The Hypocrite Test: Should Rich People Pay More?

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Today, I’m pondering the notion of fairness…

Imagine a contractor shows up at your house to give you an estimate on installing a new boiler.

You’ve got a beautiful place and it shows. You started with nothing 20 years ago and worked to the bone to build a nice life for your family and have some nice things. The house just happens to be one of them. And, it’s situated in a part of town you always dreamed of living when you were a kid.

The contractor pokes around a bit, then hands over a proposal. $15,000. Youch!

Sounds out of line, so you thank him and send him on his way.

Later that day, you run into an old friend who lives “down the hill.” You mention your need for a new boiler and are surprised to discover he’s in the market for the exact same boiler. And, the one he’s replacing is the very same one you have. AND, he also just got an estimate from the same contractor…for the exact same amount of time, same equipment, same job.

But, your friend’s estimate was $7,500. Half of yours.

The only difference, he lived in a $250,000 house in an older part of town and you lived in a $2.5 million house in the fancy part of town.

Does this really happen? All the time.

And, it’s likely you’ve been on one, two or maybe even all sides at some point in your life; the modest living consumer, the wealthy consumer or the service provider.

Question is—is this fair?

Is there any justification for charging the person with greater perceived wealth substantially more money for the exact same benefits…just because that person can afford it?

Think about your answer for a moment.

Get clear on it.

Find your conviction.

Now, let’s see what happens when we overlay the same ethical question onto a new fact pattern.

This time, you’re the guy living down the hill, earning a modest living. The contractor is now the government, the estimate you and your wealthy acquaintance received is your tax burden and the benefits are the services provided to both of you by the government.

Does your opinion change?

Put another way…

Do you believe the richies up the hill should pay a more for the exact same benefits received by you? Or, should they have to pay a larger percentage of what they make?

And, if so, is this consistent with your opinion about fairness with respect to the boiler…when you were the richie on the hill?

Because it’s the same issue, just set in a different context.

And, if you believe you shouldn’t pay more for the boiler when you’re the richie, but the richies should pay more taxes when you’re the middle-classer…

Why?

Now, let’s take this same fundamental question of fairness and overlay it onto yet another set of facts…

Let’s say you provide a service. Maybe you’re a designer, copywriter, lawyer, publicist or accountant. You have two pitch meetings scheduled for the same day. The first prospect is a solopreneur, doing what she can to make enough to let her family live well in the world. The second is a large public corporation that’s making a boatload of money. Oddly, they both want essentially the same service, requiring the same investment of time, energy and thought. And, the deliverables would be nearly identical in quantity and quality.

Do you charge them both the same fee?

Or, do you charge mega-co more…just because you can?

And, if so…why?

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152 responses

152 responses to “The Hypocrite Test: Should Rich People Pay More?”

  1. Jonathan, how do you come up with all these interesting questions? 🙂

    Here’s the problem: income should not be taxed. It’s not something we want to punish, it takes a ridiculous amount of overhead to do it, and you run into all kinds of fairness issues.

    The income tax can be replaced by a national sales tax, making people pay for consuming value rather than creating it. This removes the conflict between the first two issues.

    The third issue is tricky. I don’t think it makes sense to charge a mega-co more than the usual fee just because you can, but sometimes people want to give the little guy a break. Everyone will have their own idea of how charitable they want to be.

    • Nathan says:

      In principle I agree with switching from income to sales tax. However, I’d add that essentials of life should be exempt. Alternatively, $X of sales tax paid per year would be reimbursable to cover the same; this would probably be more feasible.

      Of course, for such a sales tax (or any sales tax) to take the full burden of income tax, the cost of goods would likely double (or more?), and I imagine people would start saving a lot more of their money (even though net earnings would increase proportionally). Which should be a good thing, except that our consumer-driven economy would likely collapse.

  2. Great question Jonathan. I’m a believer in equity. In taxes for example, i thing it’s best if everyone pays the same percentage of their income. Various institutions on the other hand, do not believe in equity but rather in support on one side, and squeezing the lemon as hard as they can on the other. Each with their own logic… or lack of.

    • J D Walling says:

      Want = taxation. Then to be “fair” shouldn’t income disparity – absolutely outrageous here be addressed 1st?

  3. Ryan says:

    My thoughts on the income tax are the same as Hunter’s so I won’t get into that but I think your analogy may be a bit flawed. See, I think it’s perfectly ok for the contractor to give whatever bid he desires because the customer always has the option of going to someone else. With taxes there is no ‘someone else’, and the contractor has guns and jails waiting if you don’t pay up. The first is free market capitalism at its finest, the second is simple thuggery.

    • Nathan says:

      Totally agree. A business can be expected to try to maximize its profits. That may mean charging different amount to different customers, unless doing so would cause them to lose enough business or potential business to outweigh the gains.

      Of course some business owners may take other factors into account (helping the little guy, or a desire to treat everyone equally), but they can’t be expected to. Although of course it’s nice if everyone at least adheres to some sort of moral standard.

      With the government (or any monopoly on essential goods or services) though, it’s different. If people have no choice, we’re talking about extortion rather than capitalism.

  4. Gordie says:

    I agree with Eduard on the tax question. A flat tax rate is simplest and would reduce the need for bureaucracy. Sure the rich will pay more, but at least it’s the same percentage. I hate the idea of governments upping the percentage you get taxed on higher income.

  5. Wow- you totally hooked me on this question. Kind of cuts to the core of the solopreneurs practice. Frankly, my distinction has been that I charge a different fee for individuals and couples than I do for corporations and large institutions-yes- for the same work. (and I have discounted non-profits).

    I like Hunter’s consumer tax concept but that doesn’t help me with a policy for setting my own fees…still thinking.

  6. Derek says:

    Political movements are so often driven by mob rule rather than actual justice, and this post elucidates why. It’s encouraging to see a lot of agreement in the comments, too. Bravo, Jonathan.

  7. The first 2 questions are easy for me: the price/tax should be the same across the board. I also like the consumption tax idea over income tax, because it is both naturally progressive and equitable. (Rich people don’t have to spend more, they just usually do).

    The third question I think depends on my personal situation as the service provider. If I have a full ticket of clients, I’m likely to work with the mega-corp and charge a premium. If I need to find more clients to earn money, I’ll still likely charge the mega-corp more, and give a discount to the little guy so that he can afford it, because in that case I would rather have a client at a discount than no client at all.

  8. dajolt says:

    The first and last part is easy. If you offer a good or a service, you should always price it at the value it offers to the buyer, if the price is high enough to cover your cost. Fair, fixed prices are an illusion.

    Taxes are a bit different, as they are not an offer from the government, but mandatory. Charging a flat tax rate would be unfair to poorer people, unless there’s a tax free minimum income that is not taxed at all.

    • Darryl says:

      How is a flat tax less fair when the poorer are paying less money?

    • Corith Malin says:

      I hate the word “unfair” when used in this context and I think a lot of people use it incorrectly. If everyone paid the same amount of taxes it would be “fair.” as everyone is paying for the services they consume. That means that everyone should pay a flat tax of $25,000 (an arbitrary number). If you make $12,000 a year, you’re going into debt $13,000 a year to pay your taxes. That’s what’s fair.

      However, that’s also unrealistic. I think what people mean when they say, “unfair” in this case is “undue/impossible hardship.” If we have a national sales tax of 5% and I make $10,000 a year; most likely I have to spend 100% of my income to survive (savings rate of 0%). That means I’m taxed at 5% of my income. If I make $1,000,000 a year but I only spend $500,000 a year that means I’m really only be taxed at a 2.5% rate. While I’d be paying more actual dollars in the second situation, it’s much easier to come up with $12,500 when I’m making a cool million than it is to come up with $500 when I’m only making $10,000 a year.

      I am of the personal opinion that no one should be taxed on what it takes to live. You need food, shelter, and water. If that costs (on average) $20,000 a year in the US, then the first $20,000 of everyone’s income should be tax free. The reason I believe this is that no one should be taxed to (literally) death. After that poverty line though, I think taxes are fair game. I do believe in a flat tax though as I think it would simplify the tax system.

      • Nicole says:

        I agree with Corith. It is impossible to compare paying $2,500 if you make $50K / year to paying $25K when you make $500K to $50K when you make $1M (all 5% of income). I make a good living and I’m happy to pay more to offset those who can’t. I feel that is my duty to others! We do not live by ourselves on some remote island. We bring each other up as a people or we all fall. Do you mean to tell me that it’s “fair” for the person making $1M to have a “measly” $950K left after taxes to live on while the person who has $47,500 to live on when food and shelter alone would probably gobble most of that up? I’m all for hard work and I do just that, but I also don’t mind paying more taxes. If you can’t be happy having “just” $900K left after taxes instead of $950K, you have serious problems and could learn some generosity and compassion.

        • Kayla says:

          Thank you, Nicole! for your kind,sane,global VISION!It’s not only about me, me, me, and I believe America is finally waking up and smelling NEW coffee…

        • Andrew says:

          Fair would be a flat tax rate with a base “tax free”. And the % should stay the same, people who make more should pay more but at a flat percentage. It is not about generosity or feelings. How many people have had a job & worked overtime only to bring home less money???? I have; and that is completely screwed up.

          How would people feel if race was input instead of money??
          If the rich family were white or black, would that be more or less fair??????

          • Alex says:

            Tax in the UK drives me up the wall. All the different bands, and thresholds and different taxes – it costs a fortune just in administration. Costs me a fortune too, and I am married to an accountant!

            As for fairness, why should one person pay a different amount for a service or item than another? Indeed if race was brought in that equation then it would be TOTALLY unacceptable, so why does someones income determine how much you pay for something. It’s just another form of discrimination.

            A flat amount (not percentage) of tax with an income tax minimum threshold should be used (living basics). Then it is fair.

            The trouble with a sales tax is that different countries have different sales taxes; so if that was increased for all luxury items (eg. cars) then everyone would just go abroad and buy the luxury item there. So a government still has to be competitive with it’s neighbors.

  9. Philip says:

    Some of my questions:

    The assumption here is that the richies and the poors receive the same services. Do they? Do they have equal street quality, police service, and hospitals, etc?

    And second, are the rich and the poor really compensated the same amount for the same work? Do the poor working at McDonald’s in poor neighborhoods receive the same hourly wages as the richer in richer neighborhoods?

    On a tangent, since women are historically and currently compensated at less than men for the same work, should they be taxed the same?

  10. Roxie says:

    False premises. An individual’s purchase of a boiler for that individual’s home and consumption bears no relationship to that individual’s role in supporting the country’s social compact (yes, through taxes). What is your rallying cry? “I got mine (through whatever means at whatever cost to the rest of you), you go get yours”? Explains much of the mess we’re in.

