The 7 August issue of The Economist has a wonderfully thought-provoking piece that starts from an uncontroversial premise — we should strive to maximise human happiness — and ends up at a surprising conclusion — we should therefore put up taxes.
How so? Well, it turns out that people value relative wealth much more highly than absolute wealth. As a result, if we were all to work harder and earn more money, none of us would end up any happier. In contrast, people behave very differently in relation to time off work &mdash they welcome having more of it regardless of whether or not other people are getting even longer vacations. The logical conclusion is that the tax system should encourage us to take more time off rather than to work even harder. That means a high marginal rate of income tax.
As someone who would readily consider emigrating again if UK taxes go much higher, I find it hard to go along with this completely (seeing my tax money being frittered away by a bunch of dickheads certainly subtracts from my total sum of happiness), but at least it made me see things in a new light.
Posted by timo at August 15, 2003 10:07 PM | TrackBack