Taxation? No Way!

Taxation? No way!

Imagine that you are in a band. You and your friends practice night and day and play for very little money. You post your songs online and slowly gather a following. One day your friend’s aunt dies and she receives enough money to fund the creation of an album. You gain additional popularity and are able to play in better and better venues. Fans love your music and go out of their way to pay for your music rather than pirating it. After years of hard work, your fans reward you with so much money that your salary for the year is $250, 000 and next year your salary is projected to grow to $500, 000.

All seems to be going well but you open the newspaper and read editorials demanding that people who make $250, 000 and above pay more taxes. You never thought about it before but it seems that you should be the one deciding what you want to do with your money, not the government. After all, your fans freely gave you their money in return for your music, which you created through years of hard work. If your fans did not want you to have this money then they would not have given it to you. If someone gives you his or her money by what right does someone else get to take some of it?

Group Discussion Question: What do you think about this thought experiment? Do you agree with the author’s point of view on taxation? Why or why not?

Taxation? Absolutely!

Imagine that you wake up to find yourself in a world where the amount of money you were able to get was decided by a disembodied invisible hand. You and the others who live in this world guide this invisible hand through your individual consumer decisions (i.e. what you decide to spend your money on) but cannot discuss and decide together how you would like the invisible hand to distribute money. However, despite or rather because of the lack of collective control over the invisible hand it creates a thriving society. In fact as you look closer you notice that this imaginary society resembles our own; new creations are constantly made through advancements in technology.

The resemblance with our world is uncanny and you soon realize that this is our world. Some who work really hard are able to get the attention of the invisible hand and are rewarded with large amounts of money while others who work just as hard are ignored. While it is apparently neutral, the invisible hand appears to enjoy enriching a few but impoverishing others. Further damaging for its claims of neutrality, those who are enriched are better able to attract the attention of the invisible hand and further increase their wealth while the hard work of those who are impoverished goes unnoticed.

At times those who were rewarded fall out of favour with the invisible hand and those who were impoverished take their place. However, despite this change there always remains a group that has most of the money and another group that has very little, despite their hard work.

You are then approached by a fellow named Ron Jawls who tells you that the invisible hand is actually just a human creation and that we could create a fairer world if we wanted to. He asks you to imagine that you are not yet in the world but are standing outside of it and before you are born into the world you have a choice: you can either keep the world as it is, controlled by only the invisible hand, who may or may not favour you or you can tax the wealthy in order to give money and provide health care and education for those who are not favoured by the invisible hand.

Group discussion: You do not know if you will end up in a wealthy family, in a good part of town or even if you will be blessed with the abilities you currently possess. Do you choose to let the invisible hand decide your fate or do you join with others to collectively influence income distribution through taxation and transfer wealth from the rich to the poor?