  11. Dale Marshall says:

    If we’re going to tax income, I have no problem with the concept that those who’ve benefited more from the system should be expected to pay a larger percentage. It has little to do with punishment or my perception of someone else’s ability to “afford” it, just a pretty stark reality – if you made more from our system than someone else, you’ve got a greater stake in maintaining it.

    On the other hand, there’s a tipping point (I think New York State’s found it) – Americans, upon encountering a certain level of taxation, will relocate to another jurisdiction with a lower rate. It’s not a global thing – look at Denmark.

    That having been said, I think our present tax system is too cumbersome, complex and fragmented, and has become a tool for Congress to gain more and more power. I prefer the FairTax, which I recommend to all.

    I like Hunter’s approach to the third question – it’s not about charging more to the company you believe can better afford it, but giving a discount to the smaller company or individual. Semantics or spin? Perhaps, but I think it’s an attitude shared by a lot of independent contractors.

    Interestingly, the model isn’t consistent. Supermarkets in affluent areas, for instance, traditionally charge less than supermarkets in poor areas. Similarly, the healthcare industry generally charges the uninsured patient more for the same services it offers insured patients – not because of policy, but because most insurance carriers negotiate discounts for their clients. Hotels and airlines likewise charge wildly varying rates for essentially the same products, although the reasons for the variations has less to do with perceived affluence.

    • Darryl says:

      You’re wrong about the medical model. Because our deductible is extremely high and I have no co-pay I ask Doctors: “How much discount do you give insurance companies?” (Usually 25%). I then say: “If I pay my bill cash, right now and file it later what kind of discount will you give me?” I usually get a 30% discount off my bill (never lower than 25%).

  12. Jeffrey Tang says:

    Jonathan, I think this is one of the biggest ideological battles at the core of society today: whether or not people with “more” have an obligation to the people with “less.”

    Here’s where I stand:

    Assuming you’ve accumulated your wealth legitimately, that wealth is yours and yours alone. You have no legal or moral obligation to others – except those obligations which you choose of your own free will to accept.

    Therefore, I’m firmly against taxing/charging rich people/entities more simply because they have more wealth. That amounts to punishing people/entities for being financially successful.

    What I support is voluntary giving and charity. Like Bill Gates, wealthy people may choose to contribute funds toward causes of their choosing – but they are under no legal or moral obligation to do so. Giving should be done out of a genuine desire to do so, a genuine caring for a cause or a person, not out of legal coercion or socially imposed guilt.

    There’s nothing wrong with helping out those less wealthy than you – so long as it’s your choice to help, and not the rest of society choosing for you.

    • Werner says:

      I agree with you completely Jeffrey. What you said reminds me of Ayn Rand’s ‘Atlas Shrugged’ – have you read it?

      • Jean Deaux says:

        Ayn Rand? Horrors!

        The analogy breaks down simply because there is no level playing field, never has been, never will. We are *not* created equal in the sense of essential attributes for success.

        Therefore, the Game is rigged from the start. Do I believe in taxing the rich more? Absolutlely.

        In the end it’s just another challenge for the wealthy, Jonathan. Using your ideas and concepts, what’s the big deal about paying more? Hmmmm? They’ll just accept that as a challenge and go out there and kick some major okole and bring back the many-tined big buckeroos.

        Love the suit, Senator.

    • Awesome, Jeffery. I absolutely support your view.

      Cheers~

      Mark

  13. Sami Paju says:

    This question is really far from simple, and comes down to each persons’ own moral boundaries. However, I want to give some further food for thought.

    I happen to live in Finland which is a country of high taxes and progressive income tax, meaning the more money you make the more you pay in taxes. In return we have such niceties as free education (no tuitions, not even in university level, so even if you’re poor but smart you can become very successful – at least according to our standards) and almost free of charge public healthcare.

    While this system lacks in providing monetary incentives, narrowing the gap between the rich and the poor has been shown to increase the overall wellbeing and happiness of the people living in such a nation and reduce things like crime, drug abuse, and health related issues.

    In principle I favor a system that aims to provide equal opportunity to everyone, and does this balancing act in personal income. However, a big issue here is starting to be that we need growth businesses, and we need them badly, but this form of taxation does not inspire entrepreneurship.

    Would I charge a large company the same as the struggling entrepreneur… I don’t really know. I think I would, but I might give the entrepreneur some other concessions such as better payment terms.

    //sami

  14. Ben J Barra says:

    Thought provoking questions. Some of my own that came to mind while pondering them…

    1. Can we really draw a comparison between government taxation and business service? One is compulsory while the other two are optional. Mr Rich or McRich Co are under no obligation to pay the quoted prices where as if you don’t pay your taxes you either run and hide or end up in jail (or get appointed to important government positions :-p).

    2. Are Mr Rich and Mr Not-As-Rich (or the solopreneur and the big co) paying for the “same benefits” or are they paying for the perceived value of these benefits? Maybe Mr Rich or the buyer at McRich Co values his/her time that much more and is willing to pay the additional amount in order to not have to deal with the hassle of getting another quote. Why should the service provider charge less than the customer is willing to pay?

    3. Taxation is a big can of worms that could spawn some endless round-about arguments. In keeping to the spirit of your question, I ask are the benefits granted to the rich truly the same as those enjoyed by the not-so-rich? When is the last time your senator had dinner with 50 people who make less than $50000/year and listened to their concerns? When was the last time they hosted/attended an $x-thousand dollar per plate charity dinner to rub elbows with the affluent? I bet the results would be highly skewed in one direction.

    Dollars do the majority of the talking in the current political environment. I am optimistic that social media has the power to change this.

  15. Mark says:

    If we’re talking about rich PEOPLE, not CORPS (although now the SCOTUS has recognized the latter as the former…), then I think it’s only fair that the Bush tax cuts for them be allowed to sunset and they go back to paying at the level they did in the 1990s. My feeling is that if they could afford to pay that then, they can certainly do so now, when the 95-99% of people around them who are not in that income bracket, and their orgs such as schools and civic orgs, are really hurting.

    For corps, that’s a different story. Here I think the only fixed rule is that the rules should apply differently to companies that were rescued by taxpayers in the bailout. In the case of the big banks, continuing shareholder profits and employee bonuses don’t fly when they’re only alive because of taxpayers. If those were private, not TBTF companies and they messed up that bad, any shareholders would have to eat the loss, and the company could have to dissolve.

    • Why should an individual pay more simply because they make more? Entrepreneurs create jobs.

      It’s not a question of what they can pay, it’s what is morally right. If you are going to remove the tax cuts, then remove them for everyone.

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  17. Nick says:

    What’s wrong with the idea of “From each according to his ability, to each according to his needs”? Back when I was a poor college student, I didn’t buy much gas (taxes to local government), spend as much at the grocery store (taxes and wages) or buy anything new (manufacturing jobs). I definitely didn’t donate anything because I had nothing to give away. Now that I have the ability to do all of those things, I do.

  18. Lisa Guinn says:

    At Least 2 Issues Here

    1 – The wealthy do get more benefits from the government than the poor. I don’t see a lot of poor people in civil court for example. The regulation of the banking industry actually helps people with money the most (believe it or not!). A substantial part of the government infrastructure supports businesses and the wealthy.

    2 – The wealthy have a greater stake in maintaining the system. Think of it like insurance – if you don’t own much, you don’t need to insure as much.

    3- What exactly is wrong with the idea of “redistributing wealth?” If this is your moral code, consider why you believe that compulsory “sharing the wealth” is bad. The idea of a progressive tax has been around for a very long time. It is only in the last several decades that “I deserve my wealth and I shouldn’t be forced to share it” has become an acceptable social stance.

    Taxes on the wealthy are now lower than they were in the Reagan years. If you are so lucky as to be wealthy, please pay your fair share of taxes, and quit bitching.

    BTW, I am certainly not wealthy but my income is in the top 10% in this country. I pay my taxes without complaint every year. I believe this country is not perfect, but the benefits of freedom are worth the money that I pay.

    • Redistribution of wealth is B.S., that’s why. There is absolutely no reason to reward someone for contributing less. If you make less, then put yourself in a position to make more.

      • Ken says:

        Because redistributing wealth is taking away from the PRODUCERS(people that created the wealth) and giving it to the NON-PRODUCERS(people who take and give nothing to society). I can choose better than the blood sucking government on how to spend my wealth. Why don’t you read some Rich Dad books, Lisa. Hey, while your at it, read Wealth of Nations by Adam Smith. The “I deserve my wealth and I shouldn’t be forced to share it” has become an acceptable social stance” statement is false has been around for centuries by the way. Why do you think anyone should “be forced” to hand over their wealth, that is not freedom nor what our country was founded upon!!

    • Darryl says:

      I made less than 30K (family of four) last year. I did not ask for government hand outs, nor did I want any. If I were to by force make someone give me money just because I made less, that would be robbery. It would be ethically wrong.

      For extra money, I mowed yards. My family survived. We’re doing better. That was the right thing to do. I would not turn down help if someone offered it to me voluntarily (as I do for others). But I have a moral problem with assuming people must help me just because they make more money than I.

      • Werner says:

        Darryl, I was in the same spot as you are now when I was younger (family of 5). Even then I thought as you do now.

        I didn’t want a hand out, but I would take a hand up. The old saying of “The harder I work, the luckier I get” is very true.

        I worked hard to get where I am now, and I’ll be damned if I have to give it to someone who didn’t want to do the work…

        • Jessica says:

          So you think hard is work is always synonymous with making a lot of money? There are plenty of people that work long, difficult hours and don’t make a lot of money. Are they giving less than you to society?

          • K says:

            Don’t you know that people who choose jobs like nursing, cleaning, crop picking, and working on the assembly line at factories are just blood-sucking losers who should be going into more profitable lines of work? Don’t give me that rubbish about access to education and health care and networks of privilege! Don’t tell me that if we all worked in high earning positions we’d have no-one to support us! Don’t give me any crap about value to society! It’s all about the dollars, man!

          • Kayla says:

            Dear K: I’d strongly advise you brush up on your people skills, or else when you get old and frail, though may be a rich bastard, no one is gonna wipe your a** for you.

    • Nicole says:

      I 100% agree. Very well said. Redistribution of wealth does not mean handouts. It means that if a new infrastructure is going to cost oh let’s say $1 billion and will revolutionize how we function on a daily basis and the “people” decided it was a good idea, then why wouldn’t some people chip in a little more when those who make the $30K / year can’t afford as much? I don’t see anything wrong with that. If I was out for a friend’s birthday and everyone had to chip in $10 but my one friend who just lost her job didn’t have but $5, I’d be happy to chip in $15, instead. I don’t understand how we got to be so greedy as a people and lose so much compassion for other people. It’s sad, really.

