Friday, June 18, 2004

Defining 'Fair Share'

A hypothetical group of friends go out for dinner and drinks. Nick, Gabe, Ashton and Abigail all have steak and salad, share a bottle of Merlot and all have equally-priced desserts. The bill comes to $160.00, including tip. How much does each pay?

Any reasonable person, in the absence of evidence about any overriding prior agreement between any of the diners, would say $40.00 each.

OK. So far so good. Let's change the scenario a bit. What if Abigail had only a salad, a bottle of water and skipped dessert? For the sake of argument, let's say the bill still totaled $160.00. Should each diner still pay $40.00, even though Abigail only ate $15.00 worth of food? Of course not. Each diner should pay for what he or she ordered. That would be fair.

What if there were 200 diners? 25,000? 30,000,000? 320,000,000? Would each person still pay for what he or she actually consumes, or would the larger number of diners somehow change the definition of what reasonably constitutes each person's fair share?

If we can stipulate that there would be a near-instant system of calculating each person's share, then the number of diners is really irrelevant. Each should still pay for what he or she personally consumes. If some diners were there as part of a family, or if some were dating others in the group, then prior arrangements or understandings might exist that would have some diners voluntarily paying the share of others.

What if it's not a restaurant meal that we are talking about? What if we are considering, say, childcare expenses. Or perhaps healthcare expenses. What about educational spending? Does the nature of the expenses have any bearing on what is 'fair?'

I have one child, aged eleven. Is it fair that I pay, through taxes, the educational costs of others with more children? No!

What about health care? I went to a doctor's office once, when I was six years old, to get a certificate saying that I was well enough to return to school after a bout of whooping cough. He didn't treat the malady. My mother did that, using various home remedies. He just agreed that I was well enough to return to school. The next time I attended a doctor's office was when I was twenty-two and needed a physical examination for admission to university as a 'mature student.' To pay for my 'fair share' of the expenses of the vaunted Canadian health care system, I have paid through taxes, over the years, many times what my true 'fair share' would be. At age 58, I still rarely go to see a medical doctor.

The political left is braying constantly about everyone paying their fair share. The implication is always that the 'rich' are somehow not paying their fair share of the cumulative tax burden. They have more, earn more, so they should pay more, even if they don't consume more. Does anyone, anywhere, with more than three or four living brain cells actually believe that?

Let's go back to our hypothetical diners. If Abigail earns ten times as much as her three friends, should she pay a correspondingly larger share of the meal expenses? No. Should she pay ten times as much in income tax? That would certainly be the lesser of a number of tax evils, since it would at least mean that she was paying the same percentage of her wages in tax as did her friends. The reality, however, in our graduated income tax system, is that she would be in a higher tax bracket than her friends. Because of her higher resultant marginal tax rate, she would pay not ten times more but some multiple higher than ten, depending on actually how much money she earns.

Is that fair? Not by any sane definition. Let's call the system what it is. Legalized theft. Extortion.

Somehow, we are told by the left, it is perfectly OK for the 'poor' to pay little or no taxes, while the 'rich' must pony up much, much more than the value of what they actually consume in the way of various public 'services.' If the cost, per person, to live in a country is (hypothetically) $20,000 per annum, is it fair that some people pay virtually nothing in taxes while others pay tens of thousands, or hundreds of thousands, or millions of dollars? No.

Let's understand what is going on. Anyone who is contributing less than what it costs to pay his or her share of the cumulative cost of support, is getting charity from those who contribute more than his or her share. Let's stop bleating about how the rich are not contributing their fair share and be grateful that they are helping pay the way for everyone else.

Now that would be fair.


  1. Where would you place a zillionaire like Colonel Walton,the user of less than minimum wage workers to amass his great fortune? Smiling all the way to church, with the warm feeling he is justified in exploiting the poor, because he is providing jobs for many unemployable fellow citizens. When middle class guys like us start feeling sorry for ourselves because our meagre savings are being drained to pay for education, medicare, drugs for the elderly, and whatever other "Social" necessities deemed worthy by our chosen leaders, ask yourself, now that you are in a position of financial security, can you honestly say, you achieved it all by yourself. Isn't it fair to admit there may have been times, you used the system for your own personal advantage?

