Wednesday, November 27, 2002

Re Whither Taxes: The disproportionate effect assumes that everyone buys one hot dog. The $175,000 earner will buy a lot more hot dogs (or will buy, in addition, DVDs, cars, houses, pet chow, foie gras, etc.) than the $17,500 earner. I accept the point, though. The problem with "progressive" taxation is the definition of progressive. By my definithion, as above, a VAT is progressive, as is a flat tax. The current progressive-marginal-rate scheme is not progressive but punitive. Thus, any meaningful tax reform plan can be called a sop to the rich, since the "rich" pay nearly all of the taxes. The only exception is the tax credit, which I dislike on philosophical grounds. Attempts to influence behavior through taxation are awfully at odds with the spirit of the Constitution, whether by giving a tax credit for driving a hybrid automobile, or by taxing a behavior such as smoking or driving a gas guzzler (or dying, for that matter).

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