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Wednesday, January 11, 2012

Chen: Progressive Taxation -- An Aesthetic and Moral Defense

Jim Chen (Dean, Louisville), Progressive Taxation: An Aesthetic and Moral Defense, 51 Louisville, L. Rev. 1 (2012):

The power to tax is at once the power to create and the power to destroy. If the United States government hopes to discharge its primary duty as creator and protector of its citizens’ wealth, it must be willing to destroy wealth, from time to time, by redistributing it. More than any other tool, the means by which government finances and depletes its treasury affects the societal distribution of wealth. Differential taxation and targeted spending are the most significant and most effective means by which government can “gradually and continually...correct the distribution of wealth to prevent concentrations of power detrimental to the fair value of political liberty and fair equality of opportunity.” Redistribution and the attendant destruction of entrenched wealth serve as society’s ultimate weapons of “creative destruction.” Of the many forces that have propelled the United States to the economic, political, social, and military pinnacle of the modern world, its willingness to countenance radical technological and organizational upheaval probably ranks first. American prosperity depends on the federal government’s commitment to an economic environment in which citizens are able not only to amass large amounts of new wealth, but also to lose it in rapid and remorseless fashion.

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Comments

What an amazing tautological argument.

"If the United States government hopes to discharge its primary duty as creator and protector of its citizens’ wealth,"

The US government has the primary duty to create our wealth???? Sources please. Just saying this is different from logically supporting same. Or does the Dean live in a world where this is so evident, it needs no support.

"Differential taxation and targeted spending are the most significant and most effective means by which government can “gradually and continually...correct the distribution of wealth"

Who said it was the government's job to correct the distribution of wealth? Who elected the philospher kings who would decide the proper distribution of wealth? Should the proper distribution of wealth be placed on the ballot? Or should the apparently totalitarian government simply decide when you've made enough money? Did I just hear an echo?

"Redistribution and the attendant destruction of entrenched wealth serve as society’s ultimate weapons of “creative destruction.” Says whom? Source, please. Tautoligy is a wonderful thing.

"American prosperity depends on the federal government’s commitment to an economic environment in which citizens are able not only to amass large amounts of new wealth, but also to lose it in rapid and remorseless fashion."

The expression used to be "shirt-sleeves to shirt-sleeves in three generations. Grandpa made it, Dad maintained & son fritteres it away - but all without government intervention. Is the Dean proposing that the government (which did not make grandpa's fortune) be more active in taking it away from father & son.

The articles subtitle is "An Aesthetic and Moral Defense." Well from my viewpoint, the Dean's article doesn't seem pretty and isn't fair.

Posted by: Ed D | Jan 11, 2012 8:09:20 AM

"If the United States government hopes to discharge its primary duty as creator and protector of its citizens’ wealth,"

Some law school, whichever one granted this guy a degree, should be closed immediately.

Beyond this it is a terribly weak and sophomoric argument.

Posted by: save_the_rustbelt | Jan 11, 2012 4:43:26 PM

These commentators have a point in that I don't know how the author asserts this duty of the government.

However, the hallmark of any successful society is a rising middle class, dropping poverty and distribution of wealth that is seen as equitable by the people.

The author is right that taxation is a primary method to redistribute the wealth.

So, regardless of the source, his premise is in all our best interests.

The current wealth distribution in the US is worse than a banana republic and exceeds the level most economists think sparks revolution as measured by the Gini index.

We should all stop arguing over whether we should do it since it is clear it is in all of our best interests. The failure to do it will be a revolution of some type.

Typically, in a democracy, it would be at the ballot box. However, the concentration of wealth and caused our democracy to stop functioning properly in some cases. So it may be outside the ballot box. Most people dismiss the Occupy Wall Street Movement; however they may want to consider whether it is the canary in the coal mine.

Posted by: John | Jan 12, 2012 7:11:51 AM

John

Tautology is repeating your point another way as proof of your point.

Your starting point is that it is the government's job to redistribute income - apparently so as to avoid violent revolution. Which the Gini index (more properly coefficient) predicts. Except it hasn't. Hong Kong and Singapore has much more Gini inequality than the US??

"The current wealth distribution in the US is worse than a banana republic and exceeds the level most economists think sparks revolution as measured by the Gini index."

Ah, the famous unsourced most economists! Since revolution has not been sparked over the last 100 years since the Gini coefficent has been proposed, does it have any value as a predictor.

So, let's expropriate the better off so the peasants don't get ugly, based on a variant of the Lorenz curve. (What percentage of those citing Gini coefficient have even looked up what it is?)

"We should all stop arguing over whether we should do it since it is clear it is in all of our best interests."

A winning argument based on logic and facts - sure.

Posted by: Ed D | Jan 12, 2012 7:45:10 AM