Posts Tagged ‘tax’

Logical Fallacies in Politics

June 1, 2011 Leave a comment

I am still seeing two issues come across the news and social media quite a bit in regards to Minnesota politics. One is the lack of a budget (vetoed by Gov. Dayton)/upcoming special session/tax rates. The other is the gay marriage amendment. My idea here today is to show how rampant the use of logical fallacies in defending each side, and to give a lesson on common logical fallacies so we can all spot them and make more informed decisions.

One of my favorite podcasts is The Skeptics’ Guide to the Universe. Their website carries a great explanation on what is a logical fallacy:

All arguments have the same basic structure: A therefore B. They begin with one or more premises (A), which is a fact or assumption upon which the argument is based. They then apply a logical principle (therefore) to arrive at a conclusion (B). An example of a logical principle is that of equivalence. For example, if you begin with the premises that A=B and B=C, you can apply the logical principle of equivalence to conclude that A=C. A logical fallacy is a false or incorrect logical principle. An argument that is based upon a logical fallacy is therefore not valid. It is important to note that if the logic of an argument is valid then the conclusion must also be valid, which means that if the premises are all true then the conclusion must also be true. Valid logic applied to one or more false premises, however, leads to an invalid argument. Also, if an argument is not valid the conclusion may, by chance, still be true.

Most of us will be guilty of using logical fallacies often. I am guilty of it myself, but for most of us it is done by accident. It takes reflection and discussion to uncover the fallacies and form a more sound, logical argument. Politicians are guilty of using logical fallacies purposely to advance their personal or party views.

Here is an egregious logic fallacy committed by AFSCME. The key statement here is this:

The Republican majorities are choosing to protect the richest 2 percent. They’re making sure these households – making $300,000 or more – don’t have to do their share to fix the state’s budget problems.

This claim falls under a few different categories. The first would be a False Dilemma. AFSCME’s assumption here is the only way to solve the state’s budget problems is to raise taxes on the rich. I haven’t looked at the budget in detail, but my understanding is the budget vetoed by Gov. Dayton was roughly a 6% increase in spending (with no tax increases). According to the BLS, inflation from 2010 was under 3%. If inflation stays at the same pace, then the 6% increase in dollars is a true increase in spending as well since the extra dollars should be able to buy more even when considering inflation. So is the state’s budget truly dire when we can increase spending without a tax increase? Yes, I know this could be construed as it’s own logical fallacy since government is only one sector of the economy and it is possible inflation in those sectors is much higher. The counter-argument to that is to then ask why is inflation higher in those sectors since the government is so heavily invested in those certain sectors of the economy, it could be partially due to their own doing.

The second fallacy of AFSCME’s statement is an example of an Appeal to Emotion, more specifically an Appeal to Spite. Saying the GOP is “protecting” the rich is a way of inciting an emotional class warfare. These people have way more than most people, and that “isn’t fair.” You could even say this is an Ad Hominem attack, saying the GOP’s position is wrong simply because they are protecting those people which most people hate.

Finally, AFSCME uses an Appeal to Belief that the rich don’t pay a fair share of taxes. Statistics on the federal level are readily available and reported. The top 1% of income earners pay 40% of federal income taxes and the top 5% of income earners pay 60% of federal income tax. The democrats want to tax the top 2% of Minnesota incomes on the premise that they don’t pay enough. Think of an analogous situation: If 100 people are in a bar and in total ring up a $5000 bar tab. 1 person in the bar pays $2000, 4 more people pay another $1000, leaving the rest of the people in the bar to pay just over $21, even though the average bar bill was $50. Did the first 5 people pay their fair share? Let’s say they each drove away in a Bentley, would you then feel cheated by how much of the bar bill they paid? Maybe you could make a moral argument that they should pay more, but claiming they didn’t even pay a fair share is simply a bad conclusion.

In the gay marriage amendment debate, I have heard 2 arguments for passing a gay marriage ban. The first one is the idea that being homosexual is biologically unnatural because it doesn’t lead to procreation and that it would be like saying “sand is food.” Human psychology and physiology is much more complex than simple procreation. While it is true that humans are animals and sex is mostly about procreation, Wikipedia has a great summary showing examples in other animals where sex is more than just a mechanism for procreation. To get very basic, it is unnatural for human males to be with only one partner in marriage. In many large mammal species, the biggest and strongest males get to breed with several females to best ensure the survival of the species. Another example where we go “against biology” is when men shave their face or women shave their legs. Biology intended that hair to be for warmth and protection. Should we ban shaving too because it is “biologically unnatural?”