  2. Sam Walton gave consumers what they want most -- low prices and customer support in the case of product failure. There are Walmarts everywhere. They wouldn't exist without millions of satisfied customers.

    Sam Walton gave workers what they want -- jobs. I have seen workers in Walmart stores that would be unemployable elsewhere. Walmart trains them and puts them to work. Is it not better to be employed at a low wage than to be unemployed instead?

    Some workers will never advance beyond employment at Walmart, but while they are there, they are gainfully employed and can be proud that they are self-sustaining. Other workers are using Walmart to gain experience so that they can use it to advantage elsewhere. Walmart (and McDonald's and many other 'McJob' providers) are a great place to learn. I worked at the S. S. Kresge company briefly in the 1960s and although I was only making $48.00 per week (a low wage, even then) I considered it as a way to get much-needed work experience. I was grateful for the opportunity.

    If you are referring to workers at offshore suppliers and contractors of Walmart's, that is a different story. If the workers are being chained to their stations (literally or figuratively) against their will, then that is wrong. If the workers are there voluntarily, it is because the job, whatever the working conditions or remuneration, is better than what they would get elsewhere. We cannot compare wages and working conditions in third world countries to what we are used to here. In many places in the world, people would sell their first-born child in order to get a job at what we sneeringly dismiss here as a 'sweatshop.'

    Check out British history. There was never any shortage of workers, whether adult or child, in the dingy factories of the early industrial revolution era. Willing workers, why? Because working is these dumps was still better than the alternative. As workers slowly managed to save a few pence, they bought themselves a better lifestyle. They bought homes or even started their own businesses. It didn't happen overnight, because things seldom happen that way. Still, generation after generation things got better.

    Did I ever use the system to my own advantage. Yes, I did. I actually collected unemployment insurance for several months once when I was unemployed and couldn't afford to eat and pay my rent. I was deeply ashamed of myself at the time and I regret that lapse to this day. I should have tried harder to find a job.

    I don't resent it when those genuinely in need, those who have tried every other avenue, temporarily accept public funds in the form of welfare or unemployment benefits. I do mind it, very much, if I am constantly berated for being a businessman, a reviled capitalist, all while those bleating the loudest have their collective paws in my pockets.

  3. I am from the UK but I came across this post by accident.

    It seems to me that you are

    a) not taking into account the disproportionality of a person on a lower income's living costs as a percentage of their earnings compared to your own.
    b) not considering ALL the shared services that your taxes pay for or ignoring the services that you benefit from.

    Just like a business, there are relatively fixed overheads and variable costs related to living. Therefore, the lower your salary the greater the percentage of your salary will have to go towards covering your fixed overheads. A simplistic fix rate tax system that does not take this into account can therefore be considered as "unfair" in as much as it will penalise people at the lower end of the salary scale disproportionately.

    For example, if you earn $10,000 and your living costs are $8,000 a 10% rate of tax will leave you with $1,000. If you are earning $100,000 your living costs will be higher but it will be reasonable to assume that you could get by with say $50,000 of living costs. Therefore, even a 35% rate of tax will leave you with 15x more left over capital.

    Furthermore, the wealthier you are the more shared resources you use up. Is it fair that you pay as much as (or only a little more than) people who can't afford to own a car for the use of the roads or should you be charged for each mile you drive? or for each mile you fly (if you travel by plane much)? or for each litre of pollution your generate which will have to be cleaned up by some tax funded body or other?

    Also, what about your military? Should you not pay a higher percentage towards their upkeep? After all, as their role is ultimately to protect the citizens of your country and their interests, haven't you got significantly more to lose than someone with less assets? If you are being fair minded, shouldn't you therefore pay an amount directly proportional to the value of your assets being protected?

    I think you will find that, if you took into account ALL of the benefits that you enjoy as a result of paying tax, as a wealthier individual, you will probably on average be paying less tax now than if you did try to itemise every little thing.