Monday, August 25, 2008

Of Tax Increases and Luck

The Democrats want to tax the wealthy. The wealthy scream that a dsproportional tax rate increase is unfair. They earned their money, they state; they worked hard and smart. Why should they pay a higher percentage than anyone else? Also, they darkly warn, a tax rate will kill their incentives: "...we (as a group) won't work as hard. Tax us at unfair levels and you as a society will lose the benefit of our highly talented energy."

How about this solution: let's NOT tax the rich for any of their money gains made from great ideas or hard work. Just for the proportion of their benefits that accrued from luck.

Even the rich (I hope) have to admit that there is a lot of luck involved in their success: such as being born in a wealthy country, or from smart parents, or genetically endowed extra IQ brainpower and perhaps a multi-tasking personality, from social contacts made early in life, or general universal karmic luck...

So...let's truly level the playing field; let's try to quantify the value of personal luck in all people's success; and, just like golfers entering a match who aren't as good as other golfers entering the match start with a handicap, let's tax people only to the proportion that luck--more than good ideas or hard work--contributes to success. Or the reverse is possible: we might even subsidize the unlucky to the amount that their status in socio-economic life is more dependent on bad luck that hard work or great ideas.

A truly democratic idea, no? Luck is taxed. All else gets a free ride.

You think the rich would scream at that proposition?


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