Tuesday, August 16, 2011

The Rich and Taxation

In the current political climate I have found it strange that Democrats and many on the left are really ‘hammering’ the rich. Perhaps the following argument can sum this up, which I label as (R). I think (R) sums up the position of many Democrats and liberals, and really sounds very much like arguments I’ve heard Obama use.

1. If the rich aren’t struggling to make ends meet, then they can afford to pay more in taxes.

2. If the rich can afford to pay more in taxes, then they should pay more in taxes.

Therefore,

3. If the rich aren’t struggling to make ends meet, then they should pay more in taxes.

In logical notation:

1. (~s → c)

2. (c → t)

3. /:. (~s → t) CA 1, 2

So, is (R) logically valid and logically sound? (R) is valid, because argument is known as a chain argument, or sometimes called a transitive argument. But what about logical soundness? Soundness deals with the truth of the argument. Are the premises true? I argue that they are not, and here’s why.

First off, being rich according to the administration is anyone making $250,000/year or more. At one time VP Joe Biden said $125,000/year or more, but currently the mantra is $250,000/year or more so I’ll stick with that. With this in mind, consider the consequences of both (R2) and (R3), “…then they [the rich] should pay more in taxes.” I believe this to be false, and this is false then (R2) and (R3) are both false and (R) is not a sound argument. (Don’t worry; I’m not going to do truth-tables.)

Keeping the rich at $250,000/year or more, let’s look at the numbers. According to Stephen Moore (2007):

The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.[1]

The Heritage Foundation (2011) substantiates this claim by saying, “The top 1 percent of income earners paid 38 percent of all federal income taxes in 2008, while the bottom 50 percent paid only 3 percent. Forty-nine percent of U.S. households paid no federal income tax at all.”[2]

I like the way that Rush Limbaugh (2010) breaks down the numbers from IRS 2001 report (no apologies to those who don’t like Rush):

Top 5% pay 53.25% of all income taxes (Down from 2000 figure: 56.47%). The top 10% pay 64.89% (Down from 2000 figure: 67.33%). The top 25% pay 82.9% (Down from 2000 figure: 84.01%). The top 50% pay 96.03% (Down from 2000 figure: 96.09%). The bottom 50%? They pay a paltry 3.97% of all income taxes. The top 1% is paying more than ten times the federal income taxes than the bottom 50%! And who earns what? The top 1% earns 17.53 (2000: 20.81%) of all income. The top 5% earns 31.99 (2000: 35.30%). The top 10% earns 43.11% (2000: 46.01%); the top 25% earns 65.23% (2000: 67.15%), and the top 50% earns 86.19% (2000: 87.01%) of all the income.[3]

With our eyes bleeding from numbers, let’s get to the heart of the matter. Government programs, such as Medicare, Medicaid, welfare, food stamps, unemployment benefits, etc., are paid by income taxes. These programs are put under the label of entitlements, and so spending on these programs is called entitlement spending. In recent years we’ve seen growth in entitlement spending, especially with unemployment benefits. Looking back at the above statistics, the US rich a substantial portion of the entitlement bill, well over half, but according to Democrats and the left, the rich don’t pay their fair share, in other words, the rich need to pay more in taxes. I have yet to understand the logic of telling the rich that they need to pay their fair share in taxes whenever if we just look at the numbers, seems to me that they are paying their fair share. If rich are picking up well over half of the tax income bill while the 50% of the US population is only paying 3% of the income tax bill, I fail to see how the rich aren’t paying their fair share.

Remember the 80/20 principle? 80% of the work is done by 20% of the people? Consider a situation where someone telling the 20% that they do their fair share of the work. Such a claim would be considered as sheer nonsense. I hold the claim that the rich need to pay their fair share in the same class of absurdity. Statistically, the rich are paying their fair share.

Is there some sort of ethical imperative that the Democrats are appealing too in order give their argument the weight it needs? Since I believe they can’t win with numbers, then I believe they’ll have to appeal to ethical arguments.

If I put my philosopher’s hat on, I smell an equivocation. It seems that in (R), our arguer is thinking that “should” is equivalent to “ought”, but really, “should” is not equivalent to “ought” in ethics. Consider the following assertions:

1. “You should tell the truth.”

2. “You ought to tell the truth.”

