From Julian Sanchez, who has been kind of a featured guest-star here this past week: a look at the moral confusion that erupts when people who voluntarily earn less than they could demand higher taxes from those who are maximizing their earning potential.
Political ideology aside, I’m as likely as the next guy to feel distaste for the high earner who fails to give more than a pittance to charity and carps at higher taxes: It seems obvious someone that well off should be doing more to help the needy. But what about the journalist and the academic and the non-profit staffer who could be high(er) earners but prefer their compensation in the non-taxable form of leisure and job satisfaction? I don’t think I’d much like being a consultant or practicing corporate law, but I like to imagine that I could probably do one or the other competently, have a hell of a lot more income to transfer to the needy, and still keep a comparable or higher material standard of living. I don’t look as greedy as the guy who fails to share the wealth, because I’m deriving my utility from a less readily quantifiable and transferable source. But if that’s partly a matter of choice (it’s hard to say, since for all I know I’d actually be awful at better-paying professions) is there all that much moral difference between us?
Fascinating. There is something to this. People who could be earning more, but who choose to stay in creative or intellectual professions or work low-stress jobs in order to have free time to work on their avocations, are in essence deriving a kind of untaxable benefit from their choices. Yet they (we) are comfortable higher taxation of those who choose to maximize their cash earning potential instead.
On the other hand, Sanchez compares the effect of higher taxation on people in different income brackets and different levels of earning maximization, and he says that in the professional middle class, it becomes “clear that what you’re taking from people [if you raise their taxes] is time — time away from the people and projects they love.” I.e., if you raise taxes on a wealthy industrialist, maybe he has to work a little harder to make the same amount of money, but because he’s so wealthy you haven’t really put much of a dent in his ability to enjoy life. But if you raise taxes on a guy who works as an office drone in order to fund his weird folk-art sculpting, and he has to work more hours now to keep himself afloat, that’s fewer hours to make his giant steel panda bears, which are all that make his life bearable.
To me this sounds like a good argument for progressive taxation. But that’s because I’m the kind of guy who would like to make giant steel panda bears. The wealthy industrialist may find this unconvincing, since he has to carry the tax load for me while I’m declining to maximize my earnings in order to follow my bliss.