Wednesday, May 9, 2012

Cicero, Hercules, and Taxes

This morning I was impressed by what Cicero said in De Officiis (On Duties):

"For a man to take something from his neighbor and to profit by his neighbor's loss is more contrary to Nature than is death or poverty ... [for] injustice is fatal to social life and fellowship between man and man ...

But this principle is established not by Nature's laws alone (that is, by the common rules of equity), but also by the statutes of particular communities ...

In like manner it is more in accord with Nature to emulate the great Hercules and undergo the greatest toil and trouble for the sake of aiding or saving the world, if possible, than to live in seclusion, not only free from all care, but reveling in pleasures and abounding in wealth ...

It follows that man, if he is obedient to Nature, cannot do harm to his fellow-man ...

If the individual appropriates to selfish ends what should be devoted to the common good, all human fellowship will be destroyed." [de Officiis, translation by Walter Miller, book III, sections V and VI]

First, an apology to women, for surely while Cicero speaks only of men the same observations apply to women.

Marcus Tullius Cicero was a product of his class, the Roman nobility, and of his times. He admits to mainly just putting into Latin what the wise men had written about in Greek. He writes this work after the fall of the Republic, which was a sort of very limited democracy, and which had given way to a dictatorship. He does not think the vast estates of his fellow Senators should have been seized, broken up, and given to ordinary Roman citizens. That is the particular theft he begins decrying. He does not worry about the thefts that led to those vast estates in the first place. He probably owned slaves.

Given that, I still think Cicero is speaking some core truths. You don't need the gods (whichever ones your culture believes in) to form basic ethical principles. You should work for your own good. You should not steal from, or defraud, other people.

People don't get rich from working. They can prosper (or not) from working, but to become wealthy one must either steal, defraud, or in the very least overcharge people.

Looking back through human history, the best way to cut down on the fraudulent acquisition of great wealth is through tax policy. When the U.S. was last truly prosperous, in the 1950s, we had a good tax policy. The maximum tax rate was near 90%, but that only applied to the richest Americans. CEO's of large corporation focused on running their companies for the benefit of everyone (shareholders, employees, and customers) because paying themselves millions or billions of dollars would have just meant a visit from the IRS. Despite that there was no shortage of rich people in 1961, when President Kennedy began his drive to lower tax rates on billionaires (coincidently, his father was a billionaire, and he would have become so by inheritance if he had lived longer).

Perhaps the 90% rate of the Eisenhower Era was a bit onerous, but would you rather make $30,000 a year and pay 15% in federal taxes, or $1 billion a year and pay 90% taxes? Unless you are real deficient in math skills, you'll take the 90% tax rate.

Hopefully, as a thoughtful person, you will support my Log Tax Plan. I hope to find some member of the House of Representatives who will introduce it after the fall elections.

Even our Founding Fathers, rich by colonial standards as some of them were, opposed the creation of a nobility in the U.S. They called it a titled nobility in the Constitution, but reasonable people realized that great wealth, even without a title like Baron or Duke, is a threat to a democratic republic like ours. The federal inheritance tax was implemented largely to prevent family fortunes of too great a size from spanning generations.

The corrupting influence of inherited wealth, and of rapidly accumulated wealth by robber barons like Jobs, Whitney, Gaits, Bezos, Page, Brin, and Zuckerberg, have overridden the safety features our economy and government formerly enjoyed. Taxes on vast inheritances can be as low as zero, taxes on capital gains are only 15%, and marginal rates on wages are lower than any time since the 1920's.

These low taxes on the rich have not resulted in job growth or economic prosperity.

Meanwhile the U.S. military and homeland security apparatus have run up vast debts that ordinary American workers, while struggling to keep a roof overhead and feed their dependents (often now including their senior parents), are expected to pay off.

The system is crazy. It is against Nature. If it is not fixed soon, expect it to crumble into Chaos.

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