It is possible to change one's status through a combination of work, circumstances, opportunity, and luck, but an absence of one or more of these generally means that change is unlikely or even impossible. Working hard is not enough, otherwise how can we explain the millions of people who work multiple jobs simply to survive. Circumstance allows a person the means by which to pursue improvement, but without the right circumstances they can not do so. Opportunity connects closely to circumstance, insofar as this is what needs to come along to allow those with the right circumstances to pursue it. Without an opportunity, there can be no progression from one state to another. Thus we might consider the circumstance element to be basic financial viability, education, health, credit-worthiness, support from family, or indeed the system in which they live. Luck, largely comes down to all these elements lining up at a time when the individual can exploit them, and see that they can do so.
How does this all relate to taxation? Let us consider three farmers from an imaginary place 150 years ago, in a community of 500 farmers. For the purposes of simplicity we shall assume that the land each one works produces the same volume of output per acre, i.e. 100 gross units of 'stuff'.
We have a small farmer, who has 349 neigbours just like him. We have a medium size farmer with 139 in his subset, and a final large land-owning farmer who is one of a group of 10.
The small farmer has an acre of land, his own labour and that of his family. He is able to produce precisely the amount that he needs to survive, and to cover a contribution taken from him by the local community for storage in case of lean times (15% of gross output). He works every hour he can, and his offspring labour with him to allow the group to survive. They can not afford the luxury of considering their health as a priority over maintaining their circumstances, nor an education beyond that which allows them to perform the tasks demanded by their life. Their entire life demands work to survive. If the crops fail they will be reliant on the community in the short term, and if a long term mishap were to befall them, they are at the mercy of their neighbours.
Another has three acres of land upon which he works. He produces crops sufficient for his own needs and those of his family. He is able to afford to employ others from neighbouring communities to work the land alongside him in order to make use of his land's capacity, thus maintaining his greater level of comfort. He can afford greater care for his well-being, and to buy an education for himself and for his offspring, that they might take over from him in future, or establish their own acreage in a similar model with his support from the wealth he accrues over time. He contributes a slightly greater proportion of his produce (20% of gross output, ergo 4x his smaller neighbour's total), but his greater margin in resources and capacity means this does not limit his personal comfort at all, nor his capacity to generate personal wealth (so that he may support aforementioned successors in their endeavours). Lean times are sustainable on a medium-term basis, and those not created by nature are less likely to befall them due to their greater access to resources that can prevent such situations being problematic (home maintenance, replacing machinery, etc).
The final farmer has thirty acres. He requires the labour of others to make full use of the land. He is likely to have a better education than his neighbouring farmers, which his offspring will enjoy too. He can afford the finest medical care for himself and his family to maintain the rudest health. He does not need to participate in the manual tasks required to produce crops, and instead can either enjoy his time in pursuits to his own taste, or indeed pursue another occupation entirely, which generates yet further wealth. He contributes to the communal reserves a slightly greater proportion of his output than either neighbour (25% percent, ergo 50 times his smallest neighbour and 37.5 times greater than the middle farmer), but will never be left wanting, and proportionally enjoys a far greater surplus which generates wealth. In lean times he has sufficient capacity to produce comfortably for himself, still give some to the community, and to maintain some growth of wealth both through his land's output and his secondary streams of income that his circumstances and opportunities have allowed.
Farmer 1 survives, barely, and is reliant on community for the hard times. His circumstances are severely limited and opportunity rarely or never present. His gross annual contribution to society is 15 units, and he is likely to need far more than his contribution back in an emergency in order to survive. Farmer 2 survives comfortably, may need a little assistance now and then, but can provide for himself and his family to maintain their relative comfort. His annual contribution is 60 units, and in the same emergency he would not need as much to survive if he has successfully created a personal reserve, and if not then his demands are less significant in proportion to his long term input. Farmer 3 enjoys great personal comfort and the trappings of wealth, rarely if ever requiring assistance, and with the personal resources to guarantee survival in all but the most disastrous of catastrophes that lines up not only a physical destruction of his capacity to generate wealth but his reserves too. He contributes 750 units a year to the community, and is, therefore, the most significant provider of resources individually, and would require only a fraction back in an emergency.
The question is to what degree should the community take from each in order to survive lean times, and at what point should the burden be shifted from the smallest producer of economic output to the largest. What is fair?
If we collectively agree to allow the smallest farmer to contribute only 12 units he has a fifth less burden in total, and increases his ability to improve his lot by 3.5%, which can be invested in health, education, personal luxuries, and savings in case of lean times (thus reducing his burden when these occur). It is a minimal improvement but better than a kick in the teeth and never having light at the end of the tunnel.
