one needs?'
2.In a system where people do not have to work hard, they will not. With socialism, I will work harder for not much more, while those who do not work hard, still get something. Capitalism may be greedy, but it motivates people to work hard and gives them the desire to move up the ladder by working hard. In socialism, if I do not do it, someone will do it for me.

You missed the rest of the sentence you are responding to:

If companies were farced to pay a living wage we could drastically reduce the cost of social programs

In other words, if companies were forced to pay a living wage, we could cut some of the taxes that pay for social programs. Taxes go down equivalent to the pay increase, prices are not driven up, and/or no less people are hired, because companies will be able to afford what they can afford today. Less people will be jobless because less people will have to work two jobs, opening up positions for others. Less people will be on welfare (which is good, because there would be less of it due to the tax cuts). Unskilled jobs will be easier to get because many of the people working two or more will now only need to work one.

The main issue is not how much money corporations make in comparison to the other areas that money goes - the issue is that corporations have been significantly increasing profits for 3+ years now, but there has been NO equivalent increase in payroll. It is the inevitable increase in wealth disparity due to deregulating business.

uh, what??????

Where did this little pearl of wisdom come from?

You might not want to state your opinion as if it is fact.

Edit: I just saw your next post.

Um, no.

Fact: a side-effect of raising the minimum wage is a decrease in the demand for labor. i.e. an increase in unemployment. That means less taxes going to the "social programs".

Forcing a system out of equilibrium will most always have negative side effects.

The other problem is that no one will ever agree on exactly what a "living wage" is. $6.50? $7.00? $8.00? $10.00? or even higher.

Who are you arguing with? I haven't seen anyone in this thread bring up the above.

O.K., I have spent about 30 minutes on this statement and can't find anything to back it up (or disprove it).

I think the statement itself is a little too braod for the argument. Which corporations? All of them? Foreign or domestic? Which industries?

I do know that companies spend more on payroll than they receive via profit, but I am not sure that has anything to do with your argument.

With all of the post-recession and post-9/11 economic problems we have had, I don't think this argument can be made. Especially when one factors in all of the variables.

When do workers get their share?
http://www.epinet.org/content.cfm/we...shots_05272004

Lopsided trends in profits and wages
http://www.epinet.org/content.cfm/we...shots_04122004

I addressed this in post #25. There would be many side-effects of raising the minimum wage. One of those side-effects would be more jobs as the people that are presently working more than 1 will no longer need to do so. Ergo, less unemployment, less taxes going to "social programs".

If you shift money to one location, it will come from somewhere else. You imply it will come in the form of more taxes, but that is to ignore the reality of more available jobs. Taxes will go down, prices do not shift much if at all.

A living wage does nothing but shift the burden of financing work from me and you to the corporations that reap the profits from the work.

Manx -

Every economic model that I have ever seen (that includes hypothetical and real world data) shows the exact opposite of your claim.

Maybe this analogy will clarify my point.

The current price of a can of pop is $0.50.
The current demand for pop is 10 million cans (out of my ass).

Every increase (no matter how small) in price for that one can of pop will cause a decrease in demand (an even greater decrease if there is a substitute).

Now, on the reverse, what happens when the price for the can of pop decreases? Yup, the demand increases. That is why the demand curve slopes down and the supply curve slopes up. At higher prices, the suppliers want to produce more. At lower prices, the suppliers want to produce less and the buyers want to buy more (i.e. scarcity).

Substitue labor for the can of pop because they are the same thing. We are the suppliers and the companies are the buyers.

Now, in the case of labor, do the buyers want to buy more when the price is going up? Nope. They buy less. So, what does that mean that buyers (i.e. companies doing the hiring) do when the price of the product they want (i.e. labor) goes up?

Everything follows this rule. Be it cars, labor, food, etc. (baring substitution)


As much as everyone wants to throw niceties and emotions into an argument like this, it cannot be done.

Wouldn't it be nice if everybody made a lot of money? Of course it would. Is it feasible? Nope.

Labor, as a product of the marketplace, is bound by the rules of the marketplace. You cannot debate using emotions against fact.


