The Ethics of Taxation

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Science Fan
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The Ethics of Taxation

Post by Science Fan »

Last night, I saw an article from Philosophy Now that was posted to this forum, titled something like, The Ethics of Taxation; however, I cannot find the article, and am assuming it was deleted. From what I read of the article, there were a number of fallacies present, one of which I would like to point out here. If I am mistaken in my reasoning, then I trust the philosopher who wrote that article can straighten me out.

As I recall, the author of the article stated that a utilitarian would welcome taxation that takes wealth from wealthy people and transfers it to poor people. The basis for this claim was that the increased happiness for the poor people would more than offset the loss of happiness that the wealthy will experience from such a wealth transfer. I'm trying to be fair to the author, but am relying on my memory. I don't believe I am misstating the author's position. I would also add that as I recall, the author did not give any precise details as to why the transfer in wealth would result in an increase in total happiness. It was merely stated as an assumption. However, being familiar with economics, I am fairly certain the author relied upon an assumption with respect to a decreasing utility for the accumulation of wealth.

This is where the fallacy occurred. The author assumed that there is a diminishing utility associated with the accumulation of money that is neither supported by logic or empirical evidence. The fallacy is in treating money as the equivalent of a specific consumer good. For example, let's take the utility associated with candy bars. If I buy a single Snickers bar, I will experience a certain level of utility eating it. However, if I eat a second one, my increased utility from the second candy bar is likely to be less than the utility I got from eating a single bar. Certainly, if I were to eat ten candy bars, I would likely receive little benefit, or utility, from the tenth candy bar. In such a case, taking that tenth candy bar and giving it to someone else who has none, may increase the total amount of utility or happiness. The happiness that someone feels from receiving a candy bar when he had none before, could more than offset the loss of happiness I experience by only being left with nine candy bars instead of ten.

However, the above analysis does not apply to money. Since money allows me to purchase a variety of goods, there is no reason to assume that I get less utility from acquiring a million dollars as opposed to my first thousand dollars. If I get diminishing utility from purchasing an increasing number of candy bars, I could simply switch my purchases to something else and never experience a diminishing utility, regardless of how much money I accumulate. Moreover, if I am saving for a large purchase, like for a home, my first $1,000.00 saved towards the purchase of a home may be less satisfying than the last $1,000.00 I put away towards buying the home, because that last $1,000.00 allows me to purchase the home while the previous amounts saved did not. Since money is not like a specific consumer good, it makes no sense to treat it as a specific consumer good when assessing the happiness or utility of possessing it. Therefore, I am stating it was a fallacy for the author to conclude that a wealth transfer would satisfy a utilitarian by increasing the total amount of utility.
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Harbal
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Re: The Ethics of Taxation

Post by Harbal »

Science Fan wrote: Fri Jun 02, 2017 4:34 pm Therefore, I am stating it was a fallacy for the author to conclude that a wealth transfer would satisfy a utilitarian by increasing the total amount of utility.
The fallacy is yours, you can file it away with all the others you've created since you've been here. I am stating that most of those who are earning the average wage (the majority) will have their happiness increased by the knowledge that the rich are having as much as possible taken back from them.
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Re: The Ethics of Taxation

Post by Science Fan »

Notice that the response to my post involved no argument whatsoever to refute my argument? There was a personal attack, but that simply means that Harbal engaged in a fallacy. After all, regardless of who I am, or even if I have made more mistakes than anyone else alive, even if one assumed that those allegations against me were true, it would do nothing to refute my argument.

Notice too that Harbal simply begged the question, which is another fallacy, by merely assuming his conclusion was correct?

There really is nothing for me to refute regarding Harbal's post, since it was based purely on a personal attack and fallacies.
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Harbal
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Re: The Ethics of Taxation

Post by Harbal »

Science Fan wrote: Fri Jun 02, 2017 9:30 pm Notice that the response to my post involved no argument whatsoever to refute my argument?
I didn't notice that.
There was a personal attack, but that simply means that Harbal engaged in a fallacy.
Is your definition of "fallacy" anything that amounts to a personal attack on you?
it would do nothing to refute my argument.
Your argument doesn't warrant any refutation, it refutes itself by virtue of its own stupidity.
Notice too that Harbal simply begged the question,
I didn't notice that.
which is another fallacy
You don't seem to be able to move round here without tripping over a fallacy.
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Re: The Ethics of Taxation

Post by Science Fan »

Harbal --- You are a zero in my book. I will not waste my time responding to you again. If anyone gets impressed with your irrational arguments, including your endorsement of racism, then they probably aren't worth a whole lot either.
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Harbal
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Re: The Ethics of Taxation

Post by Harbal »

