Marginal utility of money

I appreciate you think there are other arguments in favor of a progressive tax. I agree.

The issue in this thread is whether marginal utility is another argument in favor of a progressive tax.

If, as you have now conceded, the MU of $100 in marginal income is far greater to the starving man than the billionaire, why wouldn't it make more sense to tax that $100 in marginal income at a higher tax rate for the billionaire?

You say there is a simple argument against it. Well? What is this simple argument against it?

Well, then what is this so-called simple argument against it?

Where did I ever say I believed that? You raised the issue in your OP of whether marginal utility justifies higher taxes. I have proved why it does.

 

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

You haven't made a reasonable argument on that at all. Nothing "skews" the issue. $100 of marginal income is $100 of marginal income whether it's to a starving man or a billionaire.

And as you've already conceded that the MU of that $100 is far greater to the starving man, we maximize overall utility by taxing that $100 in marginal income at a higher rate for the billionaire.

Simple, irrefutable.

Irrelevant.

I want to see your "simple" argument, if you actually have one, which I very much doubt, as to why we don't increase overall utility by taxing $100 in marginal income at a higher rate for the billionaire than the starving man, and why, therefore, this is not a sound logical reason for progressive taxes.

You claim you support progressive taxes. Why are you so adamantly against this logical argument for progressive taxes? If you really do support progressive taxes you would embrace it. It's a fine argument for progressive taxes. I wish I'd have come up with it.

 

It isn't.

What a $100 marginal unit is does nothing to the rich man. Its like saying, "rich man would not like a sucker as much as a kid, therefore it justifies him paying more tax. That is all you have "proved."

The simple argument against it is, THERE IS NO ARGUMENT FOR MARGINAL UTILITY TO JUSTIFY IT. Ergo, we need no argument. Saying that a diminishing marginal utility justifies a high tax means nothing if you follow the fact that since a rich man will not consider a small Marginal Unit thus he will not have a diminishing MU.

You have proved nothing but if you use a small enough marginal unit you can come up with one a rich man will never consider. What kind of skewed "proof" is that? Again, you proved nothing more than if you said a poor kid will get more marginal utility from a sucker so we should charge the rich man a higher tax. Nothing, nada, nunca.

 

Simple and irrefutably logical argument.

The marginal utility of $100 is far greater to the starving man than to the billionaire. There is no dispute about this point.

If, therefore, our goal is to increase overall utility in our tax policy, then the only logical course of action is to levy a higher rate of tax on the marginal $100 of income that the billionaire receives and a lower rate of tax on the $100 the starving man receives. This will maximize overall utility, since the utility produced to the starving man is far greater.

Contrary to the OP, we've established that marginal utility indeed provides a very sound argument in favor of a progressive tax system.

Which anyone who favors a progressive tax system should logically embrace.

 

Per your OP: There have been discussions in some areas as to the validity of the economic position that the marginal utility of money always diminishes as wealth increases, and which has been suggested that income taxes on the wealthy would be justification for much higher %s of income tax than even what the Administration wants to do.

Which is exactly why he should pay a higher tax on it, right? That $100 marginal income is nothing to him. But to the starving man it's an issue of whether he can eat.

That is you "simple argument"? :rofl: :rofl: :rofl: Putting it in capital letters?! :rofl:

You are simply making an (baseless) assertion, a conclusion. Making an assertion without any logical or factual support for it is not an argument.

You said you had a simple argument against it. Guess not. Which explains why you've dodged and trolled.

I'm sorry. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Therefore, logically, if we want to maximize utility, then that $100 in marginal income should be taxed at a higher rate of tax on the billionaire than the starving many. Regardless of whether $100 is meaningless to him. Or more accurate to say may be especially because that $100 is meaningless to him.

It is irrefutably logical proof. If as you admit $100 isn't even something a billionaire would even consider, and that same $100 will keep a starving many from dying, of course it makes more sense to tax the billionaire's marginal $100 at a higher rate.

How could you even deny this?

 

I agree. So tell me again, what is the point of that? It still does not prove that the rich man has a diminishing marginal utility for wealth. It only proves that if we, as an outsider create a marginal unit for him, a marginal unit he will never consider, we can skew marginal utility. IOW, IT MEANS NOTHING. Therefore, how can "nothing" justify "anything"?

