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Posts Tagged ‘capitalism’

A simple fact that few mention in discussions about the moral meaning of taxes is that higher taxation for wealthier people is neither a steal from the more successful nor charity for the weaker. Taxes, when progressive, inside a capitalistic economy redistribute more fairly the income that was distributed unjustly during the production process through wages, profits and interest. In fact it corrects somehow an injustice  and don’t create one as ultraconservatives are saying. This is because financial capital and real capital owners are claiming from themselves more of theproduced output at the expense of workers through procedures far from fair, rational and simply economical that supposedly based on competition and efficiency.

Capital owners or their managers are achieving this through debt and monetization of the economy and high real interest rates that give a vast unfair advantage on the ones that already hold big amounts of money and capital. Also through social blackmail (by unemployment), through power techniques and intimidation (named as management) and through political lobbying that creates favorable laws and regulations for the companies. Corporations in general are forming and controlling the economy in their favor. All these put an enormous downward pressure on wages where the labor, with the exception of a small part of wage earners in the top of the wage pyramid, has too little power to affect wages, contrary to the classical theory of demand and supply.

The marginal product and wage theories are irrelevant with the real economy and are only mathematical abstract concepts. The final fixing of wages and profit rates in the corporate world are mostly the results of power balances and social techniques that includes intimidation, blackmail and cheating (fancy theory names that as asymmetry of information)

A favorable argument from conservatives is that  according to statistics in the US, after the Bush tax cuts the rich are paying more than ever  before in absolute numbers. But this is simply because their incomes and wealth in the absolute numbers have grown much more than the decrease of top tax rates by Bush administration (their share in total income is higher than ever before). It is just a sideeffect of our era where rich people getting richer than ever while at the same time the laws become more favorable for them lowering their tax rates. This gives the illusion that ultra wealthy pays more but in reality on the contrary it just means that ultra wealthy are getting crazy wealthy!

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