If you would like, I can go back and find the models I am referring to. Anybody with even a cursery knowledge of economics should be able to grasp these concepts without the data, but if the data is requested, I will get it and post it (which, would continue this threadjack even more).

I have never, ever, ever, ever, ever, seen any model (or hint of a proposed model) that shows that tax revenue will increase with an increase in the minimum wage or that more jobs will be created because of an increase in the minimum wage.

The supply will increase, but the demand won't.

I am having a hard time with your source. Several of the statements made there are highly questionable, but hard to truly dispute as the facts aren't clearly given. Here is an example:

This claim is made by EPI:

First, it is a no-brainer that the majority of people that earn minimum wage will be adult, especially since "adulthood" starts at 18.

However, almost half of the workers making minimum wage or less are under the age of 25. A little more than 25% of minimum wage earners are 18 or under. That shows that, proportionately, there are considerably more people not yet to adulthood, that earn the minimum wage or less.

And more:
Food service = usually makes even more money once tips are included, if they are reported.

From your source, the Economic Policy Institute:
From the Bureau of Labor Statistics:
Not necessarily an exact match, as one references "poverty level" wages and the other references "minimum wages". However, I find it odd that one shows a decrease and one shows an increase for a very similar labor pool.

As with statistics, if you want a desired result, it is relatively easy to get there if you are in control of what facts are included and which facts aren't.



In my opinion, wage growth cannot be forced, it is a product of the particular market. Why did the earnings in the IT category explode during the 90's? Easy, the demand increased without a corresponding increase in the supply, which causes labor prices to increase. Why are they decreasing now? The supply went beyond the demand.

For the most part, you have to let the marketplace set the labor price, it will be much more efficient that
way.

SOURCE

Actually, I am the same as the corporations you so detest.

My partner and I are in the middle of a start-up company. Our workload is increasing fairly heavily and we will probably need to higher lower-paid workers to cover the brainless part of our jobs that take our time away from the more profitable parts. Then, as the workload increases even more, we will probably have to higher more skilled workers.

In other words, I can only afford to pay so much per hour. I justify bringing in a new worker by comparing the work that they will do with the value that work has. If I have to pay the person more than the value of the job, what do you think I will do? Answer, not hire. It would be more profitable for me to continue to increase the hours I am working than to pay a new hire more than the position is worth.

The rule of thumb is that I will continue hiring until the additional cost associated with hiring the last worker is equal to the revenue generated by that worker. Now, if the "cost per worker" is higher, do I buy more labor or less? Answer: Less. If the "cost per worker is higher" do I buy more or less labor? Answer: More.

KMA,

I would like you to address the following:

In the European countries, productivity has increased as wages have increased for the past 50 years, according to Jeremy Rifkin (The European Dream), even surpasing the productivity of the US.

Has this created more jobs? Not necessarily. But what has happened is that people work less. They get to spend the money they make on things they feel make their lives better, such as, vacations and family time. They don't ultimately make more money, but they work less by receiving higher wages.
Currently they need immigration and higher reproduction to meet the growing demand of a tax base.
I want to repeat: both he and I recognize the model has problems and is not yet fully realized.

So we have the option of having unemployed people, as you suggest by the business model you are using in the portion I quoted, or hiring more people at higher wages, but not working them for very long.

So a very simple example: you have $100 dollars to spend on labor.

You can follow the American model: hire one worker @ $10/hr and work him 10 hours.

Or the European model: hire two workers @ $15/hr and work each of them for 3 hours.

Then it becomes an empirical question as to whether or not productivity would increase 3 fold. If I understand him correctly, Rifkin's argument is that it does.

But don't get hung up on that very glib example, please. Refuting those specific figures isn't the point, but to use it heuristically. For example, to further flesh this out. We might wonder about the plight of each worker who now only earns half as much ($45 income rather than a single worker making $100). But two responses to this: a) higher productivity would increase profits. It might be that you would actually have $200 to spend on labor, so you could have the workers produce for 6 hours. b) two workers in a family could conceivably work for 3 hours each (6 total is still less than 10) and be able to reap the same total financial reward, while allowing each member to be productive work force (satisfying and healthful for economy) and family time (satisfying and healthful for society).

