Weird Tax Policy Arguments

Warren Buffet’s editorial at the NYTimes–in which he argues that increasing tax rates for wealthy individuals would not be a significant barrier to investment–provoked some well-worn counter arguments from the Time’s commenters. For some reason, these contrary lines of tax policy argumentation are extraordinarily popular even though they don’t make much sense.

Here’s one that never ceases to drive me crazy:

We know that 250K income for a family of 4 doesn’t go such a long way in Manhattan. However, it’s a whole lot of money in Normal, Kansas. Why do we pretend they’re equivalent? It’s apples to watermelons.
We need to devise an index for taxing incomes that takes into account cost of living and apply it to all incomes based on where the individual lives, perhaps by area code. The inequity of the current system screams out for this type of correction.

That’s a weird thing to argue. To say that a Manhattanite earning $250 K is worse off than someone with a comparable income living in rural Kansas is like saying that someone who chooses to buy a Ferrari is poorer than someone who drives a Honda Accord. Places with high costs of living like Manhattan aren’t expensive because of some law of nature. Manhattan is expensive because a lot of people want to live in a small space. So choosing to live in Manhattan rather than somewhere else is essentially equivalent to buying a luxury good like a Ferrari. Living in the Manhattan area is in and of itself a product or good like any other, and no one is forcing anyone to buy it.

And then here’s another popular yet nonsensical argument:

There is nothing stopping Mr. Buffett or other members of the top 400, top 1% or any other US citizen from contributing more to the IRS.

Uh, okay. Let’s make all of our laws–tax and otherwise–completely optional. Only the liberal wealthy people who really want to pay for a solvent, functioning society need to pay taxes. All of the other rich people get to enjoy the benefits without incurring any of the cost. Do people really not understand the core concept of a public policy? When someone asks for a speed limit to be lowered because children play in their neighborhood, does anyone meet that proposal by saying, “There is nothing stopping you or other concerned parents from driving slower?”

Gracious, y’all. We don’t need to agree, but we can at least try to make some sense.

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