      • But the difference is that you are volunteering your money, not having it taken from you by force.

        Let’s be honest here, the government does not have a strong track record of knowing how to budget tax dollars.

  19. Jonathan Fields says:

    Hey all – Love the thoughtfulness of the conversation (as always). But, I’m also noticing something else. Most folks have chosen to focus on the taxation analogy, probably because it’s easier to pick apart and because most people also have strong feeling about the role of government in our lives, the benefits they provide and how that should be taxed.

    But, what of the other two scenarios. Where two private parties are transacting business. And, one changes what they require for the identical services not because of what they believe the fair value of the service is, but because of what they perceive as somebody else’s ability to pay…sometimes substantially more than the genuine value.

    I’d love to know more about what you feel on that comparison…

    • As some have said above, Jonathan. The price of goods and services are set by the market. Thus, if the Rich market is charged more and actually pays more, that’s the Rich price. Many of the folks who would do away with progressive taxation are also rabid free marketeers. Capitalism is designed to maximize profit and, thus, charge whatever the market will bear.

      As an independent contractor (or solopreneur, as you say) I often negotiate different fees with different clients for essentially the same servies. Sometimes I win, sometimes I lose. If the client says “yes” than that is what the market says my service is worth.

      And, as with Lisa Guinn (above), I’m happy to pay taxes on my income after all the legal and ethical deductions my CPA can find. 🙂

    • John H says:

      What if you look at the third question from a different point of view: is it OK for a corporation – say, a credit card company, as an example – to charge those with less ability to pay (those with ‘bad’ credit) more in interest and fees, while giving breaks to those with more ability to pay (those with ‘excellent’ credit)? On the one hand, it may seem that it tries to encourage people to work to improve their credit, but on the other hand it also tends to prevent those with bad credit from being able to improve it when their payments are mostly interest. The same could be said of any industry that offers loans – car, mortgage, etc.
      So, if a corporation is willing and able to charge different rates to different people dependent upon their ability to pay, why shouldn’t a solopreneur – or the government, for that matter – charge a corporation as much as possible while giving a small business owner a much cheaper price? Or vice versa?

    • Sarah says:

      I think it’s worth noting where the idea that fixed pricing is ‘fair’– or that it was in any way important for businesses to be ‘fair’ — first started. Before the 17th century the usual practice in businesses in England– as it still is in most of the world– was for people to haggle over price. But in the 17th and 18th centuries non-conforming Protestants– Quakers in particular– were not allowed to attend University or hold professional positions. That left business– which at the time mainly meant shop-keeping. Now one thing Quakers had in common with Puritans and other dissenting groups was the belief that one’s work was a sacred calling.

      So they thought long and deeply about how to do business in a way that did justice to that calling. One of the ideas they had was the completely revolutionary notion that haggling was intrinsically unfair because it favored those who were the best hagglers. They decided to make pricing so simple and transparent that a family could send a child to buy an item from their stores and know that they would be getting the best price a good haggler could achieve.

      Pretty soon the shops owned by these dissenters were the most popular around (not least because of their commitment to absolute honesty) and other businesses began to follow suit. I find it ironic that the capitalist system, which grew out of these deep moral sentiments seems to have morphed into the very antithesis of what its founders intended. It is very telling that Adam Smith’s ‘Wealth of Nations’ is much cited (though little read) while ‘The Theory of Moral Sentiments’ is ignored.

      Smith knew what so many in the West have forgotten: Markets are not about money. They are about relationships. And social bonds cannot form among people who believe they have no obligation to anyone but themselves.

  20. duffy says:

    Questions like this make my brain hurt.

    I’m not a big fan of the taxation analogy. Too many variables that cannot be assumed in a way that gives the comparison relevance.

    As a freelancer I have offered a sliding scale for my services in the past, but in hindsight it didn’t make much sense. And I ended up less for the exchange.

    If you’re teaching a class and want to offer a “pay what you can” scheme with a minimum amount that will at least give you an average that covers your costs, then great. As long as you have the attendance numbers.

    If your rate and bid is fixed, then it only matters that you’re competitive, sustainable and deliver the goods — UNLESS there’s an opportunity to share in the upside. And this is where it might make a difference with whom you work.

    A solopreneur might be willing to give you a percentage of net in exchange for your initial investment of time/services. The megacorp might be looking to retain your services going forward based on your initial work performance and fee.

    This is why my brain hurts when trying to ponder a boxed-in question like “would I charge more to someone I think can afford it.” I prefer exploring the relationship potential and being satisfied that I delivered an excellent result at a fair price.

    Cheers, duffy

  21. I already charge folks according to what they can pay.

    Thing is, I don’t *increase* my price because someone can afford more. I have a list price, so to speak, and if someone can pay that, and they find value in what I’m doing, we’re good.

    But someone else comes along, probably needs me even more, but doesn’t have as much money. If there’s any way to bridge the gap, I do the work for what they can afford.

    For me, it’s not about gouging the ‘rich’ (for lack of a better word for the ‘haves’) but a matter of giving a leg up to those who probably need it more.

    When I was making better money 10 years ago, I made sure I patronised folks at full price. When I had it, I never ever tried to talk someone’s price down, because even when I’m the guy with money, I still believe that ‘fair’ means something very much like ‘from each according to their ability, to each according to their need.’

    I think part of the challenge in the question itself is that it’s easy to perceive it as a question about greed instead of a question about unselfishness.

    • Darryl says:

      “From each according to their ability…” do you realize who you are quoting?

      • Yeah, I do. The veracity of a statement or belief isn’t always directly tied to the person whose mouth it came out of. Consider the fact that leaders of every ilk have made disingenuous statements throughout history. The fact that many of the statements were lies with hidden agendas doesn’t make the statements wrong, only the intents and outcomes.

        I believe we should all do what we can, and get what we deserve. The fact that one English translation of Marx’s words says it succinctly is, I think, immaterial, unless someone decides to take it out of context.

    • Darryl says:

      Answer: Karl Marx in “Critique of the Gotha Program”
      “In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”

  22. As far as charging clients go, I have a standard price for my time: you want me to work for you, you pay that amount. End of story. For me, it’s not a question of the perception of what clients can pay. Instead, it’s a question of what value I place on my work.

    I do place a value on others’ needs as well — I have been known to take pro bono projects. I’d much rather donate some time to a cause I feel strongly about and keep chugging along on my base rate than try to decide what individuals can pay.

    But I feel that the tax question goes a lot deeper — since I run my own business, I actually have less of an incentive to keep growing my business based on my current income tax bracket.

    I find the current income tax system in the U.S. more than a little problematic. If I bust my rear end trying to build a business, I wind up paying more taxes than someone who doesn’t put forth an effort at all. I’m penalized for not taking a job at McDonald’s — for not being content with minimum wage.

  23. Mick Morris says:

    What a great question Jonathon, I live in a country with a progressive tax system, the more you earn the more you pay and I am happy with this arrangement (obviously as an individual I would like to pay less tax, however I am happy that my taxes support access to things like universal health care and other social services to support those not able to do so for themselves for various reasons), what is not equitable is the disparity between individual and company tax rates, with companies paying significantly less tax than individuals.

    As a professional firefighter the service delivery question is everyone gets the same standard of service no matter their socio-economic status (however our funding mechanism, primarily through a levy on insurance premiums effectively means that those who earn more, and have more pay more for the provision of the fire brigade through the higher costs of insuring their more valuable possessions, and again I am happy with this distributive model)

    So I guess it is a bit of a no brainer that in one part of what I do in other businesses ventures outside of the Fire Brigade I charge differential rates for the service I provide, but deliver the same standard of service to my clients.

    • K says:

      I suppose also that people living with higher incomes are (generally) more likely to live in homes with less likelihood of needing your services (detached houses rather than tenement blocks where fires can spread; decent standard of wiring; more likely to have been built to higher standards; and even differently in social terms such as less likely to prepare foodstuffs in highly flammable ways such as deep fat frying and less likely to smoke, etc.).

  24. Sarah says:

    Interesting questions, but note the strong dis-analogy between the first and third and the second. You get the same boiler as your friend, and presumably will perform the same services for either Megacorp or Small Business. But taxes provide more benefits to the rich than to the middle class. (The poor are another issue, since they have more need.) Rich people are more likely to invest in the stock market and benefit by the regulations of the market imposed by the government. (Flimsy though they may be.) Rich people are more likely to buy international stocks and benefit from international treaties and trading agreements. Finally, the rich have more stuff. If you think about the military protection provided by the government as covering not just out persons but our stuff as well, those with more get more benefit.

  25. Randy says:

    Being a freelance graphic designer, the last question is easy. I base my fee on usage.

    For example, if I create a logo for mega-corp they will print it on letterhead, business cards for 2500 employees, billboards, trade show booths, packaging, websites, email promos, mugs, mouse pads, etc.

    Done properly, my design work adds to THEIR bottom line by enhancing their overall brand image with a cohesive message.

    Solo-startup person will most likely use it on business cards, their unknown website, and the occasional Powerpoint.

    Years later, after Solo has grown huge and it is time to re-brand, I’ll charge them like I did mega-corp–on usage.

  26. jay says:

    this is either a simple question or a moral question depending on how u see things.

    charging based on ability to pay . it happens all the time. yes it doesnt sound right to charge different prices for the same service but dont u think that the same service is subsidised for the lesser and is charged full rate for those who had ability to pay?

    the question is if we cannot charge the poor because they cant pay then cant we charge the rich since they should have more money to pay ? i mean really if the rich baulk at paying the full rate for a lot of things then they might not really be rich but like anyone else have budgets for lots of things then its time to reexamine what rich means

    all these are just questions of reality but well its reality that determines the right action not what is right or wrong on set thinking so the rich will continue to be overcharged cos its well within their ability to pay and the poor will be subsidised cos its right to extend compassion and this is totally right

    but the key question is not really answered. u did not mention that the level of service and boiler provided it will be different based on the amount of money paid so there lies in the difference both will get the same product but there lies in it the difference in the quality of good/service rendered to justify the differnence in price.

  27. Jonathan Fields says:

    @Joel & everyone – I think your comment really gets to one of the big hearts of the matter. Most of would agree, it’d be nice to be able to offer what we do to people who cannot afford what we perceive as fair value.

    But, the bigger moral side of the equation comes when we know we can get paid far more than the fair value we establish in our heads independent of a client’s ability to pay simply because they have more money.

    And, would it change your opinion if you knew that whatever money that person had left at the end of every year went to support hungry children in underdeveloped countries? We do we assume we know the values and spending patterns of those with more money in the bank.