Yes, that last question is a Straw Man argument, but I was employing it in this case as an exaggeration to prove a point that the “sand is food” argument is also the same type of argument. Homosexuality isn’t a biological “wrong” and cannot be explained that way. There are layers of biology, psychology, and other reasons beyond a simple “yes or no” explanation. So the “sand is food” argument doesn’t prove anything.

The other argument used is the past history of voting on this issue in the U.S. I haven’t looked at each vote and what was specifically addressed, but the claim is 34 votes banning gay marriage have taken place and all have had the outcome of supporting a ban. This is wrong based on both the Appeal to Popularity fallacy, as well as the Appeal to Common Practice fallacy. This is easy to explain. I am sure everyone remembers a parent saying to you, “If friend A and B jump off a bridge, are you going to as well?” Just because something is popular or has always been done doesn’t automatically make the position or action correct.

Both major parties are horrible at explaining their logic and presenting evidence for their positions on issues. Most usually want to ignore past data to support an idealistic position that is popular. For example, raising taxes on the rich sounds like a great idea in theory, but it never comes out in practice because we ignore the fact people will adjust their behavior to derive maximum benefit for the amount of work they do. It is human nature. If we taxed every dollar above $1 million at 95%, do you think many people are going to work much past that $1 million mark? Stated another way, if I make $1 million for working 6 months out of the year and make $2 million if I work 12 months, but I keep $500,000 if I work 6 months and keep $550,000 to work 12 months, how many months do you think I am going to work?

My example above doesn’t mean a tax increase isn’t warranted in this budget cycle. Maybe it does need to be part of the solution. But to say tax increases on the rich are always justified is wrong. It is also wrong to assume raising taxes will raise the revenue needed to solve the budget concerns.

If the GOP gets its budget passed in Minnesota, it does look like some people are going to lose their access to the social programs they rely on. That could affect them negatively in the short-term. However, we can’t simply look at the first layer of the consequences in a government policy and make our political decisions based on those outcomes. Taxing the rich gains us money in the short-term, but what if that change prompts a corporation to relocate? What if the rich work less or change their investments and the revenue doesn’t pan out to the projected amounts? What if a person dies due to lack of coverage?

As callous as it sounds, we do have to look at the cost/benefit in these decisions. People die more often because of the 70 MPH speed limit on the interstates in Minnesota than they would if the speed limit were 40 MPH. The higher speed limit saves everyone time (and time is money), thus costing less to transport goods, giving us more time for production, etc. We have chosen to set the speed limit at a reasonable human cost in balance with our own financial interest. Most insurance policies have a co-pay to prevent unnecessary trips to the doctor. Maybe someone skips going to the doctor because they think they just have a mild flu (rather than pay the $20) and end up dying when their infection quickly worsens. (Yes, this is more anecdotal because it is harder to quantify scientifically, but I thought it made some sense to discuss here).

Hopefully you are still reading and didn’t get too bored with some basic insights on logic. My point is to stress the importance of analyzing your political positions carefully, especially if you are perfectly aligned with the ideals of a particular political party. Be especially wary if your party or candidate uses an Ad Hominem Tu Quoque attack, where the attack is simply based on the fact the opponent changed their mind. Use your mind, think logically, discuss with a measured reason, and don’t be afraid to change your mind.

How to tax the rich

April 11, 2011 1 comment

I’ve brought this up in a couple of previous blogs, but I thought it deserved its own special spot.  Roger Ebert wrote an artice about the “one-percenters,” which is irritating in itself because I am sure he has much more money than I will ever have, so I don’t know what he has to complain about.  But, he is a professed liberal/progressive, so his viewpoint isn’t surprising.