You might be in the perfect position to try an experiment. You could, for example, strike a deal with one of your laborers that essentially states: I increase pay, reduce your hours, but your productivity needs to increase X amount (to be determined so the overall equation remains basically static). Try that for a month or two with your employee. If the productivity doesn't increase, back to the American model of driving wages down and increasing hours. I personally think that model produces downward pressure on producivity.

It would be nice if you didn't approach this debate with such obviously ridiculous statements as those two. The "facts" you have presented are not being disputed. But what you fail to consider is pretty much everything I have already said:

Follow along now -

Increasing pay to workers will result in less workers requiring more than 1 job which will result in more people working which will result in lower taxes which will result in a one-for-one balance in trade for companies who increase the pay they give to workers.

Cherry picking a few sentences that you do not actually refute does not weaken the overall information that was presented: corporate profits have increased while wages have not, in comparison to previous recovery periods.

That sounds an awful lot like "emotion" attempting to argue against "facts". I own a company and I hardly despise myself or my company or the concept of a company. As I have mentioned a number of times now, increasing the pay to employees, as a government policy, will result in lower taxes. You and your partners' tax liabilities will drop allowing you to afford paying your workers.

They tried that. It was called communism. If I recall, it didn't turn out so well.

That being said, I actually do agree with some redistribution. Simply because the higher income groups often get there by taking advantage of the lower income groups. What I don't believe in is flat-out welfare. Assisting people who are actually trying and have something to contribute is one thing, but if someone's just lazy they should be left to fend for their own.

How would this model be better for the worker?

The American goes home with $100.00 gross.

The European goes home with $45.00 gross.

That American will make over twice what the European will. Factor in tax rates and the difference is even higher.

I may be reading your post wrong, but that just doesn't make sense to me.



Manx -

When it comes to menial labor, productivity isn't always an issue. Only so much can be done in a certain time. What matters to me is what the value of that job is.

For the example, I will be specific. Our firm provides a unique engineering service to our client. Currently, we are the only company in a multi-state region capable of handling the type of work we do. Right now our competition is our customers themselves. What I mean there is that most of our clients have the ability to do what we do in-house. We do it better/cheaper/etc. and people choose to use us instead of their own in-house engineers.

Right now, we spend a lot of time doing things that hold very little value to the finished product. i.e. driving, picking stuff up, dropping stuff at customer's, etc.

Now, add the fun part: there really is no way of learning what we do unless you learned the skills while working for a different company (i.e. you can't go to any school to train on our industry). By that fact, getting a skilled worker is rare and very valuable. An unsklled worker holds very little value to us other than by taking care of the menial work.

For a skilled worker, I would pay around $30.00/hr.

For an unskilled worker, who would just be helping out, I would pay no more than $8.00

Anything above the $30.00/hr, at first, is not worth it to me (I can only charge my customers so much before they look elsewhere/or go back to their in-house options).

For the unskilled worker, $8.00 would be pushing it. For the tasks this person would be done, productivity would not be the issue (i.e. I expect a certain level to begin with and don't have high aspirations for considerably more productivity). For example: I need someone to pick up/drop off packages at our customer's locations. There is a definite limit as to how much can be done in one day (i.e. driving speed, traffic, distance, etc.). Even if I pick up some kid who wants to work his ass off, he will only be able to get XX done each day. Paying him more, whether by force or voluntarily, makes the kid too expensive to keep/hire.

Then, add the work ethic of the average American worker who gets around $8.00/hr and you will see what I mean. How many people will I have to replace at the $8.00/hr level? Probably quite a few. That makes an additional cost and an additional burden to me.

The hope is that I find somebody who understands the concept of entry-level, starts low, learns the business and then becomes worth more money to me. Once that happens, I would happily pay that person more money.

How will increasing pay lead to less workers?

If I put an ad in the paper offering a janitorial position for $5.15/hr, how many responses will I get?

If I put an ad in the paper offering a janitorial position for $30.00/hr, how many more responses will I get?

Forcing a company to pay its lower workers more, will not, in any way, create a greater demand for more workers. It will create a greater supply, but less buyers of the product.

