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April 27, 2010

Are you making up for lazy workplace colleagues?

Good piece by Cornell's Robert Frank in the NYT. To argue in favor of progressive taxes (taxing the rich proportionally more than the poor) he notes that a similar dynamic takes place in the workplace: High-status, highly productive workers make less as a portion of their output than their lazy, skating-by, washed-up colleagues.

Every workplace has them: Unmotivated or just dim colleagues who force everybody else to do more work. How do these folks get hired? The effect, says Frank, is that the competent, productive workers subsidize the lazy ones. In a perfect market, good workers would make more; bad ones would make less. "In short," he says, "the startling fact is that private businesses typically transfer large amounts of income from the most productive to the least productive workers."

For Frank, this is an argument to extend the same dynamic to society as a whole: high-status, high-earning workers pay more in taxes per dollar that they earn to take care of less-productive members of society. Interesting thought, but there are superior arguments for progressive taxation. They are: 1) It's morally right to take care of the laggards. 2) It justifiably extracts higher "user fees" from the people who benefit most from government protections and societal stability. 3) By addressing poverty and limiting social disintegration, it preserves that stability. A good progressive tax system would have nipped the French and Russian revolutions in the bud.

This is an editing week, with limited time to blog, let alone write columns. But I will try to weigh in on the changing household electricity market later today or tomorrow.

Posted by Jay Hancock at 10:43 AM | | Comments (1)



Let's take Robert Frank 's analogy one step further. In a free market a highly productive worker has the liberty of leaving an employer that spreads the wealth to less productive employees. He or she can become a contractor or proprietor or hire out to an employer that will pay more for his or her services.

How does freedom of the individual to pursue greater personal income apply to the tax system. No individual can "opt-out" of paying taxes. There is no personal freedom when it comes to taxes as there is when pursuing higher income.

Robert Frank's analogy is flawed. Which is not surprising since progressive economic theory only works on paper and in the Ivory Towers of our nations universities.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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