Science Fan wrote: Sat Jun 03, 2017 12:36 am Harbal --- You are a zero in my book.
I'm in your book?
I will not waste my time responding to you again.
I don't require a response from you, my objective is to show you up for the idiot you are which I can do perfectly well without entering into direct discussion with you.
including your endorsement of racism, then they probably aren't worth a whole lot either.
I certainly don't endorse the word "racism", it's been turned into a meaningless term by self important twerps like you.
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FlashDangerpants
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Re: The Ethics of Taxation

Post by FlashDangerpants »

Science Fan wrote: Fri Jun 02, 2017 4:34 pm However, the above analysis does not apply to money. Since money allows me to purchase a variety of goods, there is no reason to assume that I get less utility from acquiring a million dollars as opposed to my first thousand dollars.
I assume that you are also aware of maximisation of income and maximisation of utility. In simple terms, if people are motivated simply by accruing cash (as is sometimes assumed with Homo Economicus) then everybody would accept as much overtime as was on offer, and would spend their spare time doing things to earn money. But people don't do this because they apply value to their free time (choosing to maximise utility over income after their basic needs have been met).

So we don't need to just assume that a certain amount of money will have greater utility for the poorer person than it has for the richer person. We can simply observe who is willing to do unforced work at that rate of pay, and and who would never do so.

If you happen upon a rich person cleaning toilets on a Saturday because they are willing to trade their time and effort for $15 /hr, then it seems fair to say that 15 dollars has more or less the same utility for that rich person as it does for the poor person who also does the same. If you offer this work to a rich person and a poor person though, I think our innate intuition about which of them is more likely to accept the offer will be borne out.

Or you could just go to a rich person's house and see if they are willing to pay for a minimum wage lackey to come round and clean their shit for them. If so, that rich person has preferred to trade some amount of cash for their leisure time, and somebody whose income is lower than theirs has opted to become the counter-party. Which is only possible if the wealthy person applies a lower utility value to that small amount of money than the poorer person does.
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Re: The Ethics of Taxation

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You claim that wealthy people would work more overtime if they valued money more than a poor person. How so? We could just as easily state that a poor person, who valued money as much as a rich person, wouldn't be poor at all, but would be rich. The fact a poor person is not working is evidence that a poor person may not like money very much at all, and far less than a person who works much harder to acquire money. Many rich people are on salary, and do not even get paid over time. Moreover, many rich people don't even have to work, they rely solely on investments. So, there are many variables to consider, but this idea that unless people work 24/7, then they don't value money as much as poor people, who may voluntarily decide not to work at all, is not logically true, nor do I see any evidence that it is empirically true.

Besides, the issue is a transfer of what one presently owns, not what one will earn in the future. If a person worked a great deal of overtime to acquire their wealth, but is no longer interested in working additional over time, because they have to sleep some time, that does not mean that total utility will rise by taking their hard-earned money from them and giving it to a poor person, a person who may refuse to even work a full-time job, much less overtime.

You are merely speculating here. That's the problem with so-called utility curves --- they do not exist in reality, are a made-up fiction, and as many fictions, they can be manipulated to "justify" almost any conclusion. The fallacy comes in believing that the "justification" is really justified by the use of such imaginary claims.
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Re: The Ethics of Taxation

Post by FlashDangerpants »

That was weird and besides the point.
Let's simplify stuff and hopefully skip the undeserving poor routine while we are at it.

Mr X owns a a yacht and a private plane.
Mr Y owns a dented hatchback and still has payments to make on it.

Somebody offers mister X and Mr Y both the chance to earn a crisp $43 and 75 cents by holding open a door at Walmart for a few hours.

If Mr X refuses but Mr Y accepts (neither of them having any more pressing duties or money making opportunities on tat particular day) we may confidently say that Mr Y places a higher utlity value on that $43 and 75 cents than Mr X does.

Or to put it another way, Mr Y must gain more enjoyment from that small sum of cash than Mr X given that one of them was prepared to sacrifice free time for it and the other was not.
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Re: The Ethics of Taxation

Post by Science Fan »

Nope. You blew it again. The issue is not future earnings, you keep making that claim. The issue is transferring one's present wealth. This is important because empirically we know people value what they own differently from what they do not own. The same house is valued higher once a person owns it than by the same person before he purchases the house. We are also biologically wired to avoid loss more than we value gain. So, you cannot use an argument about the potential earning of future income to justify an issue about taking property from someone that they currently own. To do so, you have to ignore all the latest empirical evidence from behavioral economics. That's my point --- the so-called utility curves are made-up nonsense, with zero empirical support.
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Re: The Ethics of Taxation

Post by Philosophy Explorer »

FlashDangerpants wrote: Sun Jun 04, 2017 6:43 pm That was weird and besides the point.
Let's simplify stuff and hopefully skip the undeserving poor routine while we are at it.

Mr X owns a a yacht and a private plane.
Mr Y owns a dented hatchback and still has payments to make on it.

Somebody offers mister X and Mr Y both the chance to earn a crisp $43 and 75 cents by holding open a door at Walmart for a few hours.