I am having problems just getting past your first premise of this statement.

No kidding, please explain to me how raising the minimum wage will create a greater demand.

And, unless I am doing something wrong, I don't get any tax breaks or more tax deductions based on my workers. I get my deductions elsewhere, not from the labor I use.

People work more than one job because they do not earn enough money at one job to live.

Pay them more in one job and they will not work the second, opening it up for someone else to work.

The demand already exists but it is filled.

You get tax breaks because money needed for social services goes down as unemployment goes down.

edit: Also note Smooth's description of the gains in productivity due to happier/more fulfilled workers.

I wouldn't say you were reading my post "wrong."
Directly under the portion of my post that you quoted I answered the point you raise.

So from your answer to Manx regarding the inability to increase productivity (inherently in the job function), I can understand how point (a) wouldn't apply.

But point (b) would in that both parents from a home could share the workforce burden. Not to say that you should hire both people in a household, but I hope you're following what I'm putting down now.

There are a great many things that do not follow the laws of supply and demand. There are many products that are essential to life for the person who needs it, and therefore the demand will be there regardless of what price it costs. Do you really think that someone who either gets a certain medicine or dies will want that medicine less if the cost goes up?

What if the person is single?

What if both parents already work?

/still makes no sense to me
//besides, how do you guarantee increased productivity?

Sorry, I have to use numbers, it makes more sense to me.

Scenario: SERVICE TYPE INDUSTRY

Let's say I charge my customers $25.00/hr for the labor my employees provide (negate taxes, etc.)

Worker "A" is an average producer and gets paid $12.50/hr for an eight-hour day (no overtime). If I can keep at least seven of his working hours billable, I will gross $175.00 for Worker "A". My net profit would be $75.00/hr.

Worker "B" is an above-average producer and gets paid more an hour than Worker "B" (let's say $17.00/hr). I can only charge my customers $25.00/hr. I can't say that the price would be $25.00 an hour if you get my average tech or $35.00/hr if you want my above average tech (even if I try and tell them that the time on site would be less so their bill would probably be less--nobody is going to believe me anyway).

The law of averages says that of my techs, some will be average, some below-average and some above-average. There is no way for me to only keep "above-average" techs. There just aren't enough people out there to fill this role. When I was running crews in this type of situation, one out of five techs was "above-average", the one "above average" tech did get paid more, but our hourly rate was the same, regardless of which tech showed up on site. (plus they were union, so there was nothing I could do there--ever try and get a union worker to voluntarily be more productive, regardless of the pay? I was on a site in Mass. where the union stipulated what the techs made, that they got at least XX hours of overtime and nobody could set requirements for them--i.e. pull 1500 ft of wire a day, they could only be told to pull 1500 ft of wire, time limits were not allowed)

In other words, this idea could not work in a service-type industry. The first step would require that American unions be abolished, which will never happen.


Scenario: Manufacturing Plant

Worker "A" is an average worker and gets paid $10.00/hr. His average output is 5 units an hour and I sell the units for $75.00 a piece. Each piece costs me $50.00 in parts to make. On an eight-hour day (again, I don't want to pay overtime, it kills my profit) I will make a net profit of $920.00 on Worker "A" for one work day (taxes, variable costs excluded). My per unit net profit is $23.00.

Worker "B" is far more productive and gets paid $15.00/hr. His average output is 8 units/hr. and works for 3 hours (that is an increase in productivity of more than 50% which would be pretty fantastic). For Worker "B"'s workday, I make a gross profit of $1,800.00. After paying costs and paying labor, my net profit is $550.00. My per unit net profit is $23.13

An increase of $0.13? Statistically, paying either worker in either of the above fashions means the same thing to me. I make the same amount of profit either way.

However, our average guy, Worker "A", brings home $100.00 per day gross.

Mr. Above Average, the guy who increased his productivity over 50%, brings home less than half-that.

Let's say both guys are single.

It pays better to be average, huh?

What are the chances that I could average a 50% increase in productivity for every worker that the plan is offered to? Every percent point drop in productivity means a similar drop in profit to me as the owner.

What would be an acceptable increase in productivity?

