Tuesday, June 24, 2003

This is what happens when you spend your afternoon debating tax policy and writing rulesets and database design for a new web product:

Premise 1.1:
The government is necessary, and requires funding.

Premise 1.2:
The best means of funding the government is the one which is most efficient (i.e. does the least to slow the economy).

Premise 1.3:
Taxation is, at present, the most efficient means of funding the government, considering the level of funding required of a contemporary government. Other means, such as the rent of public lands and the sale of public goods, provide useful supplementary income, but don't come close to meeting our needs.

Therefore:
Taxation is necessary. (Major Premise One)


Premise 2.1:
Everyone needs money in order to survive. This is not strictly true, as you can get by on bugs, etc., but it's close enough to true that I think we can agree on it for the sake of argument.

Premise 2.2:
Taxation, because it takes money away from people is a harm, as it interferes with their ability to survive.

Premise 2.3:
When the fact of a harm is necessary, but you can choose the method by which that harm is distributed, it is best to minimize the amount of harm.

Therefore:
The best form of taxation is the one that best minimizes the amount of harm inflicted, which is defined as interference with the ability to survive. (Major Premise Two)


Premise 3.1:
Utility, as defined by economics, is the best determination of value, much better than the face value of the bills themselves. (In economics terms, this comes close to being a tautology.) See http://www.amosweb.com/cgi-bin/gls.pl?fcd=dsp&key=utility for a good definition of utility.

Premise 3.2:
The utility of a given dollar is a good gauge of how necessary to survival that particular dollar is to the individual who has it.

Premise 3.3:
The Law of Diminishing Marginal Utility states that as more of a good is consumed, the utility of each additional unit of the good decreases.

Premise 3.4:
The Law of Diminishing Marginal Utility does apply to money. (If it didn't then money would be the only except to this law, which would be odd to say the least. But some folks say otherwise, so I've gotta take this as a given.)

Therefore:
To take a given percentage of X's income does less to interfere with X's survivability than to take that same percentage from Y's income interfere's with Y's income by a ratio that is directly related to the ratio of their incomes. (Major Premise Three)


To sum up:

Major Premise One:
Taxation is necessary.

Major Premise Two:
The best form of taxation is the one that best minimizes the amount of harm inflicted, which is defined as interference with the ability to survive.

Major Premise Three:
To take a given percentage of X's income does less to interfere with X's survivability than to take that same percentage from Y's income interfere's with Y's income by a ratio that is directly related to the ratio of their incomes.

Conclusion:
A progressive tax system, which derives a greater percentage of its income from individuals with higher incomes, minimizes the harm inflicted on the populace by taxation, and is therefore the optimal taxation system.

No comments: