Thursday, September 1, 2011

Voluntary Taxation and Gratuitous Promotion of Family Members

It looks like the last of my siblings has no entered the blogosphere. My sister Jacoba has a piece up at the Huffington Post discussing the reaction to Warren Buffet's statements that the rich are not being taxed enough. She points out that if people think that they aren't being taxed enough then they can always just right a check to the US Treasury.

Her point is an interesting one but I think it is misguided: Very few rich people think like Buffet does. Almost everyone who is in favor of higher taxes thinks that the group who should be paying higher taxes are the people with income slightly above their own income. Moreover, even if a large number of rich people agreed with Buffet, if those people gave much more of their money to the federal government while others in their income bracket did not those volunteers would suffer a relative loss of income. There's a fair bit of evidence that people's sense of status and wealth is a function of the people around them. So if most of the rich aren't paying as much it is quite understandable that the other rich would not want to. It is thus reasonable for some high income people to call for higher taxes even as they don't make voluntarily payments. In any event, the idea is an interesting one and the piece is worth reading.

1 comment:

Michael said...

I find the argument that Buffett should just shut up and voluntarily give the money to Uncle Sam to be the mirror image of the left's "Don't like abortion? Don't have one" talking point.

First off, Greg Mankiw did a great write-up about how Buffett's tax rate is dubious, but suppose it were true. Buffett isn't saying he wishes he was allowed to, he wants the government to force OTHER rich people to pay more. Otherwise, it's expecting him to willingly make concentrated costs with no dispersed benefits.