As the owner of the plant, I don't care, my per unit profit stays the same regardless and the money I will make each year stays the same (as long as the increased productivity of the workers getting higher pay/less hours never falls below 50%)


/sorry, it sounds nice, but I don't see the numbers working. Unless, of course, I am wrong with my numerical assumptions (which I thought were on the optimistic side).

I have often pondered the relative arguments for the different tax schemes and it has occurred to me that all of them in one form or another carry varying degrees of unfairness. In examining this question, then, I will attempt to walk you through my thinking and like most of my posts here this will probably turn into a short essay, so please bear with me.

To begin with we must examine the (brief) history of taxation. In state of nature (I am a fan of Locke’s view of the state of nature, so this may seem familiar to other fans of Locke) all property is held in common. One is free to take for one’s use from the common to the extent that one can make use of that which one takes. That is to say, I can take a piece of property, say an acre of land, for my self so long as I am able to “work” or use that acre of land. If, for whatever reason, I am only able to use ½ of that acre then I have taken more then I can properly use and the ½ that I am not using returns to the common. Now, since we are not talking exclusively about property as land, but also as chattel, lets extend this doctrine. In the state of nature I am allowed to remove from the common resources (food stuffs, materials, personal belongings) only to the extent that I may use them before they spoil. So, to use an example by Locke, I can gather together as many acorns as I like only so long as I will be able to use that which I take for myself. If I take more then I can use then I have taken in excess and the remainder should be returned, or left in, the common. Accordingly, the rule in the state of nature can be thought of as, One may take from the common only to the extent one can make use of what one takes, and may take no more than this.

However, of course we no longer live in the state of nature (if man ever did), but in a “civil” society. The invention of society brings with it the ability for one to trade certain items one possesses for that from another, leading to a system of bartering. This allows one to take more of a certain items, say acorns, out of the common then one could possibly use, but trade those excess acorns to someone else for say walnuts. Now bartering in such a way will necessarily restrict one to only take from the common only so much as one will be able to either use or trade before it spoils which still limits the total amount one would be able to take from the common. The eventual outcome of bartering (in most societies), is the invention of currency.

Currency, as it develops in most societies, tends to be precious metals, jewels, or other non-perishable items. In themselves this objects have very little worth besides the “artificial” worth given to them by the society. Over time they come to represent the fruit on ones labor allowing one to take much more (acorns) from the “common” then one could possibly ever hope to use, trade those acorns for currency, and store up as much currency as one possibly can. Furthermore, this now allows one to trade one’s time to work for others in gathering (acorns) from the common, and in exchange for one’s time one receives currency for one’s pay, rather then a share of the acorns. It is through this process that there is the eventual destruction of the “common” nearly altogether because one can now “hire” others to work the land, or other property, rather then do all the work one’s self. It is important to keep in mind, however, that currency has no “actual” worth other then that given to it by the members of a particular society and in the end its value is still a representation of one’s work (or that of others working for one).

It is also important to look out how societies were first formed. According to Locke, one leaves the state of nature (presuming one was ever actually in a state of nature) to join in society because as a collective whole, one it better able to protect against the intrusion upon one’s right by another. It is for one’s own benefit then that one chooses to join society (of course those who are born into society never are given this choice, but presumably they would chose to remain in that society if it were given to them). In the beginning, well, you know the rest. Needless to say no matter what view you have of how man came to be in existence, the family structure was the first human society. In the sort of family structure found in the state of nature, the “self” is not as important as the “whole” of the family such that the emphases is not upon the “I” but upon the “we”. In the first societies based around the family unit, then, property was held in common. That is to say, the very first societies were communist, in their truest form (not the mangled form promoted by Stalin and his ilk). In such a society there was no need for “taxation” because all was held in common. As societies grew, they still maintained much of the form of the family structure (think American Indian tribes or Scottish Clans). Basically societies at this point grew to include the extended family. Much of the old system remained at play, property in a society of this form was still very much held in common, but we begin to see a shift to a more socialistic form of society. There still does not exist a true form of taxation in the early stages of these societies but they do begin to exist. Members are required to contribute to the whole of the community because here still we see the emphases placed upon the “we” rather then the “I”.

