In the past 20-plus years, I’ve seen all sorts of arguments for class-warfare taxation.These include:
- President Obama says he wants higher tax rates for fairness, even if the government doesn’t collect any revenue.
- Rich leftists say they want higher taxes because they can afford to pay, but then refuse when offered a chance to cough up some cash.
- Elizabeth Warren supports higher taxes because government made it possible for rich people to succeed.
- Warren Buffett wants a big tax hike because…well, because he’s bad at math.
- Some leftists support higher taxes because they assume that rich people obtained money dishonestly.
- The New York Times wants higher taxes on the rich in order to enable higher taxes on the middle class.
- The President said higher tax rates are acceptable because sometimes “you have made enough money.”
I suppose leftists deserve credit for being adaptable. Just about anything is an excuse for soak-the-rich tax hikes. The sun is shining, raise taxes! The sky is cloudy, increase tax rates!
But if there was an award for the strangest argument in favor of higher taxes, it would probably belong to a group of academics who have concluded that “progressive” tax systems make people happier.
I’m not kidding. There’s a new study making that assertion. Here are some passages from an announcement by the Association for Psychological Science.
…a new study comparing 54 nations found that flattening the tax risks flattening social wellbeing as well. “The more progressive the tax policy is, the happier the citizens are,” says University of Virginia psychologist Shigehiro Oishi, summarizing the findings, which will be published in an upcoming issue of Psychological Science, a journal of the Association for Psychological Science. …Well-being was expressed in people’s assessments of their overall life quality, from “worst” to “best possible life,” on a scale of 1 to 10; and in whether they enjoyed positive daily experiences (such as smiling, being treated with respect, and eating good food) or suffered negative ones, including sadness, worry, and shame. …The degree of progressivity was measured by the difference between the highest and lowest tax rates, corrected for such confounding factors as family size, social security taxes paid, and tax benefits received by individuals. The results: On average, residents of the nations with the most progressive taxation evaluated their own lives as closer to “the best possible.”
The actual study isn’t available yet, but the release from APS screams junk science – especially since a study of American states found that high taxes lead to unhappiness.
But we should be skeptical of all this research. There are myriad pitfalls, including cultural differences.
But the most obvious problem is causality. Even if we assume it’s possible to make accurate cross-border comparisons of happiness, is there any reason to think that progressive tax rates are a causal factor, one way or the other? Heck, we may as well assume that crowing roosters cause the sun to appear.
Here’s one very obvious guess about what may cause the APS results. I’m guessing that people in Sweden and Denmark say they are happy. That’s not too surprising. They live in rich countries. But those countries became rich before the welfare state began and before high tax rates became the norm. So does it make sense to say they are happy because of high tax rates?
People in Mongolia and Bulgaria, by contrast, probably aren’t as happy as people in the Scandinavian nations. They live in relatively poor nations that suffered from decades of communist enslavement. In recent years, though, both nations implemented flat taxes in hopes of spurring growth and catching up to the rest of the world. But progress doesn’t happen overnight. So does it make sense to say that they are unhappy because the tax system isn’t “progressive”?
Ironically, the APS release does include the following results.
Higher government spending per se did not yield greater happiness, in spite of the well-being that was associated with satisfaction with state-funded services. In fact, there was a slight negative correlation between government spending and average happiness.
Since we do have good evidence that economic growth suffers as government expands, this conclusion makes a lot more sense.
But I’m still skeptical about happiness studies. Seems like they might suffer from the credibility issues associated with global warming research.
Actually, I retract that statement. Happiness research may be imprecise and susceptible to bias, but I doubt people in that field would ever make a claim as absurd as global warming causes AIDS. And I doubt they would try to do something as stupid as rationing toilet paper or create something as silly as a hand-cranked vibrator.
Progressive Taxation is Financial Murder of the Middle Class. This is my experience from having lived in India (1947-1958) and then in the USA from 1958 to the Present. Progressive Taxation is PLUNDER as defined in Frederic Bastiat’s classic book “The Law”.
The Taxpayers probably funded this crazy research by a grant given by the USSA (United Socialist States of America) Government.
Corellation does not equal causation. That’s a rule of thumb in statistics.
Unless you’re a progressive. In which anything goes if it somehow convinces people to vote for more government and less liberty.
It does make you wonder, though. If these academics received research papers from their students with this kind of shoddy thinking, what kind of grade would the students get?
I might concede that in some cases, an increase in redistribution, and thus a decline in freedom, may, on balance, confer some immediate aggregate increased happiness. However, it also confers the permanent pernicious effect of slower growth.
