The humble libertarian makes an argument for flat taxes in order to quell the state’s tendency to foster class warfare.
with a flat tax, they can’t just pick on the winners anymore. In order to get more revenue, their best tactic would be to incentivize overall growth. Lower trade barriers. Lower the costs of doing business. Encourage real growth.
Exactly. Flat taxes are superior in a democratic government for two reasons 1) they must be kept small, and the lower half of society will make sure that they are kept small. 2) the government must foster growth in order to increase revenues.
Secondly, our rhetoric treats people as if they are in permanent classes, yet we tax income which is highly variable. If we are to tax anything progressively, it should not be income, but balance sheets.
Lastly, there is a point at which one’s possession of and use of capital is a distortion of the market (The Silver Debacle, or George Soros’s Abuses). This appears, at least in round numbers, to occur at its lowest, somewhere near 1000 times the median income, and accelerates from there. Above that position, people are no longer participating in the market. They are governing it. (This debate is a bit complicated for a comment on a blog post.)
So, if our taxes are to include those that are progressive, they should be against balance sheets, with the purpose of getting as many people into the capitalist class late in life as possible.
At least, unless you want private capitalist government rather than a market run by market participants for the benefit of market participants. Large capital concentrations in combination with individual knowledge cannot be applied to ‘the market’ as we understand it, and justify it in the classical liberal sense, as a ‘social good’.