Eventually what we end up with as these small familiar societies grow are “city states”, usually with one family or the other coming to dominate over the others and the establishment of a monarchy. As soon as the monarchy comes into play, the reason for taxation changes drastically. Now rather then one contributing for the support of the extended familiar structure one is being taxed to support monarchy who “may” in turn provide for ones security if they are a “good”, or may simply take from one to support themselves if they are not. Therefore the Monarchy introduces a new reason for taxation, to support the sovereign. Now here is where I would digress I bit from the views held by Locke, embracing instead a view more properly held by Rousseau, being that a just society exist for no other reason then for the protection of one’s right and as soon as it ceases to do so it is no longer just and one immediately returns to a state of nature in regards to the sovereign and one’s fellow man. Given time I might be able to dream up a system of Monarchy that would be just in protecting one’s rights (say the current system technically in place in England for example) but generally speaking, Monarchy’s or any other scheme of governance where there is a superior sovereign above which this is no other, are prima facia unjust, but I digress (the phrase “give me liberty or give me death” comes to mind).

Eventually, a republican form of society will arise where there is no sovereign because everyone is subject to the same laws of the land. The major change we see take place between early society and the republic form of society is a gradual shifting of the focus for the common existence of society from the “we” to the “I”. This shift is most pronounced in a Monarchy, if you are the monarch of course, but more properly in a Capitalistic form of society much like we have today. The tendency is lose focus upon why society exists in the first place, and that is for the preservation of the individual’s right (life, liberty and property, according to Locke, or life, liberty and the pursuit of happiness, according to Jefferson, not necessarily in the order given in either case) and for the promotion of the common good (which after nearly 4 pages, go ahead copy/paste this part over to word remembering to double space, brings us back to taxation).

From what I have read here, most people agree that society necessary entails some form of taxation for its support. The extent to which taxation should be required is what is in question. There are those who support a very minimalist view in that the government should only take the very minimal needed to support bare bones necessities and no more. But what are the “bare bones” necessities of society? You see this is the problem, everyone has a different view about what the government should and should not be involved in providing for. Here I tend to side most closely with a Jeffersonian view of government (which should come as no surprise to those who have read my posts before). Government should safeguard my rights to (in this order) liberty, life, and the free pursuit (not right to, but right to pursue) happiness. As such there are a great many thing that government should undertake, public education being the chief of these. For you see, (as Jefferson oft noted) an educated public is the keystone to any republican form of society. I think a great deal of the problem debated today (often on this very bored) could be resolved by greater education of our society (but again I find myself digressing). National security of course is a must (can secure rights without it), as are public works projects. The list could go on and on of course but I think you get the idea.

How these governmental undertakings would be best funded, of course, is another hot topic for debate. On the one hand you have the side that argues that those who have the most “property” for lack of a better term here, should pay the most toward public funds because they have gained the most from the benefits offered to them by society and have the most “excess property” to spare. On the other hand you have those who claim that everyone should be required to pay equal shares of their “property” because it is somehow unfair to require more from those who have more. There are of course different taxing schemes that purport to be more “fair” then others based upon one’s view of how taxes should be levied varying from straight tariffs (usually paid on “luxury” items, a round about way of taxing the rich by the way and functioning as a “graduated tax”) supported by our founders and the primary source of income for our country until 1913 and the adoption of the 16th Amendment (which by the way was introduced and promoted by Republicans), income tax (graduated or otherwise) which our founders were vehemently opposed to, “property” tax (taxation based upon the amount of assets one possessed, also opposed by our founders), real-estate tax (commonly called property tax), sales tax, and many other varying schemes (stamp tax etc.).

Personally, I support a graduated income tax, period. Those with greater disposable income should pay more then those without or with less. Why? Because they not only have benefitted more from society then other but they also have a greater amount to lose if that society is not supported. Additionally, (partial) redistribution of wealth is necessary for maintaining a stable society for without a controlled redistribution of wealth from the top to the bottom what you end up with is with more and more wealth flowing to the top, with less and less being divided up amongst the bottom. This inevitably leads to revolution by the bottom against those hoarding the wealth and the destruction of society (don’t kid yourselves into believing it can’t happen here when if you look at history it has happened at some point to nearly every great civilization in the world and is commonly occurring in countries around the world today).