    It’s not as easy as it seems. Even if it’s a corporation we’re talking about.

    One last thing. What we are talking about is different than “performance based” compensation.

    I know some copywriters who get a substantial fixed fee (which by the way is the same for pretty much everyone) plus a percentage of gross sales generated by the asset they create. Their, they earn more because they choose to participate in the both the risk and the upside (the risk part comes, because their flat fees when don’t participate is significantly higher).

    • Darryl says:

      Good point.

    • “get paid far more than the fair value”

      Pretty sure I addressed that: I don’t, ever. I know what I’m worth. I’ll give some away if it makes sense, but I won’t charge more than I’m worth because it’s unethical.

      Absolutely agreed it’s a moral question. I just don’t have a question about the fact that it’s dead wrong to overcharge someone, just because you can.

  28. Tim Brownson says:

    My heads just exploded and I hate you Fields!

  29. Duff says:

    The question is misleading–the rich often drive hard bargains with contractors, have lots of money to hire tax attorneys that can hide income in tax shelters, etc. The poor do not.

  30. Disclaimer: by the time I got to this post via Twitter there were so many comments I didn’t read through them. So this might be redundant. My apologies.

    I’m a Realtor and I am often surprised at the cost many vendors charge because they know I’m a Realtor. The assumption is that Realtors make a ton of money, drive around in Lexuses (or is it Lexi) and do hardly anything but pick up big checks.

    To be fair, some of the services are Realtor specific in the same ways that government services are sometimes specific to certain demographic groups such as parents (e.g, schools) or people who drive (e.g., roads) or the elderly (e.g., Medicare). Is it fair to tax people who may not use certain services?

    I’m not a tax expert but my sense is that those who have been more fortunate either by dint of hard work, brains or inherited wealth have a responsibility for those that are a bit (or a lot) less fortunate.

    You’re argument is for a “flat” tax or “regressive” tax like the sales tax in many States. Everyone pays the 5%, 6% or whatever it is for the tax on goods or services based on the price of the good or service. Unfortunately, this creates a greater hardship on the poor and middle class. More comes out of their disposable income than that of a wealthier person. Bottom line: the poor and middle class suffer disproportionately to the wealthy.

    It always sounds wonderful to have everyone pay the same regardless of their economic circumstances. Yes, it does appeal to a certain sense of fairness. A kind of level playing field. But we don’t have a level playing field either for the needs of those in our society or its fortunes.

    • How does the rich have a responsibility? If I work my way up by building a business, then I made it happen through hard work and perseverance.

      Everyone has a chance. Education is available to all. Just because someone is too scared to take a risk doesn’t mean the rich owe them anything.

      • Tim Brownson says:

        “Education is available to all”

        Theoretically that may be true mate, but the reality is somewhat different in my experience.

        Personally I think we all have a responsibility to each other. None of us are getting out of this alive, so let’s do what we can to help each other.

        • All I’m saying is that anyone can get a loan or work through college if they want to. Prior to that…hard to say from my own experience, but I really believe that if you want something bad enough, then you can get it. At least in the US.

          Anyway, your 2nd point is fair, but I’d argue that there’s a difference between having an obligation to help and helping because it’s good to do.

          • Sorry Nathan, I’m really not down with that at all.

            Educational opportunities are vastly unequal across the socio-economic spectrum and that starts a long long time before college. Kids who grow up in poor families or neighborhoods are exposed to a tiny fraction of the learning opportunities during the absolutely crucial early formative years, say before the age of 5, and by then the damage is done – through absolutely no fault of their own, they just happened to be born into poverty. Development is also affected by poor nutrition, domestic violence, and so on.

            The playing field simply is simply not level and it’s frankly naive and insensitive to pretend it is. The idea that our success is entirely self-created is a convenient delusion. We are what we make of our opportunities, yes, but the notion that those opportunities are not skewed massively in favour of those who grow up in a prosperous environment is disingenuous at best.

            Why do the rich have a moral responsibility to help the less fortunate? Because the system is so heavily stacked in their favor. Paying an ‘unfair’ proportion of taxes might seem to suck, but it beats poverty any day of the week, and the idea that the poor stay poor out of sheer laziness is archaic and not remotely supported by real sociological evidence. Can anyone claw their way out of poverty by sheer force of will? In a theoretical fantasy land, perhaps, but not in this one. A few do, but most don’t ever get a crack at it.

            Why progressive taxation? It would be great if everyone who had the means were charitable enough to provide for the basic human needs of those on the bottom of the scale, but it turns out that they aren’t, so we need some kind of system to enforce it. It’s not perfect, maybe it’s not ‘fair’, but overall the world has been much, much less fair to the have-nots than the haves.

          • Nathan says:

            @tobias
            Thanks for that counter-argument. Made me adjust my thinking somewhat.

            @Ken
            How about a flat rate sales tax with a fixed annual exemption of $X for basic necessities? (With an additional exemption for dependents.) That should no longer be a greater burden on the poor, since a greater percentage of their spending (or even all of it in some cases) will be exempt.

  31. Tim Brownson says:

    @ Duffy – Not sure about that at all mate, it’s an incredibly sweeping statement.

    I know plenty of poor people that can drive a hard bargain and enough wealthy people that will just pay whatever they are quoted. There are lots of wealthy people that don’t try and avoid paying tax too, we just hear about the ones that get caught trying to do otherwise.

  32. Brandon W says:

    1) Infrastructure is necessary to the functioning of a modern society. This includes, but is not limited to, highways, air traffic control, sewage, security (national), a judicial system. The wealthy have benefited more from that infrastructure. They continue to benefit more from it because that infrastructure helps their employees and their customers (who are likely much less wealthy) get to and from work or the store, live better lives and thus be able to consume more (which equals more profit for them), and in the case of countries with universal health care, it keeps their employees and customers healthier and more productive. There is a price for all that. They benefit first personally, and again secondarily. They pay for that double benefit.

    2) Part of the reason for progressive taxation (U.S. taxation is progressive) is that the wealthy have more discretionary income. The person making $25,000/yr can’t afford to pay $7,500 in taxes and survive, but the person making $250,000 can afford $75,000 in taxes quite easily. Thus, while the wealthier person pays 30% in taxes, the poorer person may pay 5% in taxes ($125). Income tax is designed more to tax discretionary income above a certain threshold, not gross income.

    Having said all that, the U.S. tax system is ridiculously complex and absolutely must be simplified. Replacing the income tax with a sales tax would never be feasible, as it would require a 25% sales tax to work. Mathematically possible but certainly not politically. Much more likely would be a Value Added Tax, similar to the one used in Europe. I’d like to see a VAT combined with an income tax that is progressively scaled, has a high base deduction (plus a deduction for each child), and absolutely zero other deductions. Every income tax filing could be done in 10 mins on an EZ form. Business taxes should be just as simple.

  33. Shane Mac says:

    I have to say that I find the value in the willingness to help others do and see a path that they didn’t know existed. If I would price base on who not what I was offering I don’t think I would believe in what I was doing. Life to me is about the relationships and willingness to help others, regardless of their income level. With that, I price all individuals and companies based on the level of work required and based on what I think I can offer that is of value.

    Good work Jonathan and that took me forever to get to the bottom. phew.

    -Shane Mac
    @shanemacsays

  34. Here’s an interesting conundrum, and I believe, closely related to the topic: When you contract for the US Gov, they get “most favored client” rates.

    Think about why that might polarize businesses into those that almost exclusively work government contracts… and those that don’t work any government contracts at all.

  35. Carl Harvey says:

    Hmm. Awesome conundrum.

    Brief answer (it’s late in UK!):

    Tax – one size fits all. You shouldn’t punish success, nor reward lack of ambition.

    Services – there should be an onus on the provider to get as much money as he deems appropriate, with a corresponding burden on the consumer to get the price as low as he can.

    Therefore, my answer is simply: whoever haggles best, wins. Income shouldn’t come into it. I still want the best price, despite the fact I have money in the bank.

    If the guy in the $2.5 mil crib doesn’t want to do his homework, then the tradesman should be able to get away with charging what he wants (within ethical reason!)

    In shops, it should be a fixed price for sure.

    To finish, governments should p*ss off and stop stealing all our bloody money. 50% tax in the UK now – my goodness.

    PS – Finally got round to reading your book (Tim Brownson kept going on at me). Awesome. Cheers.

  36. Theresa Wagar says:

    Excellent discussion! The premise of this entire discussion is based on your opinion of whether you can spend your money better or the government can spend it better for you. It is an age old discussion. In my opinion, our government is headed toward taking more because the folks running it believe they can do a much better job with it. Unfortunately they have proven over and over (anybody remember the USSR?) that centralized government will fail under its own weight every time. Mind you, the government does need to tax us to fulfill the assigned duties we are willing to give up to it (such as national security), but I agree with the first comment, that taxing income is evil. Some kind of national sales tax would be much more fair to rich and poor alike.

    The question on selling to a small business verses a big business got me thinking about how I have quoted jobs in my business for the past 15 years. Honestly, I pretty much charge the same. I tend to keep my costs reasonable as I focus on helping small businesses. My experiences with larger companies is that there generally more hassles involved due the bureaucracy that is naturally created as the company grows.

    Enjoyed this thought provoking discussion 🙂

  37. Ciel F. says:

    1/ To me, paying my taxes, income or otherwise, is not a matter of paying a price for services, it’s a matter of contributing to the common good.

    Higher income seems to me to obey the law of diminishing returns, to the point that once I have food, shelter, some entertainment, and an adequate savings rate for my retirement, it’s not about the money anymore. At that point, a dollar in my pocket does less to improve my life than it does when put towards serving the common weal.

    In that context, higher tax rates on higher incomes and higher property taxes on more expensive homes make sense to me. If you can contribute more to the common good, you should.

    Whether your particular set of governments are doing a good job at translating your taxes into the most common good for the money is a separate issue, of course, and one that can be hotly debated.

    2/ Would I charge a solopreneur less than the mega-corp? Quite possibly…if I feel the solopreneur is going to be more of a joy to work with, with a better working relationship, etc.

    Because although it’s about the money, it’s not just about the money.

  38. Laura Roeder says:

    My mind immediately went to the business situation where it looks like everyone else went to the taxes – not sure what that says about me!

    I will totally admit that I have charged different businesses different amounts for similar services. I have very mixed feelings on this – on one hand its my prerogative to charge whatever I want in my business. (Including an asshole tax.) On the other hand, one of my guiding principles is to never lie, and never do anything that would piss people off it was “found out”. Charging different prices could fit in the latter – or it could not. After all this is really common public practice from organizations like phone and internet companies – they have a personal use price and a business use price. I think everyone knows they’re delivering the exact same product.