If Mr X refuses but Mr Y accepts (neither of them having any more pressing duties or money making opportunities on tat particular day) we may confidently say that Mr Y places a higher utlity value on that $43 and 75 cents than Mr X does.

Or to put it another way, Mr Y must gain more enjoyment from that small sum of cash than Mr X given that one of them was prepared to sacrifice free time for it and the other was not.
But Mr X could walk through the door with a bigger smile on his face.

PhilX

PS Being rich and all, I would expect Mr X to normally avoid Walmart.
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Re: The Ethics of Taxation

Post by FlashDangerpants »

Science Fan wrote: Sun Jun 04, 2017 6:50 pm Nope. You blew it again. The issue is not future earnings, you keep making that claim. The issue is transferring one's present wealth.
The money to be transferred cannot be present wealth for two unrelated people one of whom is poor and the other rich.
Science Fan wrote: Sun Jun 04, 2017 6:50 pm This is important because empirically we know people value what they own differently from what they do not own. The same house is valued higher once a person owns it than by the same person before he purchases the house. We are also biologically wired to avoid loss more than we value gain. So, you cannot use an argument about the potential earning of future income to justify an issue about taking property from someone that they currently own. To do so, you have to ignore all the latest empirical evidence from behavioral economics. That's my point --- the so-called utility curves are made-up nonsense, with zero empirical support.
You also seem to be assuming something about this tax that I see no justification for. Why isn't it an income tax or a capital gains tax that is levied at the time of earning?

Irrespective, the diminishing utility still applies, you are really only challenging me to use a different example.

So, Mr X (who remains rich) and Mr Y (who is still poor) now go to their respective accountants and are both informed that if they do not take remedial action to rectify a misstatement in last year's tax returns they may face a stiff penalty. The cost of rectifying it is identical for both parties, but amounts to 90% of Mr Y's assets or 0.4 percent of Mister X's. Which of them will lose more sleep (or even be tempted to risk severe punishment by not truing up?).
Would it be equally rational to both be equally disturbed by this problem?

You have done nothing to show that treating the moved assets as present wealth rather than future income makes a difference so significant as to reverse the blatantly obvious fact that $10 is worth more to somebody on the edge of starvation than it is to somebody who couldn't get anything they would ever dream of eating for that price.
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Re: The Ethics of Taxation

Post by Science Fan »

What's rather ironic is that you are committing the exact same fallacy that I identified in my initial post -- without being aware of it. Here is where you went wrong: When you ask whether person A is willing to do an activity for a certain sum of money, and he says no,, while person B says yes, that tells you absolutely nothing about how much A and B value money per se. All it tells you is how much they like doing that specific activity. If I ask a 65-year-old neurosurgeon if he would be willing to enter a prize fight for $100.00, and he says no, while a 20-yer-old kid says yes, that does not mean that the kid values money more than the physician. If I were to ask the 20-year-old if he would be willing to attend medical school and go through the requirements to become a neurosurgeon, and he says no, then how could one conclude he values money, per se, more than the surgeon? One couldn't. One can easily ask different people whether they would be willing to do specific activities for certain sums of money, and that will never tell one how much they value money per se, it will only tell one how each person prefers to undertake a specific activity.

Since money is a general claim on al sorts of goods and services, one can not determine how much any specific person values money, compared to another, by asking people which activities they prefer doing. That's not even a rational generalization. Ideologues, however, hope no one notices the sleight-of-hand being employed.
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Re: The Ethics of Taxation

Post by FlashDangerpants »

Nice try. But I used standing around at Walmart opening doors as my example because it is something that I doubt anyone enjoys much, but pretty much anyone can do. Unlike cage fighting and abseiling into sieges while blasting terrorists with an uzi and any other extreme scenario you care to bring into things just to escape the basic 'all other things being equal' rule really ought to go without saying. Which was your sleight of hand.

It does indeed measure how much a person enjoys, or is otherwise willing to carry out a task. It does so against the yardstick of a fixed sum of money that is more tempting to the person who has less money than it is to the other person for obvious reasons. It also really is neither here nor there which goods and services our candidates are likely to spend their money on. One can afford more, and a more expensive set of them than the other can which is why the poorer person is to be expected to place a greater utility on the smaller sum with which to purchase those things, so I see no point in trying it on with the abstract nature of money.

I never made any sort of claim about who values money more "per se" than the other. It may well be that overall the rich person places a far greater value on wealth than the poor person does on the whole, indeed all other things being equal we might even assume as much. But he must be an incredible miser to the point of psychological instability if he values a single $10 bill more than a hungry man with empty pockets would.
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Re: The Ethics of Taxation

Post by vegetariantaxidermy »

The fallacy of the 'over-used fallacy' fallacy, wherein the weakness of an argument increases in direct proportion x10 to each use of the word 'fallacy'.
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