Now then the final topic I want to address here is how the two (primary) sides view taxation. On the one hand you have the “liberals” who in addition to public works projects want to provide “social programs”. These “social programs” cover a broad rainbow of issues from art, public parks, unemployment, adult educations, etc. On the other hand you have the “conservatives” who claim (claim being the operative word) that government should only take what is necessary to provide the bare necessities for society and leave the “social programs” to private individuals. You see the problem is that while the “liberals” come right out and tell you where they are going to spend your money and why, the “conservatives” claim they are going to save you money and then spend it anyway. Its not lying exactly, its just not being forthcoming in their true intentions.

Example: Bush claims the traditional republican stance of lower taxes, cutting pork spending, and that the rich shouldn’t be charged significantly more then the poor in taxed simply because they have more excess resources. But here he is trying to have his cake and eat it to. Let me explain. Under Bush’s new tax plan, the average family in America was given addition tax credits to reduce the amount they were required to pay in federal income tax. One of the largest of these credits is the “child credit”. So then take two average families. The average family has consists of about 4 ½ persons and combined income is about $58,000. Presuming that this is the “classic” family unit that equals out to be Mom, Dad, and 2 ½ children. Now then, take another family, say me and my wife (our present combined income is somewhat sort of the national average but that is because I returned to school to further my education and we are living on one income, but for the sake of this example lets presume that the incomes are equal). Now then, your classic family is going to pay less in income tax then me and my wife. Why? Well thanks in large part to the child credit. Although the classic family will be using up much more social programs then my wife and I will, we will pay for more of it then they will because we have a greater amount of excess income. So people, this is about as close to and apples to apples example as I can give, under the traditional “conservative” income tax scheme, families who use more of societies governmentally funded social programs will pay less then families who use less. Talk about robbing from one side to give to the other. How are they able to get away with such trickery? Well you have to understand that the “conservatives” primary base is “family values”, so you see its all in how you package taxation for resell to the masses. It is ok to tax me and my wife more because of our excess, but it is not ok to tax Bill Gates more for his excess, because will all the vast amounts of money he has, some of it will trickle down eventually (but again I digress).

The primary problem I see in the disconnect between “liberals” and “conservatives” view on taxation is a matter of degree. It is between the rural viewpoint and the urban viewpoint (I’m sure you have all seen the map of red and blue America). Growing up in very rural America in a very red portion of the country I was indoctrinated with the rural conservative view of society. You see ( and I’m most of you who also grew up in rural America or live there now would agree) there lies a fundamental difference in world views. In rural America there is still a great sense of the “we” in society. If your neighbor is in trouble and needs some help, you go help him, its just what you do. Having lived a good portion of my life now in urban areas I can tell you that often times you are lucky to even know who your neighbor is, let alone if they are in any sort of trouble. In the country if you fall on hard times and your family runs out of food, the community will often come together and make sure you are fed until you can get back on your feet again. In urban society this tasks falls upon those “social charity programs” that conservatives complain about so much. In rural America if you can’t pay your bills with “currency” you can still usually work out some form of barter system to get the goods and services you need (example: my father ran a small tax accounting practice for many years, many of his clients were unable to pay his fees with currency so instead they would trade him crops, meets, or exchange services. One example is when a rancher had a rather lengthy audit by the IRS. This rancher ran a fairly large operation and was a millionaire many times over on paper, but in reality didn’t have dime to his name. So in exchange for my father’s work the rancher gave my dad a entire side of beef, already processed and stored at the local meet locker. Now there is now way my family could have used an entire side of beef, so my dad traded half of it to a local mechanic for repairing our truck. Try doing that in a city).

