Pfff. I believe Irwin Schiff went to jail using much the same arguments to believe he could legally not pay taxes, vidyohs.

No, Gil. Irwin Schiff and I have nothing in common in our beliefs.

You probably know really very little about Irwin Schiff, and you’ve absorbed very little of what I have stated as my position, therefore you can make no valid comparisons nor any of wisdom on the income tax issue.

I wonder if that's an artifact of 9/11?

I can't wait to see this graph again when they are all on 6 month waiting lists to see their physician about that lump they found and their taxes are hiked up to pay for all that free health care they have a right to. There aren't enough people making >$1MM who are dumb enough not to shelter the vast majority of that income or to just work less to avoid the 10% tax hike (bush cuts + surcharge) to pay for for their promised all-you-can-eat medical buffet.

I don't put too much stock in opinion polls, but I wouldn't be surprised at all if a lot of the "too low" category is your Warren Buffett types – exactly the kind of people that we're talking about raising taxes for. That would also go a long way in explaining why there's so few of them!

I'm not 100% behind this surtax on the rich. I support in a strong progressive tax structure, but radical changes to the service provided by government should be taken seriously and supported by everyone. We won't take arbitrating between different reform options seriously if we simply soak the rich to get things done.

So aside from specific taxes that have come up lately, I bet the distribution of these responses across the income distribution bears fairly close resemblance to some dominant tax reform proposals.

Probably has more to do with actual changes in the tax structure. People get their taxes cut, and they're less likely to say it's too high.

What a surprise!

Or perhaps the typical unemployment polls…you typically feel your own job is pretty safe, but you're worried about your neighbors' and friends' jobs.

I wonder, is there a formal name for this effect? If not in economics, perhaps in psychology?

I'm not 100% behind this surtax on the rich.

You are never 100% BEHIND anything, whether it is tax, government, truth, lies, humor, health etc. so what % are you behind this surtax on the RICH?

As for ethics, I'm not an ethicist and as long as policy decisions aren't explicitly unethical I'm not sure you can point to one revenue policy and say it's "more ethical" than another. But like I said… I'm no ethicist so maybe that's complete bunk.

When we think generally about taxes, though, I think the ethical instinct is to treat people equally. As economists, we know that people have different preferences so we should really think more in terms of utility when we think about optimizing social welfare. As economists we also recognize that we optimize by equating margins, not absolute values of anything.

With that economic/ethical foundation I'd say that the goal should be equalizing the marginal disutility of taxation across the tax base. Given the diminishing returns to money that we know exists, that implies a progressive tax structure.

I think this kind of thinking isn't just sound economics, it's also inherently how people think about fairness. Marx gave "from each according to his abilities to each according to his needs" a really bad reputation, but think about how families operate privately. With in a community, some form of this logic (obviously less extreme and all encompassing than Marx's formulation) is the natural understanding of "fairness" when it comes to common sacrifices for common goals.

I'm just sketching that out – you'd have to ask an ethicist for a more formal answer.

I'm also hugely flexible. I don't like flat taxes, but I'm very attracted to progressive consumption taxes too. I think it would be good to consider moving in that direction. I'm not dogmatic about it, but I do think a fair tax structure is going to have to be structured progressively to some extent.

Haha – touche. Shall I be decisive for once? 0% behind explicitly tying a surtax to health reform, 100% behind making the tax structure at least marginally more progressive at some time in the near future – ideally once recovery starts to pick up, though.

No, that's not what you're talking about. The schmuck in New York City making $350K per year is in the same tax bracket as Buffet. The guy making $1MM per year is also not in the Billionaire's bracket. But you're looking to raise taxes on all of them. And who's this "we"? Are you finally giving up the charade and throwing yourself in with the socialists or did that just accidentally slip out from behind your mask?

I suppose I'd be OK raising taxes for someone making $350K a year, but I don't recall advocating that explicitly and I definitely don't recall advocating putting them in the same bracket as Buffett. Please don't assume you know what I do or don't want to do. You have a long track record of misunderstanding that, so it's best not to assume.

You are a would-be social engineer who will decide what other people's utility curve is and where their optimal return to money and impose it on them by confiscating anything above what YOU consider an adequate amount. You also believe that I somehow care or should care as much about you as I care about my family because you imagine in your overactive fantasy life that we have some common goal. I assure you that you mean nothing not only to me but to anyone on this blog either. And let me assure you in no uncertain terms that I don't have a single common goal with a socialist like you.

What I want to know is if you actually swallow your own bullshit or if you just peddle out to others in the hope they will. You sure have a butt-load of it.

I don't presume to know what people's utility curves look like or what specific tax rates should be. I never laid claim to that knowledge or authority. But I'm fairly comfortable saying that everybody's utility curve is concave, and if that's true than a tax policy that equalizes marginal disutility across society has to be somewhat progressive. The ONLY thing I have to assume for that to be true is that you have a diminishing marginal utility for money. That's all I'm saying, and I'm suggesting this is how a lot of people naturally think about things – even if they don't do the calculus. I can't fathom why that's so offensive to you. The argument is over a century old. It's a very straightforward argument. It merits engagement and objective criticism, not insults.

Who the heck are you to decide how much anyone gets to keep and who should pay more and who should pay less? What gives you that right – besides your amazing hubris?