Posted Oct 17, 2012 11:00 am CDT
Judge Richard Posner sees a connection between free will (he doesn’t believe in it) and heavy taxation of wealth (he sees nothing unfair about it, though there may be “disincentive effects”).
In a post at the Becker-Posner Blog, the Chicago-based appeals judge notes that liberals tend to see luck as instrumental in financial success, while conservatives see talent and hard work as driving achievement. The argument has implications for taxation, Posner writes. “Taxing success that is attributable to pure luck does not have disincentive effects, and so is a cheap away of financing government,” he says. “Taxing success that is attributable to hard work may induce a substitution toward leisure.”
For his part, Posner says, he doesn’t believe in free will. “I think that ultimately everything is attributable to luck, good or bad,” he writes. Factors such as IQ, a person’s country of birth, a propensity to risk or caution, and decision-making ability are all determined by luck, he says. “Talent is luck but so is the propensity for working hard (often the consequence of a compulsive personality) or not working hard.”
Still, Posner isn’t ready to take Bill Gates’ wealth “and scatter it among the poor.” He sees “terrible incentive effects,” although the extent is likely to vary based on the type of luck that produced the wealth. Heavy taxation of wealth earned as a result of talent and ambition could result in a disincentive to work hard, while taxation of wealth unrelated to personal qualities—money that is inherited or won in a lottery, for example—may not have the same effect.
“So there is in my view nothing ‘unfair’ about heavy taxation of wealth, but there are practical objections,” Posner writes. One is that the wealthy will likely use their clout to “pepper any new tax law with loopholes” that have no social utility. “Another is that the additional tax money raised will be squandered on unproductive governmental activities, including handouts that reduce recipients’ work incentives,” he says. “This objection would disappear, however, if the proceeds of additional taxes on the wealthy were earmarked for reducing the federal deficit.”
Hat tip to How Appealing.