Thursday, March 12, 2009

Regressive taxes

Progressive taxes have been criticized for punishing success--taking disproportionally more from the successful while providing them less. What if, instead, taxes were regressive--baseline taxes were assessed for government services (health inspections, defense, infrastructure), while the remainder of taxes were based not an ability to pay, but an ability to provide?

If people who made less than some amount were taxed at 100%, but given health care, basic shelter, rationed food and utilities, they'd have incentive to look for work (if not just out of boredom), eventually earning a small paycheck--enough for a TV, computer, or car.

Such a tax system would essentially vary the level of socialism based on ability to provide and not punish people who are successful. What's especially clever is that during a recession, as paychecks shrink, increased taxes force people to cut back, providing a safety net like an insurance company would--based on risk.

A regressive tax might sound unfair, but if it's unethical to tax a couple's second paycheck higher than the first, and it's unethical to let poor people die of starvation, the only compromise is a regressive tax that imposes a command economy on those that refuse to participate in the free one.

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