Where did we decide it was our "goal" to use MU to raise taxes? And if we do choose to use MU to raise taxes then there must be a reasonable marginal unit for the rich man to consider. Basically, when you are trying to use $100 as a marginal unit you just blew the marginal utility theory out of the water. $100 is irrelevant to a rich man, and he will never use.

Nope, what you have just produced is an argument that if YOU CHOOSE the marginal unit you can MAKE IT LOOK LIKE it justifies a progressive tax system.

Then it would be embracing a phoney concept if one uses a miniscule marginal unit to prove diminishing marginal utility. IE, there is no proof at all, except that we as outsiders can skew the numbers anyway we wish by using a phoney and arbitrary sized marginal unit.

Circular thinking Iriemon. If we really want to use marginal utility as a justification (and I don't agree we should), then we have to use the size of marginal unit the rich man would consider. We can't use an arbitrarily outside selected unit size.

 

Yep, that is my OP.

So the starving man can eat, we agree. But the rich man will not use $100 as his marginal unit. Got it yet?

No, it is not a baseless conclusion. If you want to use marginal utility as an excuse, you have to use the size of marginal unit the individual would consider, not $100.

I have used a sound argument and you still want to argue the same old baseless concept of you choosing the marginal unit. Only the individual considering the unit can made that decision.

Which has nothing to do with the marginal utility the rich man will actually have.

Yep, it is meaningless to the rich man, therefore it can't be used to determine the rich man's marginal utility. Note, I did not put a value in the op, why are you arbitrarily trying to do so now?

The only irrefutable proof you have presented is concerning a miniscule marginal unit. Not whether or not the rich man will or will not have an increase in marginal utility as his wealth increases.

Because it is skewing the outcome of the rich man's marginal utility of increasing wealth when you arbitrarily choose a small marginal unit for him to consider, and he would never consider $100.

 

How can diminishing marginal utility be logically used if the marginal utility does not actually diminish?

I am sure you are aware that if you were going to pay higher taxes if your marginal utility of wealth diminished, and I arbitrarily selected $1 as the unit size you would use, then you would have to pay more taxes. Don't you think it silly for me to select $1 as a marginal unit of wealth for you? I don't know what your income is, but do you think you would be satisfied if your marginal unit was $1? Of course you wouldn't.

So to put all of this in perspective, even if I wanted to use diminishing MU as a justification for higher rates for a billionaire, I would have to determine if his Marginal utility actually is. Likely he would consider a marginal unit in the millions of $$$$$. Likely his MU would increase. Therefore no justification to raise his taxes.

 

The point is that a marginal increase in a given amount of income, whether $100 or $1000, has far greater MU to a poor man than a billionaire.

That statement simply confirms my position. Whereas $100 means a starving man can eat, it is insignificant to a billionaire. It then logically follows that the billionaire should pay a higher tax rate than the starving man.

Of course it means something. It means that $100 of marginal income produces far greater utility to a starving man than a billionaire. Which you've conceded. And therefore, justifies a progressive tax.

You've stated you support progressive taxes numerous times.

There "must" be no such thing. Who cares what the rich man considers or not.

We are trying to decide whether he should pay a higher rate of tax on his marginal income than a starving man.

Again, you're just proving my point.

It "doesn't make it look like". You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

It's not a "phony concept" and it doesn't "skew" anything. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

We can substitute $1 or $1000 instead of $100 and get the same result. That marginal utility of that money is far greater to the poor person than the billionaire, as you concede. Therefore we increase overall utility with a relatively lower tax rate on the poor person. Which you cannot and have not refute.

No we don't. Again, who cares what the billionaire would consider? We are looking at how to tax marginal income. We can make it $1 dollar and get the same result.

 

What's he going to do with the $100?

We can use any figure you want. What figure do you thing would be more appropriate to use as a tax rate determinant?

I haven't seen any argument, much less a sound one.

Nice try to backpedal. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Of course it does. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Of course it can. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Because you've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. We can make it $1 if you prefer. Or $1000.

Irrefutable logic. The proof is that ou've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

 

It does diminish. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

That is the only logical conclusion whether you use $1 or $10 or $100 or $1000.

