The Need for Progressive Taxation

Last week, I overheard a conversation amongst 5 co-workers, who all happen to be Republicans, talking about an interview with Warren Buffett.

An interview with Tom Brokaw broadcast this morning on NBC's Today Show gave Buffett an opportunity to direct attention to the unfairness of a system that taxes income earned through labor at a higher rate than income earned through investments.

"The taxation system has tilted toward the rich and away from the middle class in the last ten years. It's dramatic and I don't think it's appreciated. And I think it should be addressed."

Buffett asked the employees in his office to calculate the percentage of their income that they pay in income and payroll taxes. Buffett, who said that he does his taxes without an accountant and does not use tax shelters, revealed that he paid 17.7 percent of his income in taxes, while the average for his office staff was 32.9%. None of Buffett's employees paid as low a rate as he did.

All of these Republicans agreed that this wasn't fair and that income earned through investments should be taxed at a higher rate than income earned through work. It was good to hear this idea of progressive taxation being discussed.

George Lakoff explains why we need a system with progressive taxation.

Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors — those who have accumulated enough money beyond basic needs so they can invest — make much more use, compound use, of the empowering infrastructure provided by everybody's tax money.

The wealthy have made greater use of the common good—they have been empowered by it in creating their wealth—and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.

This is the fundamental truth that motivates progressive taxation.