The middle farmer has sufficient resources to thrive in the good times, and if sensible can survive in the hard times with comfort. He already contributes more widely with his spending power. The collective agreement is to allow his contribution to remain the same.
The final wealthy farmer can not only live comfortably in the good times and enjoy massive wealth, but still remain in relative luxury when things turn sour. To offset the 3 units no longer being given by the poorest 350, he and his nine rich friends must each increase their contribution by 105 units, representing only 3.5% of their gross output to be added to their existing contribution. Certainly this is more than one poor farmer can produce in a year alone, but given he already enjoys the proceeds of an output that affords him wealth beyond the wildest dreams of all his less affluent neighbours, and still have immense reserves in case of disaster, still able to provide employment to those without a farm at all.
Imagine the difference that could be made to the lives of the poor 350 farmers if their contribution were only 10 units. If the middle class farmers are permitted to still pay the same dues, the rich farmers who represent 3.3% of the community only see their contribution increase by a little under 6% of gross output. Their personal life is not impacted at all, their ability to generate employment remains the same, and only their annual increase in personal wealth is decelerated by a small amount.
With greater personal reserves in the poorest class of farmers, increased access to good health and a better education for their children, greater ability to use their new-found spare capacity to save and to spend locally, the personal and local economies are both boosted. They have better circumstances, and are more likely to be presented with opportunity which can actually be taken, thus swelling the ranks of the middle class, and increasing their contribution to a greater degree still. The middle class are unaffected. The upper class are still unimaginably rich, and merely get richer still at a slightly slower rate than before, but still relatively insignificant compared to any other member of society.
But consider this. The richest farmer is not just likely to produce 100 units per acre, as this protracted example contrived to establish. In reality his greater wealth will afford to him greater access to latest techniques and technology in the farming world to increase his output. His greater share of market presence allows him to either generate more wealth for himself, or cut prices and drive his neighbours out of business, buy their land, and increase his output yet further, and thus increase his wealth further still. His power accrues like compound interest because of the the wealth he gathers, and his fiscal dominance over his neighbours. His influence is vast, and can therefore increase the chances of political decisions favouring him over his neighbours too. His neighbours are gradually becoming employees who are reliant upon him, working the land they once owned in return for a wage. It is in his interests to ensure that his neighbours' stifling share of the collective tax-burden is not relaxed. Despite his protestations, this is not a matter of doing so to prevent his own impoverishment, nor to ensure he has sufficient resources to create new jobs (he never will, since there is a greater return in technological investment that strips jobs away - any job creation is as a result of expansion into the land his neighbours once owned, and re-employing them to do exactly as they did before). Keeping his burden low does not allow his wealth to trickle down, but rather enforces the order that sees his dominance increase economically and politically.
This is the crux of the "fair share" argument in the real world's taxation debates. The rich today argue that they are merely 1% of society and contribute 36.73% of the collective coffers total value. Why should they pay more if the bottom 50% only offer 2.25% between them? It's about proportionality to the income not merely as a percentage point value, but the power that the remaining value has to the individual. If the poorest 50% of people cut their contribution in half, their personal capacity to be able to save, spend, be healthy, increase opportunity for their kids, only reduces the collective total by 1.125%. If the richest 1% of people were to cover this 1.125% of national contribution amongst themselves from 36.7% to 37.825%, the impact upon their wealth and capacity to generate wealth is absolutely minimal when we're already talking vast numbers. 50% of the tax-take on $13k (the average income for the poorest fifth of Americans) is a lot to the person who lives on this tiny amount. 1.125% extra tax-take on $1.4m is a drop in the ocean. Is it fair to make the poorest bleed and suffer to pay the smallest amount when the rich can drastically cut that burden and barely be impacted by the change?
Fairness is found in allowing those in the worst circumstances the opportunity to improve themselves, not pushing the boot down on their throats even harder.
To cut taxes for the rich, and cover this reduction in collective resources by cutting the investment that those reserves make toward services that support the poorest half of society means increasing the burden on the poorest to pay toward what cannot be cut, as a proportion of their income, and take away those elements that directly benefit them most (health and education). The rich have proven time and again that the savings made in tax payments are not reinvested into job creation but instead into stockpiling resources outside of the economy, and creating wealth by putting that money to work in accumulating assets for themselves or shipping jobs elsewhere in the world. This is not fair, it is the antithesis of fair.
Resources:
http://www.ntu.org/tax-basics/who-pays-income-taxes.html
http://www.ctj.org/pdf/taxday2012.pdf
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