Tuesday, January 03, 2012

Things I did not say

One of the odd things about the blogosphere is that I often find myself being surprised by positions that are attributed to me.  For example, Matthew Yglesias says:
Many proponents of low taxes on high-income individuals are "supply-siders" who claim that such a tax policy will maximize overall welfare. But other proponents of low taxes on high-income individuals such as Greg Mankiw deny that this is the relevant consideration, and simply say that progressive taxation is immoral.
If you follow the link that Mr Yglesias gives here, you will find it is to my paper "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber." Does this paper say that progressive taxation is immoral? No. In fact, while advocating what I call a "Just Deserts" approach to taxation, it says the following:

Public goods and Pigovian subsidies lead naturally to a tax system in which higher income individuals pay more in taxes. Surely, those with higher income and greater property benefit more from a governmental system that protects property rights. Moreover, the monetary value attached to other public goods (such as parks and playgrounds) and to positive-externality activities (such as basic research) very likely rises with income as well. Indeed, if the income elasticity of demand for these services exceeds one, as is plausible, a progressive tax system is perfectly consistent with the Just Deserts Theory.
What about transfer payments to the poor? These can be justified along similar lines. As long as people care about others to some degree, antipoverty programs are a type of public good. [Thurow 1971] That is, under this view, the government provides for the poor not simply because their marginal utility is high but because we have interdependent utility functions. Put differently, we would all like to alleviate poverty. But because we would prefer to have someone else pick up the tab, private charity can’t do the job. Government-run antipoverty programs solve the free-rider problem among the altruistic well-to-do.
Does that sound like someone who believes that progressive taxation is immoral?