The Rich Benefit More. So?
Suppose you were kidnapped. A hood thrown over your head, tossed into a van, driven away.
When the kidnappers take the hood off, you find yourself in a big room with a lot of metal chairs. You are strapped into one of the chairs. You notice a cable running from all the chairs to a big pain machine on one side of the room. You know it’s a pain machine because there is a big sign, “Pain Machine,” at the top.
One of the kidnappers goes over to the pain machine and turns the knob above the cable from your chair. He gives it only a slight turn.
Ouch. Yep, it’s a pain machine.
The kidnappers leave, only to reappear an hour later with another kidnapped victim. They strap the new guy into a chair and give his knob a turn — a little more of a turn than yours got. The new guy seems to be in more pain.
This repeats a few more times, each time the pain knob is given more of turn. The newest arrivals are in so much pain they are moaning constantly.
Suddenly the door bangs open and policemen run in. They quickly arrest the kidnappers and lead them away. One cop heads toward the pain machine. “Don’t worry, I’ll have this off in a second,” he calls out to all the occupants still strapped into the chairs.
As the cop reaches for the switch to turn off the pain machine, you yell, “Stop!”
The cop pauses and looks back at you. “Why?” he asks.
“Because,” you say between gritted teeth, “these other guys are in more pain than me. If you turn the machine off, they will benefit more than me.”
Now suppose you are taxed at 20% of your income and the guy down the street is taxed at 40%. A politician introduces a bill that will reduce all taxes by 5%. So you will be taxed at 15% and the guy down the street 35%. But then you notice that your tax bill will be reduced from $1000 to $800 — a savings of $200 — while the tax bill of the guy down the street will go from $10,000 to $9000 — a savings of $1000.
Are you going to complain and fight against the new tax bill because someone else who is in a lot more pain will benefit more than you?
Apparently. An awful lot of people do.
In the first place, the other guy is getting half the tax cut you are. A reduction from 20% to 15% is a 25% reduction. From 40% to 35% is only a 12.5% reduction. Sure, he’ll get a bigger benefit in dollars but that is because he was in a lot more pain than you to begin with
If the tax cut were “fair,” his rate would be reduced to 30%. But then he would save even more money and the tax cut would be even less popular.
There is no “fair” in the call that the rich should pay their “fair share.” There is no economic or moral rationale for some to be taxed at a different rate than others. The only possible reason is envy.
Envy, the new replacement for moral reasoning.