Layman's Economics

2w ago

One of the seemingly logical ideas is the idea of progressive tax.

The poor get taxed very little. The middle class get taxed more than the poor. The rich get heavily taxed.

Proponents of progressive tax think that the rich should “give back to society” since the reason they got rich was because they “took from society” in the first place.

Does this mean that the rich owe the society?

Let’s consider how the rich got rich in the first place.

They got rich because the value of their work is higher than the value of their consumption.

In other words, people in society value the rich’s contribution to the society so much that they’re willing to give the rich a lot of money in exchange for the goods and services produced by the rich.

On the other hand, people in society value the rich’s consumption so little that they’re willing to take just a few dollars from the rich in exchange for the goods and services that the rich consume.

In this sense, we can see that the rich don’t owe the people in society at all. In fact, the rich’s contribute to the society is a lot more than the rich’s consumption. That’s why people give the rich a lot of money. All this money are, in a sense, IOUs.

The fact that the rich have a lot of money (or IOUs) indicate that other people owe the rich!

This is why the idea of progressive tax and the idea of wanting to the rich to “give back to society” is ridiculous!

Furthermore, what’s going to happen when progressive tax is implemented?

A lot of capable people are not going to want to work hard. Why would they want to work hard when they’re going to get punished for their hard work anyway?

This is going to result in a lot of people just slacking off, or many capable people moving to other countries where their hard work’s not going to get punished as hard.

That’s why progressive tax is one of the factors responsible for destroying a country’s productivity.

And one day, if this keeps going, a country will find itself without any capable people left and there will be no rich people to leech off of (via progressive tax).

That’s when a country will start tearing itself apart.

#economics #tax #policy #government

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