Ironically, if you follow where most of the money goes, it is often those who are against high taxes and graduated taxation of the rich, who receive the most benefits from these vary same “social programs”. Farmers and small businesses would be hosed were it not for governmental subsidy resulting in price controls. The “family value” constituency would be in for a real shock if they were required to pay for all the goods and services that they consumed from “social programs”. So in short, while I do not necessarily support a robbing from Peter to pay Paul sort of tax system, it is fair to require those with greater excess to contribute more for the greater good. I just wish people would wake up to what it is they are truly receiving and ask themselves are they willing to live without it? If not, then pony up on tax day and quit your complaining. :thumbsup:

Wait, how do you have above and below average producing techs? The "product" they are producing is hours billable to the customer. All the techs are producing that product at the same rate, as long as they are actually working.

It doesn't serve our interests to create examples and counter-examples to illustrate how it could or could not work. I was giving you a glib example of the argument in Rifkin's book of how it does work in the European model. I'm not opposed to you pointing out what you think are problems, but how can you know whether he addressed those issues without reading his complete argument?

My post was intended to encourage you to read Jeremy Rifkin's book wherein he outlines the historical evidence for what I typed, not argue the hypotheticals you are now raising. I mean, maybe I could go point for point, but why? He already did it ;)

I should point out, however, that even in your example it doesn't "pay to be average." In your second example, worker B works almost two-thirds less time than worker A and makes only half as much. If you increased his hours to 6 (still less than 8, which worker A does), he makes as much as worker A. But the Eurpean model is that worker B prefers to take a pay cut and only work a fraction of the time.

That was the premise of me and Rifkin's argument: that people would prefer to make a wage that allows them to have more time out of the factory, rather than the goal itself being making more money.

So yes, I would prefer to work 3 hours and earn $50 bucks than work 8 hours and earn $100.

And I wouldn't even need to double my output to do that: a 50% increase in productivity is not working twice as hard--that would be a 100% increase in productivity.

Those were my thoughts exactly.

Wow, You nailed it. Sure you don´t want to retract that statement?

Keyword: Service Industry (i.e. repair technicians)

And yes, I have run crews for many years, you get good techs and you get bad techs.

Example: Customer calls in for a service call

Tech "A" (above average) runs the call in less than an hour without needing help

Tech "B" finally calls for tech support after fiddling with the stuff for an hour. Two hours later it is fixed.

In all honesty, Tech "B" brings me in more money because he has twice the billable hours as Tech "A", but the fear is that the customer will notice that the guy doesn't know what he is doing.

Smooth -

I have to use the above method because it is the way I analyze things.

Also, what if the person is single/divorced? They would be screwed under the Euro plan.

I just don't see it as having any advantages. I really don't care if I get more leisure time, I want more money, period. I have XX dollars that I need to make in order to maintain, after that, it is all free money. To cut my salary in half would make me work in the red, I just couldn't afford to lose half of my income, regardless of the leisure time involved.

Also, this plan wouldn't work in my situation: Only one working parent. We do it this way so that a parent is watching the kids (i.e. someone else doesn't raise my kids) and we also do it to save the $420.00 a week it would cost us (yes, that is an accurate number). The other parent (namely me) is busy going back to school and starting a company at the same time. We need 100% of my wife's income to survive.

I look at this idea (and I think I gave it a fairly objective look) and I just don't see any benefit to it.

If I can pay $8.00 an hour and I need three workers, the most I can pay $24. With a living wage of say $12, I can only hire two workers. One job is lost. Two people may be earning more, but one is now jobless, and my firm gets less work done. A living wage is essentially a subsidy, because it guarantees a certain amount will paid. Subsidies cause a surplus of labor. So workers will be paid more, but less jobs will exist. The only way to support these out of job workers is with welfare, since all the jobs will be taken. Welfare costs money, the taxpayer will have to pick up the costs of firms being less productive. since no one will be living below the poverty level, the increase in wage will most likely be offset by the higher taxes. The higher the living wage, the higher the taxes and the higher the unemployment rate.

The reason Europeans work less hours is because of taxes. They have higher tax rates than in the US. They take home a smaller percentage of their salary than American workers. At some point leisure time is more valuable than those extra hours of work because the compensation for those extra hours is now being paid in taxes. Its called the Laffer curve. look here. http://www.bized.ac.uk/virtual/econo.../inctaxth5.htm

Thats a very interesting link and site as well, stevo22.

Isn't economics fun?