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March 03, 2003

A Modest Proposal Regarding Taxes


As we are coming up on tax time, and I’m going to be paying a bundle this year (having stupidly sold some real estate and ostensibly—but not really—made some money on the deal) I thought I’d psych myself up for writing that check by researching the virtues of the progressive income tax on the Internet.

Yes, there are websites and documents devoted to this topic (the Internet, as I have often noted, surpasseth all understanding.) One document that caught my roving eye was an essay by Richard A. Musgrave, self-described dean of public finance economists. It had been written presciently in 1989—back when the top tax rate was a lowly 28% —and not only had defended the institution of a progressive income tax but urged that the top rate be raised to 40%. Apparently some sort of black magician, Mr. Musgrave had to wait only four years to see his proposal raising taxes on high income individuals come to pass--and at almost exactly the number he suggested. (Jeeze, kind of makes you glad his fingers didn’t slip and type 50%, or maybe 80%, huh?)

In any event, since I’m quite scared of irritating Mr. Musgrave—who, among his other accomplishments, is still with us despite being born in 1910 (more evidence of Satanic powers, in my book)—I want to proceed to gently suggest an amplification of his undoubtedly completely and utterly correct views. He describes the key virtue of income tax as follows:

The income tax as a direct and personal tax permits tax liabilities to be adjusted to the taxpayer’s ability to pay. That ability is fairly measured by a comprehensive definition of income…The income tax as a direct tax is highly visible to the taxpayer and hence a steady reminder of the quality of public service that should be provided in return. It thus promotes an efficient public sector, unlike “invisible” product taxes such as a value added tax.

Here, while duly noting the godlike genius of Mr. Musgrave, I must ask if he hasn’t skipped past a key point. Does income actually measure ability to pay?. Even if it does, it certainly doesn't measure ability to earn. Perhaps because at the very moment I was reading this I was slacking off, noodling on the Internet, rather than going out and taking that night shift job at McDonalds (which I will undoubtedly need to pay my tax bill this year), I became conscious of the possibility that people may selfishly choose to make less money than they could!

I understand that economists pretty much assume that human beings are profit-maximizing entities, and I wonder if that may have led even such cosmically gifted (and evidently foresighted) individuals like Mr. Musgrave astray. I’ve recently read studies that suggest that people’s income correlates positively with the number of hours they work, which would tend to suggest that to the extent that such work is discretionary, some people who could be pulling down heavy bread may be choosing not to do so!

Having been persuaded of the supreme, central truth of Mr. Musgrave’s brilliant essay—that the real point of private sector activity is ultimately to fund the public sector—I began to grow hot under the collar at the anti-social injustice of intelligent, healthy individuals choosing not to maximize their incomes (and thus, of course, maximize their taxes!) Why, these slackers are nothing but economic criminals! Choosing leisure, and poetry reading, and going to movies, and spending time with their kids in place of single-mindedly bringing home the maximum bacon they could carry! The scum!

While on the other hand, a group of fine citizens like, oh, investment bankers began looking pretty darn heroic. I’ve known quite a few investment bankers in my day, and while many are quite bright, others are by no means the sharpest tools in the shed. And yet, every last one of them are out there selflessly devoting their every waking hour to shoveling in the cash, and in turn passing it on to Uncle Sam--in many cases, to pay for expenditures on behalf of people who don't work as many hours as they do! My righteous wrath knew no bounds.

And then it hit me. We could easily change the progressive income tax (subject to gaming by selfish, lazy yet intelligent individuals) to a tax that would not be nearly so easy to evade: an IQ tax! Taxing smart but slacking individuals at a 39% income tax rate would motivate them to get their rear ends in motion and make some real money—otherwise, they’d starve! (As rightly they should.)

This would involve only a small rewriting of Mr. Musgrave’s deathless (one hopes not in the literal sense) prose:

The IQ tax as a direct and personal tax permits tax liabilities to be adjusted to the taxpayer’s ability to earn. That ability is fairly measured by a comprehensive definition of IQ…The IQ tax as a direct tax is highly visible to the taxpayer and hence a steady reminder of the quality of private effort that should be provided in return for the public sector’s largesse. It thus promotes an efficient private sector, unlike “invisible” product taxes such as a value added tax.

So join me in my campaign to replace the outmoded income tax with today’s up-to-date, cutting edge IQ tax.



P. S.—Feel free to send your tax-deductible contributions to me, care of this web site. I’ll put ‘em to good use, I promise. I’ve still got that tax bill, remember?

posted by Friedrich at March 3, 2003


I am afraid that this post was much too clever. Now you will have to pay the hefty IQ tax on top of the already heinous tax bill. Also, a bit stiff requesting responses here - might those rising to the bait, proving that they are possible masters of the English language, be subject to surreptitious scrutiny by IQRS agents?

Posted by: Felicity on March 3, 2003 11:41 PM

WhoHoo, so all I have to do is bomb an IQ test? Not that that would ever occur to me, of course!

Posted by: John on March 4, 2003 12:31 AM

You left out the part about the evil people who work (whether for themselves or other people) without any hope of getting paid for it. They're a bunch of tax slackers, too.

Posted by: Nancy Lebovitz on March 4, 2003 9:23 AM

As long as we're going to put things on this basis, how about caller IQ? Now that would be useful.

Posted by: Aaron Haspel on March 4, 2003 5:06 PM

What appeals to me about the IQ test is that -- given the direction my mental abilities seem to be taking as I advance further into middle age -- I'll be paying less and less every year.

Posted by: Michael Blowhard on March 5, 2003 12:41 PM

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