Let me start with making sure everyone knows my political affiliation.  I used to believe everything the democrats fed me.  Now I best align with the libertarians, which does have a tendency to lean to the republican side except the reasons for supporting policies is usually different than the republicans.  An example of this paradigm is in the Planned Parenthood funding.  Republicans wanted to cancel funding for Planned Parenthood because they support abortions.  Democrats wanted to keep it because of the need for women’s health care for the poor.  Well, republicans are wrong because: 1) Abortions only account for about 3% of Planned Parenthood’s funding, and 2) Abortions should at the very least be an option when the health of the mother is at risk, otherwise you could be leaving that unborn child and the already born children without a mother which isn’t a good option either.  Democrats are wrong because we now have Obamacare.  Anyone eligible for Planned Parenthood should easily qualify for Medicaid or several other programs under the new health care law.  If Obamacare covers everyone, then we don’t need a separate program like Planned Parenthood.  So the libertarian (and I would say logical) choice is Planned Parenthood doesn’t need federal funding because there are other existing federal programs that take care of those mothers anyway.  It saves money and reduces overlap of services.  So you see, the solution lines up with the republican point of view, just for a different, logical reason.

To get back on topic….taxing the rich. I’ve written previously about how no matter how high the top tax rates, the collections as a percentage of GDP have never been over 20.6%.  Certainly there is a tax rate that could be too low, meaning a point where a higher income person would be willing to pay more without working to avoid taxes but not collected (simple example, 0% taxes means $0 tax income which I think everyone understands some form of tax is necessary).  However, there is some point when taxing the rich becomes an impossible tax, because they have the means to either avoid taxes or simply not work (see more here).  So is it really fair that 1% of Americans get 25% of the income?  That’s hard to say.  The conservative viewpoint is that the top 1% (making 25% of the income) already pay 40% of the tax revenue which is more than the bottom 95% of income earners (I guess that really sucks for those in the top 4.99%-1.001%).  The liberals would say that’s true, but they should pay even more as they make more.  This is a bit less logical since they pay taxes on a percentage, they do pay more as their income goes up.  Whatever your viewpoint – it is true the top 1% are making more than in the past.

How do we tax the rich?

Note: Sorry some of this is almost exactly from another entry, but I wanted to emphasize and expand it.

So to the point of this entry.  Stop supporting those businesses that make the rich even richer.  Start with daily goods.  Buy food from local farmers and your local (union) grocery stores.  Buy your soap, toothpaste, toilet paper, and other goods from your locally owned pharmacy.  No more big screen TVs, Blu-Ray players, iPods, stereos, etc.  No more name brand clothing.  If we took those actions, Walmart, Best Buy, Macy’s, and Target would go out of business very quickly.

Stop banking at your large corporate bank and open your checking and savings at a locally owned bank or credit union.  Stop investing in your 401(k) and open an IRA CD at your local bank or credit union.  In fact, make sure all of your investments, including your union pension, isn’t invested in mutual funds or large companies for that also supports large corporations with CEOs making millions.

Make sure all of the products you buy are made by U.S., union manufacturing.  Don’t support corporations such as GM, Chrysler, AIG, etc., that received bailouts.  Demand your union bosses stop taking $400,000+ salaries and spending millions on campaigns (which goes to rich politicians) and instead put that money to use protecting jobs instead of buying political favors.

Let’s not forget…this also means no Dairy Queen, no Pampered Chef, no Fruit of the Loom, no Geico insurance, or any of the others owned by Berkshire Hathaway.  Also, no McDonald’s, BK, or other fast food.  Now Buffalo Wild Wings’ CEO did take a pay cut to $1.9 million this year, so I guess that is up to you to decide if she is too rich or not.

My point is not to make a straw man argument, but to point out that we in the middle class still carry the market power.  The source of the wealth in this country is our productivity and our consumer power.  If you feel like the rich are too rich, then stop making them rich.  We all have the choice.  Until you start making a conscious effort to move away from supporting those very rich people you claim to despise, your argument of taxation or criminal action against them for making money holds very little water.  You can take away their wealth if you feel their wealth doesn’t justify the product(s) or service(s) they provide by not purchasing those products and services.

Personally, I have completely closed my accounts at Wells Fargo and moved to the credit union I worked for.  I shop at Target for my consumer goods (mostly) because I still get a good deal, and Target supports the arts and other causes right here in Minnesota, so I feel like my dollars are not completely wasted.  I used to buy Levi’s jeans because they were U.S. union made, but now are made in Mexico.  Occasionally, you can find some Lucky Brand that are made in the U.S., but it is hard for me to find ones that fit.  I buy meat from the local meat market, and milk is generally local no matter where it is purchased.

I’d like to see some comments – what are you doing to tax the rich?