    • Brandon W says:

      It makes perfectly good sense to charge more for some than others, particularly when it involves value pricing. Let’s say I’m consulting with a small business, and my effort will increase their profits by $45,000 next year. I could very reasonably ask for a $9,000 consulting fee, as 20% of the value I bring to them. However, the very same type of consulting may result in another $2 million in profit for a larger company. Why should I not also ask for 20% of the value I bring to them? Why not charge them $400,000? Even if you say it takes a month of work to help the smaller client, and six months to help the larger client, you’re still ultimately charging a lot more to the bigger company. That’s fair. Charge for the value you bring to them. Never trade time for money.

  39. Cory Kaufman says:

    To everyone who thinks their taxes should be lower than they are: I have a little experiment for you to try. Pretend, just for a moment, that there really isn’t anything you can do to change the amount you are taxed. Ready?

    Now, why so angry about something you can’t change? That’s not going to get you anywhere. If you want to be angry just to be angry, fine, but sooner or later you might want to start thinking about the things you can do.

    What can you do? Three things:

    1. Spend less

    2. Save more

    3. Earn more money.

    Those are all things you can do right now. I guarantee if you focus all that energy you’ve been devoting to being angry about taxes to doing one or more of those three things, you will be happier.

    Not sure where to start? Read a personal finance blog or two. I recommend JD Roth’s Get Rich Slowly (www.getrichslowly.org) to start.

    Ok, experiment over. You can stop pretending now. Get out there, yell, scream, stomp your feet, do whatever it takes to get the government to lower your taxes so you can start enjoying your life.

    • Darryl says:

      Corey, your argument breaks down because there IS something we can do about our taxes: vote and advocate for lower taxes. We do not live in a closed system. You say: “Earn more money”. All well and good. But when government raises your tax bracket from 15% to 30% just because you make a couple of thousand dollars more, then earning more money becomes a net loss! That just doesn’t make sense to sit by and accept it. Do something about it: advocate, protest, vote, speak your mind, write blogs and letters–that helps to change things. Don’t fall for the lie that says you can do NOTHING!

      I do agree with your other points: spend less and save more! To that I would add: avoid debt, quit leasing cars! Budget your money. If you use a credit card go to the store with a set price of what you are going to spend and spend not one dime more. That is called discipline. It has worked for my family which makes less than 65K (last year I was unemployed all year). We had no debt (other than our house), and through odd jobs I was able to eat and pay the house note and did not miss one payment–that was on less than 30K with two teen-aged children in the house! Nor did I receive government assistance or even unemployment. It is possible and can be done!

      • Darryl says:

        Corey: I feel a little sheepish. I read 3/4 of your comment and went off. My apologies. Your last paragraph says it all! 8^/

      • Cory Kaufman says:

        Just want to point out that when you move into a higher tax bracket, that doesn’t mean your entire income is taxed at a higher rate, only the portion that is above each threshold. It’s not really possible to have a net loss due to making more money.

        • Nathan says:

          Well, except that more will be automatically deducted from your pay (assuming you’re an employee). You’ll get it back when you file your tax return, but if you were to move from the very top of one bracket to the very bottom of another, the opportunity cost of not having that money for part of the year could outweigh the gain.

          That’s pretty pedantic though. 🙂 Your point is well made.

    • Because it can be changed by casting a vote for someone that won’t tax the rich more than they would tax the poor. A defeatist attitude doesn’t help, that’s for certain.

      It’s not about being thrifty, it’s simply a matter of what’s right.

      • Cory Kaufman says:

        How effective is your vote? I’m not saying it’s worthless, by all means, exercise your civic duty and vote. But what can you change? If you’re lucky, you can elect people who will lower your taxes. If you’re lucky, you can elect more people who will make those tax cuts permanent. If you’re lucky, you might be so fortunate as to be taxed 5% less in… how many years?

        Or, you can go to your boss and ask for a 5% raise. Save for your retirement. Cancel that gym membership you never use. Earn some money on the side. Before you know it, you’ll have earned the equivalent of that far off tax cut, and then some. That’s not being thrifty– that’s being smart and taking matters into your own hands.

        You talk about doing what’s right– that’s admirable, but it is also worth considering where you have the ability to effect the most change in your life.

        • I think you’re talking pie in the sky stuff here…not everyone has a boss and wants to be thrifty. Of course, the obvious answer is to make more money, but the point is that you shouldn’t have to. Sounds like you’ve already given up.

          • Cory Kaufman says:

            So you don’t want to spend less, save more, or earn more. You “shouldn’t have to” because federal taxes, which haven’t really changed much and aren’t really going to change much, are somehow keeping you from enjoying what you’ve already worked so hard for? Pie in the sky, indeed.

            Is it really that hard to extrapolate what I’ve said to your own situation? So you don’t have a boss. That probably increases your chances of being able to earn more. So you don’t like being thrifty– don’t be. Take 10% of your paycheck (after taxes), put it towards retirement. Take 20% of your paycheck, and set it aside for long term savings. Spend the hell out of the other 70%– no thriftiness needed.

            If nothing I have said tonight works for you, then maybe I am not the one who has given up.

  40. Darryl says:

    First I’d like to point out: giving someone a discount is not the same as inequitable pricing–the discount is an exception to the price. So if we are talking about giving a poorer person a discount out of the goodness of our hearts, no problem. But that is different from just charging people off the cuff by their appearance or just because they could pay more.

    Unfortunately, Government is not about giving discounts. It seems to be about creating a class envy/warfare in order to collect more money. Just today a group of people gathered around to take care of a couple of orphans, providing money for a parent’s funeral, collecting money to take care of lawyer fees to help a couple get guardianship of the minor child and help the other child continue his schooling. People rise to the occasion when they experience needs locally. Do we really need a national bureaucracy to do this? Furthermore this community will step in as emotional support. The Federal government cannot do that. This has happened several times in our community.

    Your analogy does break down because you would not generally charge by percentage of income (a normal house pays X% for a water heater so, since you’ve a more expensive house you pay the same percentage). Nor would that be proper in my opinion.

    Yet a flat tax or national sales tax (as long as an amendment abolishing the income tax is passed) is most fair. Yes, the rich (or those who buy more) pay more in cash–but not more in percentage. Which is the fairest way of handling it. As far as I know most of the rich are much more supportive of this kind of taxation as fair.
    It always irks me for government to tell me who I should help. Government is most often defrauded by hucksters. Citizens usually know who really needs help and do a much more effective job.

  41. Ken says:

    Hey tobias tinker, the poor choose to do things just like the middle class and the rich. In today’s media and web driven society, very few have the excuse that they have to live with the cards they were dealt. It’s all about freedom and choice, man. You have the choice to get up every morning and do something or do nothing. I think it’s called personal responsibilty.

    • fascinating rebuttal. I’m not going to waste a lot of time here trying to win an argument, but if you honestly think that the information hurricane that is today’s media and web environment overrides the fundamental differences in early childhood development and the subsequent disparity in educational opportunity that my comment addressed, you are living in a dream world. Enjoy that.

      Here’s a thought: if people who are upset at paying more taxes think that things are so much better for the poor, why not try making less instead of more? Then you’ll be reaping the rewards of our unfair system and can laze around all day enjoying the fruits of others’ labors? If you really think this is what the system encourages, why aren’t you doing it?

    • A few quick links to support my argument that there are fundamental disadvantages based on early development that are not equalized by later access to information:

      http://berkeley.edu/news/media/releases/2008/12/02_cortex.shtml
      http://www.irp.wisc.edu/research/education.htm
      http://www.thereadingpeople.org/docs/rich_vs_poor.PDF
      http://www.nap.edu/openbook.php?record_id=9824&page=1

      Again, I’m not saying it isn’t possible for people to haul themselves out of poverty and achieve success, I’m saying that growing up in a relatively affluent environment (as almost everyone participating in this discussion most likely has) means we don’t have to: we are fundamentally advantaged from square one, and subsequently at every turn throughout life. Growing up affluent means our lives are mostly opportunity, possibilities that are not available to poor kids. How exactly is this more unfair to the rich than the poor?

      Again, progressive taxes are an imperfect response to this inequality, and trying to gouge people in business is perhaps a worse one… but this implication that poverty is essentially the fault of the poor, a result primarily or exclusively of their laziness and lack of motivation… well, it riles me up, as you can see. Of course these things are hard for people who have grown up advantaged to admit, because it follows that we should be happy to pay a bit more later on. Hmmm.

      Thought experiment time: What kind of environment do you want to provide for your kids? Why? If the playing field is level, why not bring them up under the same conditions the poor live in, and see how they do later on, just to prove your point? Deprive them of proper nutrition, make sure they don’t have access to many books, that kind of thing? If it really makes no difference?

    • “very few have the excuse that they have to live with the cards they were dealt”

      Um, Ken, that’s just so far from my experience with nearly every person I’ve ever met that it seems to me more of a statement of hope than a realistic perspective.

      Why are we amazed by those who come from behind to win big? Because they’re the exception, not because they’re typical and representative.

      Because it goes against psychology, environmental factors, and the current economic system, most people will have to put forth heroic, life-altering effort to escape the hand they were dealt.

      Well, those who were dealt a tough hand. Those who were dealt a good hand make very little effort to overcome it, for obvious reasons.

  42. Darryl says:

    Tobias Tinker–IF the government actually managed the money well enough and actually helped the disadvantaged effectively, you might have something of a decent argument. But has the government really made things better? No it hasn’t. what has made our society more prosperous are those entrepreneurs who have created jobs, who have provided scholarships and voluntarily helped those in rotting neighborhoods get a chance at good education. The private industry and non-profit organizations have been much more effective at helping the disenfranchised than government has.

    Rich people and middle class people have more often than not voluntarily shown generosity of spirit. Again: it is troubling for someone to force me to help people. Without government prodding I and an association of friends shell out money all of the time to assist others in need. And I think we are pretty darn effective about it, too. I know of dozens of non-profits who do the same on even a grander scale.

    • No argument from me about the effectiveness of government in handling the situation, and I agree that privately run non-profits generally do provide more meaningful help to those who need it – although often they suffer from many of the same political & organizational problems that the government does, just on a smaller scale.

      My issue is largely a philosophical one, against this notion that everyone has an equal chance (they really don’t, sorry) and that this somehow justifies a callous, I’m-alright-jack attitude amongst people who did not actually have to struggle against insurmountable odds in achieving success.

  43. Darryl says:

    Charge what you believe is fair–be consistent with your principles and know why you are charging what you charge. If you are charitable–there will be little complaints because it will be seen as being kind and generous. People respect that.