(2) introduces some sort of ethical imperative, while (1) does not. (2) is much stronger assertion than (1); this can be seen even at the intuitive level. So,

3. “The rich should pay more in taxes.”

4. “The rich ought to pay more in taxes.”

(3) and (4) clearly are not equivalent in an ethical context, but it seems to that (R) assumes that they are. So, our arguer is equivocating (3) and (4) in (R) and this clearly undermines its soundness.

As shown previously, “should” can’t mean “ought” since these aren’t equivocal. Could one appeal to some contextual definition, i.e., the meaning of “should” in the context of utterance means “ought”? Well, I can see this, but I’m not sold on it because, again, looking at (3) and (4), they’re not in same category, and I believe saying that they are same is a category mistake.

Is “can” equivalent to “should”? I’m dubious of this.

5. “The rich can pay more in taxes.”

6. “The rich should pay more in taxes.”

(6) is a stronger claim than (5), but still doesn’t get us to the ethical imperative of (2) or (4). While I’m not a fan of arguments that bicker over semantics, but there is the question of what “should” in (6) means. Clearly “can” doesn’t mean “should” in any context, at least there aren’t any contexts that I can think of. (For the philosophers, I’ve looked at possible-world and truth-theoretical semantics and can’t find any account that one could use to get “can” and “should” to mean the same.)

7. “You can drive the speed limit.”

8. “You should drive the speed limit.”

Clearly (7) and (8) are different sorts of assertions, just (5) and (6) are different sorts of assertions. “Can” does not imply “should,” and, therefore, (5) does not imply (6).

With this in mind, (R2) is based upon a false implication, and thus must be rejected.

Therefore, (R) is false in two ways. It assumes that the rich don’t pay their fair share, which is empirically false as IRS data shows, and (R2) must be rejected because it is based upon a false implication.

1 comment:

  1. Thoughts:

    1) I'm fairly certain that most informed do not hold (R). Just because someone is not struggling with the wealth they have is not a sufficient reason for their being morally/practically obligated to do give up a greater percentage of their wealth, even if they can afford to do so. In any case, some have held worse arguments before so perhaps some do hold (R). However, I suspect it doesn't accurately capture their view.

    2) The logic is incorrect. There are really two worries here. First, the argument seems to be analyzed via first-order logic, but actually involves a deontic premise (premise (2)). Second, even the analysis in first-order logic is incorrect. Focus on the latter first. In order for Premise (2) to be false the consequent must be false while the antecedent is true. Likewise, with (3). When analyzed using in Deontic logic, we first have to adopt a particular interpretation. The interpretation we choose will tell us what it takes for a conditional roughly like 'if x can y, then x should z' to be true (I'm leaving the deontic operators where they appear in the English sentence which hides scope and other things).

    3) I don't see any equivocation between the premises nor the premises and conclusion.

    4) 'Should' and 'ought' have the same meaning. If someone thinks you should do x they think you ought to do x, unless they fail to understand the terms.

    5) 'Can' and 'should' do not mean the same thing. But, I don't see why that matters. As you point out, (2) is underwritten by some ethical or practical argument. So, the derivation of the consequent of (2) from the antecedent of (2) is more than just synonymy. But, just showing that they are not synonymous doesn't undermine the argument that underwrites (2), since, I take it the argument would not appeal to synonymy...right?

    6) It's probably true that 'can' does not always entail 'should'. I can shoot my neighbors, but I shouldn't, is true as far as I can see. But, be able to do what is morally right seems to entail that I should. I take most would think that the rich can afford to pay more taxes. Separately, they think that persons deserve equality along some morally important axis. They also think that an increase in revenue and a particular distribution scheme would achieve this (or move toward achieving this). They reason, then, that there are folks in a position to help achieve the morally better state of affairs and so they should. (This is the more nuanced position I hinted at above, be it correct or incorrect).

    7) It is unclear how the numbers show that the rich pay their fair share. As a start, we need a reasonable view about what fairness comes too here. It is implausible that in this context fairness means 'paying more than others'. Fairness seems to at least be about a balance of the burdens and benefits, where those burdens and benefits include more than monetary burdens and benefits whatever they include. I take it that the worry folks struggle with is that this balance is off and that the wealthy are in a position to do something about this. Should they? Perhaps that's an open question that the numbers pointed to don't answer.

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