Exposition of a New Theory on the Measurement of Risk (1738) [pdf]

If expected utility is actually logarithmic, then that would an imply that a flat tax is actually fair. But a real flat tax, not the kind some Republicans have advanced in the past. It would appeal to worked/earned income and capital income.

I wonder what kind of findings there are indicating that progressive is actually more fair than flat? Perhaps most of the pro-progressive argument is just to counteract other regressive elements.

ssivark2• 7 years ago

You’re arguing as if the goal of taxes is to “punish” people and therefore taxing everyone the same fraction results in the same did-utility. Needless to say, there are ostensibly many other reasons/justifications for taxes.

ravar• 7 years ago

There are arguably two competing directives, one is too get the most revenue per disutility generated, in which case the flat tax is definitely not desirable. But another is fairness, it seems unfair to only make certain people suffer disutility, this logic is commonly accepted when discussing minority rights. So maybe the flat tax is minority rights for the rich? And what societies try to find a middle ground between the two goals?

cies• 7 years ago

Indeed. Taxes suck, bad for trade. But we need some or all spending is by the individual which kind of destroys societies (some services are best provided by-all for-all). No since we need to have taxes,why not tax the "unwholesome" instead of the "wholesome". I mean, nowadays income-from-labour and houses are taxed a lot; they seem pretty essential... Why not tax pollution instead? The market would reward sustainability instead of "easy money by maximizing on the near-free polution". Actually I think it is backwards that we tax wholesome behavior so much; much more than pollution.

burke• 7 years ago

It's true that a flat tax rate results in the same disutility for everyone, and if your goal is perfect equality of disutility, it seems correct.

However, as a counterpoint, following the same theory, preferentially taxing the rich concentrates the disutility in a smaller group: if you add up all the utility values in a progressive tax system you get a higher total result, though the individual results vary.

EDIT: e.g. https://i.imgur.com/DppEKTT.png

Nydhal• 7 years ago

Must Read:

Peters, O. (2019). The ergodicity problem in economics. Nature Physics, 15(12), 1216-1221.

https://scholar.google.com/scholar?cluster=16380731883124301...

Exposition of a New Theory on the Measurement of Risk (1738) [pdf]

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