Not at all, if we are trying to determine what rate of tax we should apply to a marginal increase in $1 income.

A maginal unit isn't "his". It's simple the metric we are using for determining a proper tax rate.

It doesn't make sense to have a tax rate structure based on units in the millions of dollars. Most people don't have millions of dollars.

 

There is no way for you or I to know what figure we should use as the size of the marginal unit for someone other than you or I. That is the whole point when I said,

"There have been discussions in some areas as to the validity of the economic position that the marginal utility of money always diminishes as wealth increases, and which has been suggested that income taxes on the wealthy would be justification for much higher %s of income tax than even what the Administration wants to do."​

Then you are not reading my comments.

Which means nothing to his actual marginal utility. We could say millions of times that $100 would have more utility for a poor man than for a rich man, and we would have still not determined what the rich man's actual marginal utility would be.

Can't you get it through your head that we CANNOT CHOOSE THE SIZE OF THE BILLIONAIRES MARGINAL UNIT. I put it in all caps because you obviously can't read small print or you would not keep saying he same BS over and over.

It is obvious that if you believe you can arbitrarily choose the size of the marginal unit, whether is is $100 or $1 million, you have not even the slightest idea of what marginal utility is all about.

 

That was not the point of the OP. And we don't need a MU metric to determine tax rates.

Either we are going to use Marginal utility to make a tax determination or we are not. If we are, then we have to use the unit size of each individuals own choice so as to determine just what is what he would consider.

Basically your whole argument is, we can choose the MU metric of our choice. If we do that we just threw out MU as a justification. A justification we didn't need to begin with.

So make up your mind. Do you want to use MU as justification (I don't)? The use the metric which fits the individual, or recognize we don't need such a justification, period.

 

But you've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. The marginal utility of that $100 in marginal income diminishes as wealth increases. As you've conceded.

Which is why it makes irrefutable logical sense to tax the billionaire's marginal $100 of income at a higher rate than the starving person.

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

We don't need to figure out what his marginal utility would be, whatever that means. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Can't you get it through your head that we ARE NOT CHOOSING THE SIZE OF THE BILLIONAIRES MARGINAL UNIT.

We don't need to figure out what his marginal utility would be, whatever that means. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Sure I do. The marginal unit is whatever we want it to be. And you've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

Given that, as you concede, $100 in marginal income has far greater utility to the starving man than the billionaire, how can it not be that we increase overall utility by taxing the billionaire's $100 in marginal income at a higher rate than the starving man's?

You've never addressed, much less refuted that contention. And the reason is obvious. The logic is irrefutable.

 

Regardless of whether you intended it to be or not, you put it the OP. And have been arguing about it.

Irrelevant. Where did I ever say we needed it? Why do you keep saying this?

We are.

No we don't.

That doesn't follow at all. If, as you concede, $100 in marginal income has far greater marginal utility to the starving man than the billionaire, then why does it not make perfect sense to tax the billionaire at a higher rate?

Why is that "throwing out MU as a justification"? It is a perfectly logical justification.

I'm using the metric of $100 of marginal income, thanks, since that was the figure that was being discussed. But same result if we use $1 or $1000.

 

No, I did not put in the OP as you want to use it. I put it in the op as to how marginal utility SHOULD NOT BE USED. And even then, only if the marginal utility was used in accordance who the individual would perceive MU. You have bastardized the whole idea by trying to select an marginal unit which would never be used by the people involved. The fact that a marginal unit of $100 would be great for a poor man, is not relevant as the rich man would never use it. Thus his marginal unit which would be considered would be much higher and his marginal utility would increase and poof, there goes your justification for progressive taxation. Since we don't need a skewed marginal utility to justify progressive taxation why would you try to use a phoney one?

Conceding that a skewed miniscule marginal unit would be of more value to the poor man has absolutely nothing to do with using marginal utility as a justification for progressive taxation.

Not if you use the actual marginal utility. Only if you try to use a skewed and phoney unit.

It was only discussed as an example of why the rich man would never consider it. After all, he lit a cigar with a $100 bill, so obviously if you really want to use marginal utility as a justification you would have to use what the billionaire would consider, which will me many times more than $100. Stick with that stupid story, it further suggests your ignorance of the entire discussion.