As your relative prosperity constantly and relentlessly starts diverging toward poverty, how long will you last before you cry uncle? No matter what the initial small and temporary injection of “happiness” was? The Soviets lasted seven decades before they finally cried uncle. The European Union,… we are closer and closer to finding out. Things move ever faster as humanity advances, so future rises and declines, I expect to be even swifter.
Redistribution is the core and enabling force of statism.
Redistribution is not the only pernicious effect of statism – but it is its wellspring
Even without analysis, most people sense that statism/collectivism is — in anything but the short term — much less efficient than individual liberty. However, the hope of even temporary, fleeting prosperity though redistribution is too much of a temptation to pass up.
This is why some countries, like Sweden and Denmark have been able to survive under strong redistribution, by managing to keep most other statism at bay.
But make no mistake, they are living consuming competitiveness past, as Mr. Mitchell points out. Now, under the decreased incentives of a flatter effort/reward curve these countries too are riding a substantially subpar one to two percent annual growth trendline, in a world that constantly and aggregately grows three to five times as fast. They too are on a decline march to being absorbed into the worldwide average like the rest of Europe.
So is the US which has now embarked on the irreversible track of adopting a European Voter mentality and associated European growth trendline to decline.
The future will be elsewhere. The countries that offer superior economic freedom are still small, but with great demand from declining western world refugees, the circle and size of the free world will expand. Overall economic freedom in the world is on the upswing, even as western countries, encompassing a once small privileged minority of human beings, embrace the vicious cycle of statism (most notably the once aberrant outlier of Freedom, the US). So the future of the world as a whole never looked better — as the aggregate world growth trendline has reached levels unparalleled in human history, and billions of people see their standard of living increasing.
The cranky and unappreciative of capitalism American middle class is firmly on its way to becoming an irrelevant spec in world prosperity as they adopt a European mentality and, in the process, unleash the irreversible cycle of clobbering meritocracy and replacing capitalism with crony socialism. They will just keep complaining that it is hard to keep a roof six times the size of the average world roof over their heads,… that it is hard to have three mid size cars per family, which is again about six times what the rest of the world has,… it is in general hard to keep enjoying six times more consumer goods and services compared to the rest of the world, when flatter effort reward curves and the innovation stifling effects of an ascending collectivism are dropping your production level to only four times the world average. That is the simple arithmetic of perpetual compounding decline — caused by sub-par growth rates. Trying to go against this fundamental fact with redistribution will only hasten the decline through even slower perpetual slow growth, serious crises once or twice per decade — as fundamentals reach the point of no longer being able to be contained — or both.
Regarding hand cranked vibrators…
Human muscle energy is one of the least cost efficient and carbon footprint intensive forms of energy, regardless of whether this is applied to the comical un-scientific hippie ritual of biking to work on earth day, or making sexual self-pleasure entirely self-sufficient.
The amount of calories expended by humans to do an activity that can be done by machines, almost always requires more money and a larger carbon footprint than the equivalent activity done by machine.
Take the proverbial bike ride to work on earth day: Say, 20 miles roundtrip (*), 1.5 hours of biking, about 1000 calories (an additional one third of typical daily food intake). Equivalent gas and car wear expenditure for 20 mile trip: about $5 (including 3/4gal of gas). Can you buy or prepare 1000 calories of human food for $5? — and at a smaller carbon footprint than the ¾ gal of gas — in the typical mixture of foods consumed by the average developed world citizen and the manner these foods are most efficiently procured?
(*)Other commuting distances scale proportionately to the same conclusion. Walking and running (as I, the carbon brute, often do) are even less efficient.
If higher taxes correlate with happiness positively, and lower spending negatively, perhaps what really cheers people up is a balanced budget… testing may be required.
“a study of American states found that high taxes lead to unhappiness.” Forget unhappiness; they lead to people *leaving*
[…] though I’m not sure that I trust that kind of subjective research since there’s also a study showing people are happier in high-tax nations. (at least, unlike Brazil, nobody in the U.S. is talking about making happiness a responsibility […]
[…] though I’m not sure that I trust that kind of subjective research since there’s also a study showing people are happier in high-tax nations. (at least, unlike Brazil, nobody in the U.S. is talking about making happiness a responsibility […]
[…] states, though I’m not sure that I trust that kind of subjective research since there’s also a study showing people are happier in high-tax nations. (at least, unlike Brazil, nobody in the U.S. is talking about making happiness a responsibility of […]
[…] states, though I’m not sure that I trust that kind of subjective research since there’s also a study showing people are happier in high-tax nations. (at least, unlike Brazil, nobody in the U.S. is talking about making happiness a responsibility […]