When they attack Mitt Romney and Warren Buffet for not paying enough taxes because they are taxed around 15-20%, I began thinking about what Obama said tonight: it is common sense that everyone should pay the same percentage? Many tax systems are even progressive and require higher income earner to pay proportionally more. I realize that what I’m going to write is like swearing in the church in Sweden but I don’t agree with the common sensicality with such progressive tax systems. A wealthy person does not cost society more than a less wealthy. Thus lack of common sense in same tax rates because the total amount paid by a wealthy person on a lower percentage could very well be higher than that for a less wealthy person. Rather they provide vital investments with their fortunes that benefit society apart from costing society the same per capita. They often sit on more information that society benefits from as well.
So what is going on in Scandinavia where people think you should pay more if you are richer. Does a rich person get anything for this, like for example power and influence? In this case people that have other talents than becoming rich should in some fashion be rewarded likewise for justice to reign? SCB.se has data on where tax money comes from. The bulk does not come from the richest fraction but from the middle classes. However, in the US the top 1%, earning more than $500,000 per year, control 40% of the wealth. The bulk of the tax probably still comes from the middle classes in the US. The question then is if it is fair that the richer pay a higher percentage? Milton Friedman advocated a flat tax rate as did some of the Republican presidential candidates lately. Such a tax system has the advantage of being simpler and supposedly bringing in more money per tax rate per person. In other words it is supposedly more efficient. It is possible to think that lower income takers can have less tax but higher income takers the same as the middle class or less? The US has, according to Wikipedia, the most progressive tax system among OECD countries but on a lower average level. Progressivity is derived from the “ability to pay” and as I suggested that is good at the lower incomes but does not necessarily make sense in the higher range. Why should rich and successful individuals give their money to the state instead of managing them themselves? As Lincoln said: government should only do what the individuals cannot do themselves. What is flying around right now in the debate is the notion that it is necessary to tax the rich higher percentages for the state finance s to function. What would this mean? It would mean that we could not live without the rich—an interesting thought.