Why the rich should not pay their fair share.

Posted on August 14, 2011

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The only debate that matters in popular taxation politics is the business of taxing the rich, you’re either for a flat tax to avoid punishing success or you’re for a progressive tax to correct the kind of imbalances that even John Locke and Adam Smith warned of. Yet those of us on the left arguing the merits of a progressive tax are making a fatal error of judgement when it comes to arguing our case, we have based it on exactly the same principle as those arguing for a flat tax – that taxation is a contribution to society.

I love Senator Sanders’ passion for equality yet he argues based on emotive statements, the rich should pay their fair share because they have the ability to. Every time we use this argument we get shut down by our detractors who say we are punishing the successful and that a flat tax will provide a more rational, propotional contribution. Why do we keep playing every game by their rules?
We can’t really argue that the rich will contribute more money than the rest of us with a flat tax, particularly if loopholes are closed and tax havens are cut off, and still we argue that wealthy people and corporations should be taxed based on their ability to do so. I have a better idea.

Our tax system should be based on our usage of national resources, those who make less money do not utilise anywhere near the same level of resources (natural, economic and human) as those who make more, so like a loan it is one of the most basic principles of capitalism that they are being lent those resources on margin, and a proportional amount of interest should be added based on size and risk. This doesn’t punish the rich, it is merely the cost of borrowing based on exactly the same principles that banks have used since the days of Aristotle.

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Posted in: Economy