    If you are honest and fair you will do well. If you are arbitrary (and greedy) then it is very possible you will lose business because someone else will come along who has a better offer. It is the beauty of free market system. Not it doesn’t always work…but usually the over greedy and dishonest are found out and they crash and burn big time.

  44. To your original question about fairness, no it’s not fair because it’s the same service. You wouldn’t charge an adult more for sweets because they are an adult.

  45. bchase says:

    I think that the fundamental question to this is your definition of fairness. If fair means equal then the answer is no, it isn’t fair. But if fair means something else to you then it could be fair.

    To put this in perspective I will offer an example that an EEO officer at a state agency I used to work for offered when trying to explain what it meant to offer equal access to a public meeting. She told this story: I have three children that I want to take to the circus. One is an able bodied child who can go anywhere do anything. One is in a wheel chair. One is terrified of clowns. If I treat each of the children equally I could rob all of them the best experience for the visit. I would not put the child who is afraid of clowns in the position to be confronted by them, I would allow them to be a good safe distance from them. I would allow the child who can move around to do so. I would place the child in the wheelchair in a place where she could see everything and would be able to access it from her chair. If I do my job well they will all have the best experience from the place but they will not have been treated identically. Is that fair?

    Reading the comments above I see that some people feel that it is “unfair” that they be expected to help people without the power to exercise their judgment of whether that person is worth of help. To others, it appears that it is unfair that the people with the money (and therefore power) have the power to negotiate benefits that those with money (and usually no power) do not.

    Is fairness measured by everyone being treated identically? People have pointed out that people are not. And it is usually the poor that bear the brunt of the different treatment. Big corporations can negotiate prices for goods down because they are buying a lot. This forces the small business out of business because it can’t compete with the mega corp. Look at private bookstores, the small hardware store, the local dress shop. All of these are going the way of the dodo because of the Amazons and the Walmarts. Is that fair?

    Some of the comments above seem assume that people who contribute less are willfully lazy pigs at the trough. What if they are working their hardest and through random circumstance their hardest is not good enough to get them out of the financial circumstance they are in? Is it fair that person should pay more or be denied service because they don’t have the cash up front to negotiate a better price for a service, like a doctor, that they need. Should they be turned down by four doctors who required insurance or cash before treating? Should a person who does not have insurance (and therefore the negotiating power of a megacorp) be charged 10x the amount that a person with insurance is charged? Depending on your definition of fair yes.

    What does the word fair mean? I doubt that you’ll get much agreement on its definition. I postulate that the notion of fairness is a pointless and meaningless idea. I postulate that there is no such thing as fair.

  46. Sarah says:

    Since no one else seems to have commented on it, I’d just like to point out a couple of problems with the story– and with the analogy.

    With the story: We get a clear picture of the ‘rich’ person a) as someone who is hard-working, i.e. in most people’s view deserving,
    b) as someone who is not really rich, but only appears to be.

    By implication the ‘poor’ person is
    a) not hardworking, or not AS hardworking, and
    b) not really poor, but only appearing to be so.

    Can you see how this sets up the conclusion? How does the narrative change if we switch it around? Depict the ‘poor’ person hardworking and TRULY poor and the ‘rich’ person as someone who has never worked a day in his life and is TRULY rich beyond your wildest dreams?

    The second problem is with the analogy to taxation. In the US, at least, there is no tax at all on wealth, so if, as the story tells us, these two people are actually alike in all ways except the values of their houses– i.e., each earns the same amount, they will be taxed the same. That is, if their incomes come from work: if the ‘rich’ person earns the same amount as the ‘poor’ person, but the ‘rich’ person’s income comes from investments they will probably pay LESS than the ‘poor’ person, because capital gains are taxed at a considerably lower rate than earned income.

    In any case I think we’re not really doing our jobs as moral creatures if we blindly adhere to rules even at the expense of the principles they are designed to enforce. Although I don’t happen to be a ‘hypocrite’ in this particular case (since I tend to favor both sliding scales and progressive taxation) I would much prefer to have the sin of hypocrisy on my conscious than that of ingratitude.

    • Jonathan Fields says:

      Sarah – Interesting observation about the way I created the facts, assumptions and questions. Not sure I agree, though.

      The reason I added the qualifier about the wealthier family having earned their money the hard way is that I think most people would assume the opposite. And, the reason I didn’t say that about the person down the hill is because most folks I know assume the middle class person very likely puts in a MORE “honest day’s work” than the wealthier one.

      And the way I wrote the post was not intended to diminish the efforts of the person earning less and their was no implication as such, but rather it was an attempt to “even the assumption playing field” a bit which, at least in my experience, has been the opposite of what you’ve suggested.

      Also, I think it’s pretty safe to say that someone who lives in a $2.5 million home very likely moves beyond appearing to be wealthy and IS wealthy.

      Thanks for making me think through this again, though. It’s always interesting to try to suss out our internal biases and discover whether there’s something in there we’d like to change.

      • Sarah says:

        Jonathan– I agree entirely. We all live– and sometimes die– by the narratives we adopt. The world can be turned upside down by the determined efforts of a few people– if they are armed with a powerful enough narrative– and a platform from which to launch it.

        I’ve been lucky enough to see a number of these transformations from close up, starting with the Civil Rights movement in my childhood, through the dissidents in Central Europe who helped tear down the Iron Curtain. I’ve also been fortunate enough NOT to be in the bulls-eye of any of the equally powerful destructive narratives that have touched all of our lives in one way another: from the myths of ritual murder of Christian children by Jews and the contentment of Africans in slavery, to the story of Aryan superiority, through the belief in the benevolence of a dictatorship of the proletariat.

        I believe it is imperative for us all to try to become conscious of the kind of narratives we follow without thought and to think about what narratives might best serve to create the kind of world in which we would most like to live, and so I thank you for a most thought and discussion-provoking post.

  47. Wes Morgan says:

    I did not read all the comments, so I apologize if someone pointed this out. All contractors carry liability insurance. This covers their mistakes. Imagine if the contractor caused water damage to both houses during removal and/or installation. In the $2.5 million house he could easily cause more damage than the entire house “down the hill” is worth. Our world has become a liability. Everyone is looking out for themselves and his prices cover the liabiity he is taking by crossing the threshold of a $2.5 million house.

    Taxes can’t be compared to the private industry. Wealth is still not taxed. Only income.

  48. Werner says:

    @ tobias tinker

    I think where a person is in life has much to do with the way we think about things.

    – My parents grew up in post-war Europe and immigrated to the U.S. (legally) in the 1950’s, and became citizens in the late 60’s. They started with nothing, worked hard and instilled that ethic in all 5 of us kids. My folks built a modest life for us through their own efforts.

    When things were tough, we all pitched in doing lawn work, painting homes, recycling cans – even delivering phone books. We did whatever it took and we never took a government handout.

    – I couldn’t afford college, so I went to the library and read voraciously. I found out certain companies had tuition reimbursement plans as part of their benefits. I got out of the machine shop I was working in suburban Long Island, and got a job as a street messenger for a company in NYC.

    I worked my way up and took advantage of their tuition reimbursement program. It took 7 years, but I got that degree and it opened all sorts of doors for me. It made a huge difference – all because I decided I wanted something better.

    – Years ago I befriended an elderly man, a Russian Jew, who at 18 escaped from the horrors of Treblinka during WWII. He found his way to the U.S. with nothing. By the time I met him he had just sold his successful garment business.

    – I went to school with a Vietnamese boy whose family barely escaped the Khmer Rouge with only the clothes on their back. After 5 years in the U.S., they bought and ran a small market in our town.

    – My family is friends with a Chinese family that immigrated to the U.S in the early 90’s. They came here with few possessions and several hundred dollars. Today they own and run a successful and popular restaurant in the town in which I now live (in New Hampshire).

    These are all examples of people from very different backgrounds and under-privileged environments. None allowed their circumstances and environments to hold them back or keep them down. None of us bought into the sense of entitlement that is now so prevalent in this country. We all recognized this country offers more opportunity to better ourselves than any place else and we continue to take advantage of that fact.

    It’s all about personal responsibility in the way we think and the choices we make.

    • Ever heard the phrase ‘exceptions prove the rule’? I have not once said that it is impossible for people from disadvantaged backgrounds to become successful; I said it was dramatically more difficult for them to do so than for people from affluent backgrounds. That’s all. I am as big a fan of hard work and determination and pulling oneself up by the bootstraps as anyone else, but the fact that it is possible does not make the playing field level, and it does not mean that the poor have ‘just as much’ opportunity to succeed as anyone else. They don’t. They have to work harder.

      Picture a race where two children have to climb adjacent ladders. One starts from halfway up, lifted there by his parents; the other starts from the bottom, and also his ladder is greased and wrapped in barbed wire, and his parents are pulling down on his shoulders. But both ladders are the same height, and they both start at the same time, so it’s ‘fair’, right? Now, an unbelievably motivated kid might manage to haul himself up the second ladder anyway, so yes, it’s physically possible… but the odds are against it.

      I am not talking about people who had a reasonable education in their home country and started a new life with ‘nothing’ – nobody ever starts with nothing. We are products of our backgrounds. If you have a basic education, if you have a supportive family and access to decent nutrition, that’s something you can work with.

      30 million people in the USA – 14% of adults – are functionally illiterate. They cannot read well enough to understand things we consider essential to daily life, such as job advertisements, past-due notices, newspaper articles, signs and posters, etc. This has not happened to them, by and large, because they are lazy and unmotivated. They have simply been failed by their social and educational institutions. They had the bad luck to be born into circumstances that are unimaginable for most of us.

      How do they have the same opportunities as everyone else to make something of themselves? Why exactly should they be thankful they didn’t grow up in some terrible socialist place like Sweden, where unnamed perils will keep them from making the most of their lives?

      • Werner says:

        If these illiterate adults wanted to learn how to read, all they need to do is decide to do so. Once that decision is made they will do what it takes to find the resources they need to help them meet that end.

        My father did not have a “reasonable education” or a “supportive family”. He came here from Germany at the age of 21 with a 6th grade education. He possessed an English vocabulary of less than 50 words. He really wanted to speak, read and write English and made the time to learn. He was conversant in just over a year.

        When he was drafted into the U.S. Army, he took advantage of the English classes they offered. He repeated those classes until he was comfortable with his abilities to read and write his newly adopted language.

        People in this country don’t have to accept the circumstances of their social and educational institutions. It’s hard to change it, but it is possible if they decide to change it. The problem is that most people don’t want to put in the effort to change – because it’s too hard.

        I personally know people who are that way. They know how the system works and plays it to their advantage. They are satisfied to not work, sit back and take the handouts – and feel they are entitled. There’s nothing wrong with them other than they are lazy and live life making excuses for everything.

