Monday, March 17, 2008

New Justification for a Progressive Income Tax

I agree with very little of what Yglesias writes, but he makes a good, and interesting, point here about why we should tax the rich more:
But speaking strictly as an ideologue, I don't necessarily have a problem with the government intervening to bail a bunch of rich guys out when their own bad decisions blow up in their faces if that's what's needed for the health of the overall economy, but this sort of thing is one of several reasons why I think the very rich should pay high tax rates and we shouldn't be happy about the prospect of ever-growing inequality. At a certain level, the game is rigged and you're not really bearing any risk.

I would add the fact that the rich also get much preferential treatment because their sources of income (capital gains, dividends, etc.) are taxed at lower rates than the earnings of the rest of us who work 50-60 hours/week and just get by. Oh, and, don't forget that the vast majority of their income is not subject to social security taxes.

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