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Loki wrote:

Is this incredibly weak dinner table parable that keeps circulating is the best justification for cutting taxes for the wealthy anyone can come up with?—at least the earlier generation of supply siders argued that the rich would invest and that would stimulate the economy or that being able to get rich would motivate people to innovate and entrepreneur. All we hear now is a throwback to the Protestant Ethic's inversion of Christianity: the rich deserve to be rich because they are better, "the elect of God."

The point of posting it was not to perpetuate this "Elect of God" mandate, as you termed it. It was merely to emphasize one thing - proportionality. Actually, I am not wealthy at all (yet!), and I am unfamiliar with Protestant ethics, so I do not speak for those who are. I guess my "inner Libertarian" just found it somewhat more common-sensical and straighforward than some of the other comments in this thread (smaller government and fewer taxes make sense to me).

Think about it this way. Over time, politicians have no problem tacking on this tax or that to disproportionately target upper incomes - with very little by way of reduction, rollback, or rebate of these charges. After being "targeted" for these taxes over time, it only seems appropriate that when tax cuts are discussed, those who have had to pay more in the past should get more back than others who have not contributed as much.

While those in upper incomes are expected to contribute more than others, in most cases they do not see the type of return on their investment that those in lower income brackets do. Sure, they get their country protected, their deposits insured, their public services, their roads built and paved (if they're lucky), etc. but those are benefits that everyone gets - the wealthy just get to pay more for the privilege. (As an aside, someone mentioned deposit insurance. I would point out that insuring deposits came about to protect those who could LEAST afford to lose their savings and to avoid the panic of poor people to withdraw their money after the bank runs of the Depression - it certainly was not meant to protect the wealthy only [which is why we have a cap on the amount of $ protected].)

The wealthy taxpayer does not see their money returned to them in terms of direct benefits such as welfare, medical care, or other benefits. The lower-bracket tax payer sees much more direct return on their tax dollar investment than any upper income taxpayer does. Unfortunately, one result of this is that we have dis-incentivized work (and the subsequent contributing tax payments) as a means of social advancement. Instead, we have a system that "rewards" laziness and abrogation of personal responsibility by feeding, housing, clothing, and providing medical care for those who choose to forego becoming productive members of society while we penalize productive taxpayers who advance themselves by work and education by sticking them with higher and higher taxes as their incomes advance. Another disincentive: if you are unfortunate enough to be on the border line of entering a higher tax bracket, you really have to weigh whether the benefits of additional income would be erased by increased tax payments.

In addition, the wealthy taxpayer is exposed to a slew of other taxes such as special property tax assessment zones; increased taxes on goods and property (luxury taxes, anyone?), and; estate taxes should they die with anything significant left over - to name just a few. And did I mention property taxes? These taxes were created in our agrarian past when land was roughly equivalent to income because you could earn income from using it for crops or livestock. Modernly, they are archaic. There is nothing about most modern primary-residence properties that generates income. Instead, these taxes are assessed on property owners based not on their income - but on the value of land which they have, in most cases, indebted themselves to acquire.

While you may have problems with Mr. Forbes' idea of a flat tax, it certainly seems fairer than the mess I described above. It is also more Constitutionally consonant with the concept of Equal Protection than our current system of taxation. The constitution provides for "equal protection under the laws" yet we are expected to believe that taxing some people twice as much (or more) than others somehow is "equal." Go figure.

Anyway, that was the point of my previous post - to stress the proportionality argument of unequal tax cuts. That's all.
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