        I vehemently resent that attitude and mindset. And I hate that people who go to work and contribute to society have their tax dollars go to the “gimme-people”.

        So what if those who aren’t born into privilege have to work harder? What’s wrong with that? It builds character, changes people and creates cultural societies, industries and nations. There is no such thing as a “level playing field “ in life.

        This country was founded by pioneers and doers who wanted the opportunity to make a better life for themselves. It was not founded by people who accepted their circumstances, looking for government handouts or a “level playing field” – those people stayed in Europe.

        If everybody were given a level playing field and given everything they needed to be passably comfortable for the rest of their lives from the very start; no one would be motivated to do a thing more than they absolutely had to. Why would they?

        Once the hardest workers in this type of society figured out they were only eligible for the same exact lifestyle as the laziest people, there would be no incentive, no reason to care or work as hard – and they wouldn’t. Then you’d have the old Soviet Union.

  49. In my business I have what I call a “diva fee”. I don’t charge differently for services and products. Everyone pays the same because I value myself and my time according to the value I provide – regardless of who’s getting that value.

    However, if I KNOW that aside from the value I’m providing, I’m dealing with a high-maintenance client, well, I’m not above charging the diva fee (extra calls, extra edits, extra, extra, extra). It’s like paying for extra conveniences. But if everything is equal, then the diva fee’s not an issue. I set very clear parameters as to what to expect when working with me, and if they want more than that, they pay for it, and know that they will.

  50. […] The Hypocrite Test: Should Rich People Pay More? As with many such fundamental political issues, I think there are valid arguments on both sides of the coin and that some reasonable compromises can be reached. The only problem is that people don’t sit down at the table and rationally discuss such issues today – instead, they resort to arguing, insulting, and “straw man” representations of the opposition. I have little interest in that, whether it’s Keith Olbermann or Glenn Beck – I wish they’d both shut up. Whatever happened to the Lincoln-Douglas debates? Such thoughtful coverage of the issues of the day went away with the advent of fifteen second news blips. (@ awake @ the wheel) […]

  51. […] The Hypocrite Test: Should Rich People Pay More? As with many such fundamental political issues, I think there are valid arguments on both sides of the coin and that some reasonable compromises can be reached. The only problem is that people don’t sit down at the table and rationally discuss such issues today – instead, they resort to arguing, insulting, and “straw man” representations of the opposition. I have little interest in that, whether it’s Keith Olbermann or Glenn Beck – I wish they’d both shut up. Whatever happened to the Lincoln-Douglas debates? Such thoughtful coverage of the issues of the day went away with the advent of fifteen second news blips. (@ awake @ the wheel) […]

  52. Tamara says:

    I don’t believe you get the exact same benefit from the city/state/country if you live in a small house down the hill vs a larger house up the hill.

    1 – in new developments there is a need to provide new roads, plumbing, lighting and other city services. As you get farther and farther away from the epicentre these costs increase because of the loss of residual power, and the larger lots that require more pipes per residence.
    2 – newer and “richer” areas often have increase and more frequent snow removal because their voice is heard more loudly than those in other areas

    If both individuals were truely receiving the exact same services, at the exact same cost to the government, then I might be more inclined to agree that the taxes should be the same.

    • That’s a matter of state and/or municipal tax, not necessarily Federal tax.

      When it comes to income tax, much of it goes to programs the average American will never be a part of, and as such, it isn’t an issue of what you get for your taxes, because let’s face it…the most we’re getting for our taxes right now is Defense, and I’d say that’s pretty equal.

  53. Luke says:

    As a borderline libertarian I believe that in a perfect state, most things would be done through private enterprise with the exception of a few core functions that have large positive externalities which would not be met by normal private incentives. That being said, I think this analogy is a poor one for the reasons that have been pointed out. The benefits of government are largely variable based on wealth. Who benefits more from a fire department, someone with a $2.5M house or someone with a $250k house? Who benefits more from police protection from theft, arson, etc? Who benefits more from legal protection and enforcement of property rights, those with more property or those with less? Who benefits more from enforcement of debts? Of a functioning financial system? And ultimately from the peace kept by a standing army & national defense policies? My guess is that I, as a ‘rich’ person, get more benefit from the government, even than a ‘poor’ person who is receiving direct subsidies from the government, because what value would my specialized skills, wealth, and property have in a world without these protections? And this is outside of any personal feelings I may have towards the rights and responsibilities of citizens to provide for those who do not or cannot provide for themselves.

    Anyway, I think a better analogy would be who should pay more for property insurance, the ‘rich’ person or the ‘poor’ person? I would have to say the ‘rich’ person.

  54. 1st scenario – If I was the contractor I would charge the person in the rich home about 25% more because rich people often expect a higher level of quality and service. So I would increase the cost to cover for the additional time and effort these expectation would cause. From a moral perspective it is perfectly fine as long as you don’t purposely mislead or lie about what your offering to justify the increased price.

    2nd scenario – I am personally opposed to a progressive tax system. Ideally everyone would pay the exact same amount for the public services we receive, but you can’t ignore the complexity of the real world. For any tax system to be practical the rich will have to pay the largest percentage of the tax bill. I would lean towards a flat tax rate that kicks in on income above the poverty limit.

    In general it is to everyone’s benefit for the wealthy to pay the bulk of taxes because basic government services like infrastructure, defense, education and justice raise the whole economy which increases everyone’s wealth including the wealthy tax payers. However I personal believe it gets into a very grey area when the wealthy are asked to pay people to live in the United States.

    I believe the wealth fare state as it is set up now is a negative force on the economy and redistribution of wealth at its worst. However, I do feel that as a wealthy nation we have a moral obligation to care for those who can not take care of their basic needs. I believe we could set up a system that it was a positive economic force that would provide a return on investment for taxpayers.

    3rd Scenarios – I would charge the large corporation more because it is a more impersonal relationship and because the large business will likely have more bureaucracy to deal with. However the prices would not be in different ball parks and if I felt the soloprenuer would be very difficult to work with I would charge her more. Generally I think you should have real business reason for price differences. In my opinion preferring to work in a more personal relationship is a valid reason.

  55. It all depends on your values. Even though all of the situations are similar, the context makes a huge difference. I would not be able to provide a blanket answer for all of them.

    I am actually going to simply ignore #1 and #3 because there are way too many variables to consider as to why the rich would end up pay more for the same service.

    The real issue that I see is taxes. I never understood and never will understand why the wealthy should pay more in taxes. To me it is a form of discrimination. Who in the world decided that just because I have more money, I have to more to government? Isn’t that counter productive from a motivational point of view?

    Best,
    Tomas

  56. Jeroen says:

    All interesting questions, but this one is a bit loaded:

    “Do you believe the richies up the hill should pay a more for the exact same benefits received by you? Or, should they have to pay a larger percentage of what they make?”

    While in the first case, both parties do receive the same service, in governement service the richer do get more out what they pay (security, school funding to name a few), they usually also profit more from things like infrastructure (for most people a bridge/road saves some time, for an employer it saves time for him and the organisation and for all his trucks)

    That said, my ‘most fair’ system would be a sales tax combined with 1000$ income for everybody. (hey, i can dream, right?)

  57. Mel says:

    Taxes aren’t about ‘fairness’ – they’re (essentially) about providing public services that keep our society going.

    Flat taxes: If the selected tax rate doesn’t provide enough money to provide all the required services, what can you do? Either increase the rate for everyone, potentially to the point where poor people can’t afford food and shelter. Well done – you’ve just increased what it costs society to keep those people sheltered and fed (or increased the number of homeless people/beggers on the street). Or you can increase the rate *for those who can afford it*. No, it’s not ‘fair’, but you keep poor people in their homes and out of the pockets of the rich people.

    Also, the benefit provided to by public services *isn’t* equal. Let’s take education as an example, using Pauper and Richy. Pauper has a kid, who attends a state-funded school. What benefit does Pauper and his kid get? Education and the possibility of a better life. What benefit does Richy get from that same kid being educated? A potential educated employee. Possibly an educated service provider. One less person to rely on handouts from Richy via welfare or 5-finger discounts from Richy’s house/car/business.

    Putting it bluntly, these services help the poor and help the rich avoid the poor. Do you want to live in a society with beggars on every street, children pickpocketing to eat, and thieves stealing the tv you just bought with your ‘saved’ taxes? Or would you prefer to pay a little more and have those people educated, housed, fed and policed to keep them away from *your* house and possessions?

  58. I think this post proceeds from a false assumption. The wealthy often receive more than those at lower incomes. For example, the wealthy man might have been buying the same boiler, but for his higher fee he might have received priority installation, whereas the lower-income buyer might have been forced to wait a month. As another example, in my city and many others, wealthy neighborhoods receive better police protection and have better schools. Large companies often receive tax breaks and other public subsidies despite making record profits.
    I would suggest a different hypocrite test: Do you value humankind so little that you will let poor people suffer because they work the low-wage jobs that you don’t want? In the United States about 45,000 people die every year due to denial of health coverage. The annual compensation of one insurance company CEO could save those lives. Are the CEO’s creature comforts really more important?
    I would also suggest a common sense test: If citizens of the “social democracies” of Europe are repeatedly shown to live longer, healthier, happier lives than Americans, why shouldn’t we learn something from those systems?

    • Because the United States is not a socialist country. If you start doing that, then we’re facing a much larger problem than people being poor.

      • Cory Kaufman says:

        What problem? Disincentive to work hard? I would think the government taking more of your income would make you want to work harder, not work less. What exactly are you afraid of?

        • It doesn’t work that way. In a socialist country, there is no incentive to work hard because income isn’t based on effort, but on need.

          Am I going to work harder because someone uses a whip? Why would I work harder in order to give more away? It’s a faulty argument.

          • Cory Kaufman says:

            Maybe if we were purely socialist, but we’re not. There’s still plenty of incentive, because if you work more you still earn more money. Based on the argument you’re making, inflation would also cause people to want to work less, because their current income can’t provide as much as it used to. That’s not the case though, because even though our dollar is steadily losing value, we still have plenty of opportunities to be rewarded for hard work.

          • K says:

            This definitely explains why there are no European international corporations, entrepreneurs, multimillionaires or poverty. Except for how all of that doesn’t actually make any sense or relate to, you know, the reality based community.

  59. Vicki in ABQ says:

    I don’t think we’re comparing apples with apples when talking about taxes and contractors. I feel a contractor should charge the same for the same exact work (unless he wants to give some portion of it as charity–when he knows the client can’t pay–for example: his own personal labor). But with taxes it is not just the same, it is fundamentally different.

