Adam Smith speaks: a fair tax is a progressive tax!

As an update to my piece in Blue Oregon, and a rejoinder to those who objected to my use of the term "fair" to describe progressive taxation, here are some thoughts on tax equity, first from the patron saint of capitalism:

“The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state . . . . [As Henry Home (Lord Kames) has written, a goal of taxation should be to] ‘remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.’ ”

Adam Smith
AN INQUIRY INTO THE NATURE AND CAUSES
OF THE WEALTH OF NATIONS (1776)

And this from the Institute on Taxation and Economic Policy:

"A fair tax system asks citizens to contribute to the cost of government services based on their ability to pay. This is a venerable idea, as old as the biblical notion that a few pennies from a poor woman’s purse cost her more than many pieces of gold from a rich man’s hoard."

That brings to mind Molly Ivins.  In her book Bushwhacked, she recalls a wealthy friend saying that if he paid $600,000 in taxes on a $1,000,000 income, that would leave him a tidy $400,000. 

"And you know what?" he said.  "I'm still rich." 

Lastly, to those who argue that "proportional", or flat, taxes are fair, here again is what the Institute on Taxation and Economic Policy says:

"Some believe that a proportional, or “flat,” tax structure is fair. They argue that if everyone pays the same share of income in taxes, then everyone is treated equitably.  But this view ignores the fact that taking the same share of income from a middle- or
low-income family as from a rich family has vastly different consequences for each. Low-income families must spend most (or all) of their income just to achieve the most basic level of comfort. Even middle income families spend most of what they earn to sustain only a modest standard of living.   A tax on these families can cut directly into their quality of life.  In contrast, the same tax will hardly affect the life style of the wealthiest families at all."

Comments

[Jeffrey]

I am all in support of a progressive tax IF people at the low end pay in... Currently, about 1/3 of people pay NO TAX because of their tax bracket (I am meaning the LOW END). Why should I subsidize them?

I would support 40% for all income over $100,000. 30% for between 50~100 thousand. 20% for under 50K. No exemptions. No rebates or child tax credits. I could support this.

[Sorry]

Sorry, you inaccurately cited The Wealth of Nations here. Smith supported a higher tax rate for the wealthy:
"It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion."

[send gifts to Pakistan]

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