Wednesday, April 27, 2005

On the subject of annoying pigs...

This post by Brad DeLong raises the interesting point about what "progressive" means. Suppose that once upon a time, the top 10% in wealth of the population paid 50% of the tax burden and the rest paid the rest -- this would be called "progressive". Suppose that today, the top 10% now pay 80% of the tax burder -- would anyone claim that the current tax structure was less progressive than the past tax structure?

Brad DeLong might. He would argue that if the wealth of the top 10% increased by enough, they they may be paying a smaller % of their total wealth in tax even though they are shouldering more of the entire tax burden overall. In this case, the tax code is less progressive than it used to be because, yes, the richer are paying more, but you see it is causing them less pain than it used to.

Personally, I think of taxation in terms of efficiency (taxes should do little harm) and fairness (rich should shoulder more of the burden). Brad seems to view it in terms of retribution (rich=evil & must be punished!)


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