    I believe that those who benefit the most from society, should contribute the most to society. The poorer person is not getting the same level of benefits—for some reason, the richer person is getting more benefits from society (their personality type may be better suited to success in the current structure of society, they may be able to get more tax credits and deductions because they can afford to spend money on the things that qualify for those, the structure of society may have afforded them more opportunity–of various forms–than the poorer person down the hill, etc…) There are lots of our “freedoms” that aren’t really ours to take if we can’t afford to take them…you have the freedom to move, get an education, live where you want, etc…only if you can afford to so.

    The rich person isn’t richer because he or she is necessarily a better person. They are richer because they had the opportunities to be so and they had the knowledge to know the right decisions to make in our current societal structure to be so. The odds were slanted in their favor, so they got more benefit from society than their poorer neighbor. Therefore, since they get to take more benefit from society, they should in turn contribute more to it.

    That’s my take on the issue.

    • You’ve got to be kidding me. Rich people got that way because they are lucky?

      I don’t know a single rich person that didn’t get there by working damn hard and taking risks. The odds are slanted towards those that are willing to try, but saying that people are rich because the game is rigged…well, that’s just bogus.

      Ever consider that poor people are poor because they choose to be?

      • Jeroen says:

        “You’ve got to be kidding me. Rich people got that way because they are lucky?”

        That is not what she said.

        “Ever consider that poor people are poor because they choose to be?”

        That is just plain judgemental. Not to mention completely wrong.

        • “They are richer because they had the opportunities to be so and they had the knowledge to know the right decisions to make in our current societal structure to be so”

          I’d say that borders on luck, especially the first part.

          Opportunities are created, not happenstance.

          I was poor for several years, so I think I know a thing or two about it. My comments are based on my own experience and the experience of knowing other poor people. Call it what you want.

  60. I agree that the tax analogy specifically is not the point of the discussion.

    As a business owner, I believe in charging whatever the customer will pay as long as they feel fair value has been delivered. As a customer, I feel the exact same way. Being a miserly skinflint and always trying to chip people down is just a waste of energy, and it’s unbecoming.

  61. Lot’s of great comments here, as well as the original discussion. Leaving out the tax burden of the rich and wealthy for a minute, or maybe even two, having been on both sides of the equation you present, I can say with confidence that I charge the same no matter who you are. If you can’t afford me, then don’t hire me. However, for a smaller company/business, I may make a deal, or take them ‘off the clock’ after awhile, in order to attract/keep a new client.

    My only problem right now, is that not too many people know that I’m famous, so, they don’t charge me the higher price yet, however, I know it’s coming 🙂

    The short term is, I’m raising money to make a short film. Whatever I raise is my budget. If someone doesn’t cut me a deal, then I don’t use them. I don’t have the opportunity to deficit spend….

  62. Jonathan Fields says:

    Hey everyone – loving the continued back and forth in the comments. Seems we’ve got a few different yet pretty intriguing conversations going on. Lot’s of strongly held points of view that have got my head spinning…in a good way.

    Just a quick reminder…disagree all you want, debate all you want, that’s cool and ecnouraged.

    But keep it respectful. That is all. Thanks! 🙂

    • Werner says:

      I completely agree Jonathan.

      tobias tinker and I are quite far apart in our opinions, but he’s obviously an intelligent and insightful guy and I totally respect him for his views…

  63. Personally I believe that it is unethical to charge someone more just because they have more money (deep pockets).

    I value the work I do, and every estimate is based on the information the client provides and how long it will take me to complete the work.

  64. Naomi Niles says:

    I didn’t read through all of the comments, so maybe someone already addressed this.

    But regarding the question of charging the same thing for a small client vs. a corporate one, I think that really depends on the ROI of the client and the perceived value of your services/products.

    I charge my clients the same because most are very small biz’s like us and it makes sense to do so within that market. But, if I would propose those same rates to a larger corporate client, there would be no chance that they would take us seriously.

    We have actually been placed out of consideration for particular projects before because our rates were too low.

    Just something else to think about.

  65. Scott Messinger says:

    Here’s a thought:

    What if the cost of the boiler and installation was $11250? And the contractor knew that your friend “down the hill” couldn’t afford it. Perhaps he had 2 kids and a sick wife, and his boiler was shot. But he could afford $7500. To the contractor cuts him a deal on installing the boiler because the rich guy up on the hill could afford to pay twice as much. And so it all evens out. (11250 X 2 = 7500 + 15000).

    Everyone wins. The poorer guy gets a boiler and is still a productive member of the town, and the rich guy gets a boiler and gets to live in a town that is better because of it.

    In reality, contractors don’t work like this. But the government does (or is supposed to).

    Now, there are probably millions ways in which this metaphor breaks down, but I think you get the point.

  66. […] Blogger Jonathan Fields, in his blog Awake at the Wheel, has a great discussion and thought experiment on what is to fair to charge clients, in his post The Hypocrite Test: Should Rich People Pay More? […]

  67. Ryan Hanzel says:

    I liked this article, I think everyone at some point or another thinks about what the rich should be doing and the poor shouldn’t. My opinion is that I think the rich people should pay more of a percentage from their income for things than the less wealthy. At the same time I came up with a argument that contradicts my own opinion. If the poor person could get the same things rich people can for the same percentage of their base income, why would anyone have aspirations to become rich? I think some minor things could be changed to benefit today’s economy but being rich should be more of a reward for your actions. It is a motivator to strive for success and accomplishment, at least for me. I would love to see my family have it made from me being successful and not worrying about nothing financially until their final days. Just my thoughts and opinions.

  68. I really enjoyed this topic.. But the question that comes to mind is how do you find the things to blog about? Do the topics come to mind at random or do you think it through?

    • Jonathan Fields says:

      Hey B, A little of both. There are certain posts I plan and others that just come tumbling out. This one was the latter. A lot is just based on what I experience every day. 🙂

  69. […] The Hypocrite Test: Should Rich People Pay More? As with many such fundamental political issues, I think there are valid arguments on both sides of the coin and that some reasonable compromises can be reached. The only problem is that people don’t sit down at the table and rationally discuss such issues today – instead, they resort to arguing, insulting, and “straw man” representations of the opposition. I have little interest in that, whether it’s Keith Olbermann or Glenn Beck – I wish they’d both shut up. Whatever happened to the Lincoln-Douglas debates? Such thoughtful coverage of the issues of the day went away with the advent of fifteen second news blips. (@ awake @ the wheel) […]

  70. Bill says:

    I don’t think I quite agree with your premise. Or maybe I just don’t feel comfortable with the comparison. In the boiler instance, I would say yes, unless there are some major cost exceptions, the price should be the same.

    But taxes are another thing. If the U.S. system is anything like the Canadian, it is a puzzle with layers and layers of complexity layered on top of one another. “If this, then that unless exception A or B apply and, if B, refer to subsection 95 of clause 3.1.2.”

    In other words, though perhaps the system was designed with the best intentions (like fairness), the more wealth you have the better able you are to afford experts who can find the exceptions, whittle down what you pay, and so on. Some years ago in Canada a survey was done of Members of Parliament asking if they would be able to do their own taxes — without an accountant. The majority said they would have no idea where to even start. Should everyone pay the same percentage? Probably. Is that the reality? No.

    For myself, I essentially charge everyone the same price for my writing services. Where I may make an exception (charge less) is when a contract has a guarantee of a certain level of work over a fairly long period. It’s a kind of discount for buying in bulk.

    I believe in fairness and don’t think someone should be penalized for having either more or less available to them. I do, however, think the world is rarely quite as black and white as that and we have to be guided by fairness within whatever the given context its.

  71. Keith says:

    I didn’t have time to read all the comments (obviously a great set of questions) but will chime in with my opinions.

    First, I am for the flat tax with essentials removed from it, especially since this gets the ones that don’t pay taxes (criminals, drug dealers etc…)

    Second, I think your product service is worth what people are willing to pay for it, period. I have owned contracting companies, and my rate was the same no matter where you lived, but that is me. I personally think the ones that try to take advantage will be weeded out eventually.

    Third, let me know when you get rid of that annoying pop-up asking me to sign up for your newsletter, I will come back then. I am completely for newsletters, and I sign up for plenty of them, but I NEVER sign up for one that has a pop-up, I just hate pop-ups…

  72. trademan says:

    my experience for the income tax is like waste food as it gives no benefit for what we pay the income tax.

  73. william says:

    I believe that it is easier to earn a million dollars with a million dollars, versus a dollar with a dollar. Hence, the person who earns a million dollars should pay a higher percentage in income tax to sustain the system that allows him to earn proportionally more.

  74. Henry says:

    Prices are determined by what someone is willing to pay, not by any measure of intrinsic value, so in the first case both are willing to pay so it’s ok.
    Taxes should be based on a percentage of income, because someone who has more, requires more. (ie. more land, more customers etc.) People that have more money, have more money because people give them money. the more people that give them money the more meoney they have. Because they benefit by more people providing them more money they shoul d pay more. (an equal percentage is appropriate).

  75. […] isn’t that the rich have money…it’s that they are tired of it being taken away by […]

  76. marc henlee says:

    Rich people should pay more in taxes. No one person should have billions of dollars. For every dollar they have in bank or “investing” somewhere, is money a lot of others can use in our economy, such as buying groceries, building homes, etc…That same money could help others. The rich are rich because they took advantage of the regulations (or lack of) that society/government provided for them in first place. There are those that say “they earned it”. Yes, but society gave that chance to them. Since they live in a society of other peoples, they should be morally responsible to limit their own greed.

  77. […] This post was mentioned on Twitter by David Risley and Lisa Morosky, Nathan Hangen. Nathan Hangen said: This is a really scary comment: http://bit.ly/dpaG4T […]

  78. ipv5 says:

    Shouldn’t everyone that is on TV pay a tax on the incremental value they receive by being on TV? Every TV personality gets paid to do their job, but they themselves receive additional value by being on the public airwaves and building public recognition. Easily the value of the recognition is equal to the salary received for the appearance.

    Shouldn’t the tax rate they pay reflect these additional values they are receiving?

    Should the rate be double their current rate?

    Since they receive so much value and advocate positions with broad reaching impact, wouldn’t it only be fair that they are affected proportionately?

  79. John says:

    Let’s stop using this euphemistic word “tax” and replace it with the correct one, “extortion”.

  80. Alan N says:

    I have often wondered in the design field for print materials or websites how to determine what you should charge someone.

    Here is an example…you are starting up a website company solo so you charge your first few customers $500 per site + whatever extras they want, now a few months later you start getting some high end customers in, do you still charge them the same $500 ? or do you switch over to a new plan where you see what their budget is and work from there?