 

A person doesn't have a marginal unit.
It's whatever is being dealt with at the time. If it's a $100 bill, the marginal unit is $100, whether it's a poor man or a billionaire.
If you are dealing with yachts, the marginal unit is the cost of the yacht.
The value of the marginal unit is situational.

 

I couldn't care less how you wanted to use it. You drew the reference to tax policy in your OP and have been arguing that MU doesn't support a progressive tax policy. Why you would argue that being a self proclaimed "moderate Democrat" who supports a progressive tax structure. But fair game.

I reject that condition.

Sure it would. $100 or $1000 is a natural marginal unit to use when analyzing tax policy.

Thanks for proving my point that MU supports a progressive tax structure.

I couldn't care less what marginal unit he would use.

I'm "skewing" nothing. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

I'm "skewing" nothing. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. Which has everything to do with the fact that MU is an argument for progressive taxes, as taxing the starving guy more reduces overall utility more.

I'm "skewing" nothing. I'm using actual marginal utility. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. Which has everything to do with the fact that MU is an argument for progressive taxes, as taxing the starving guy more reduces overall utility more.

Proves the point, as you've conceded, that the MU of a marginal $100 in income is much greater to a starving man than a billionaire, which is why MU argues for a progressive tax.

I have to do no such thing, as the issue is what rate of tax should be applied to the marginal income of $100.

Sour grapes from someone who cannot defend their lame position.

 

Exactly. He's making this silly argument as if we each walk around with a mythical marginal unit we think about.

The issue he raised in the OP is whether MU justifies progressive taxes. In that context it is perfectly rational to talk about what the tax should be on the next marginal additional income of $100.

He concedes that the rich guy lights his cigar with a $100 bill while it would keep a starving man from dying, and he concedes that the MU of that $100 in marginal income is far greater to the starving man than the billionaire.

But then he refuses to acknowledge the obvious -- that therefore if your goal is to maximize utility, you would have a higher tax rate on that $100 of marginal income of the billionaire than the starving guy.

He's just stubborn and too proud to concede he's just wrong.

 

Correct, a person does not have a set marginal unit, it is what he is dealing with at the time, and a billionaire will never choose $100 as his marginal unit as his wealth increases. If the two of you won't accept that, then why bother discussing it? Both of you are trolls looking to argue over points neither of you understand.

So, unless you accept the fact that a billionaire will NEVER DEAL WITH A $100 MARGINAL UNIT, there is no more point in discussing the issue.

 

You've already conceded that MU is subjective and cannot be measured so your statements about what a billionaire would or would not "choose" as his "marginal unit" is both nonsense and irrelevant.

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

You're just a troll who's been proved wrong by your own concessions and you're too stubborn to admit it.

I accept it just fine. Which, for the nth time, completely supports my positions and destroys yours. Because the MU of a $100 marginal unit is so low as to be meaningless to the billionaire, and is much higher for the starving man, as you've conceded, then you have to acknowledge that overall utility is maximized with a higher tax on on that marginal $100 of income for the billionaire.

Let's break it down.

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. No dispute there.

And you'd agree that the goal is to maximize utility, right?

So given that goal and given that that $100 in marginal income has far greater utility to the starving man than the billionaire, if you want to maximize utility, would you tax the $100 dollars in marginal income higher on the billionaire, or higher on the starving guy? Why?

 

The point is only to understand what marginal utility means to the individual, that is all. Do you accept the fact that a billionaire will NEVER DEAL WITH A $100 MARGINAL UNIT? If not get back to me when you do.

 

In the story about the millionaire who lights his cigar with a $100 bill, what is the marginal unit?

 

I accept it fine. Please answer the question and stop dodging:

Let's break it down.

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire. No dispute there.

And you'd agree that the goal is to maximize utility, right?

So given that goal and given that that $100 in marginal income has far greater utility to the starving man than the billionaire, if you want to maximize utility, would you tax the $100 dollars in marginal income higher on the billionaire, or higher on the starving guy? Why?

 

Do you accept the fact that a billionaire will NEVER DEAL WITH A $100 MARGINAL UNIT?

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Nope!

It is not given that the goal is to maximize utility. Do you accept the fact that a billionaire will NEVER DEAL WITH A $100 MARGINAL UNIT?