About Joe...

Joe Wurzelbacher, the Ohio plumber who cornered Obama during a campaign stop, got a lot of attention in the final presidential debate. His complaint: he wants to buy a plumbing business that makes around $250,000 a year. So he asked Obama if that wouldn't mean higher taxes for him. That would be wrong, Joe thinks. So does John McCain. Taxing people like Joe might keep him from owning a business that would provide jobs to other people.

Joe may end up being the face of the last three weeks of the campaign, and there are certainly issues worth arguing about behind the question he asked. But as usual, these things aren't simple. Would Joe's taxes go up? That depends. Is the $250,000 gross receipts? Or net profits after all expenses and salaries are paid? (See this ABC blog for some related questions.) That makes a difference. If what Joe has in mind are gross receipts, then his net profit will keep him nicely under the threshold.

But let's suppose he meant net profit. What's the issue now? Everyone agrees: it would be nice if no one had to pay taxes. But everyone also agrees: we need schools, bridges, disaster relief, highways, an army and any number of other public goods. Although hard-core libertarians think that the government shouldn't be in charge of any of this except the army, most voters, including most conservatives, don't agree. So we need taxes. And that brings us to the big question:

Given that we have to have taxes, what should the rates be? Who should pay how much?

One answer is that we should all pay the same rate. And as it turns out, Joe thinks something more or less like that. Here's Joe in his own words:

It's not right for someone to decide you made too much---that you've done too good and now we're going to take some of it back.

In fact, Joe is against any sort of progressive tax scheme. He thinks it's unfair.

Now maybe at the end of the day, Joe is right. I don't think so, but what matters isn't my opinion. What matters is that there is a heck of a lot to argue about here. To do what everyone in the mainstream -- liberal and conservative -- thinks government needs to do will take a large chunk of money. And so we can ask: what flat tax rate would do the trick? Once we've figured that out, we'll need to ask another question: what would that do to most people's situation?

The likely answer: most lower and middle class people would pay more taxes than they do now, while people making lots of money would pay less. Is that fair? Maybe, but it's not so clear once you frame the question carefully. After all, people who work hard but make low incomes have to spend more of their money on necessities. People with high incomes, even if they're in higher tax brackets, spend a smaller fraction of what they make on getting by. And the more they make, the truer that is. Surely we can at least raise the question of what fairness calls for here.

So... Are progressive tax schemes unfair? People are bound to differ, but my guess is that most people would opt for a progressive tax structure, even if they aren't in the bottom bracket. In that case, it's just built in: some people will pay more on their top dollar than others do. Unless we have what we might call "continuous bracketing," which I'd guess would be a nightmare to administer, there will be cutoffs. And someone -- Joe or someone else -- will end up on one of the cusps. But if a progressive tax code is the fairest way to go, then that's pretty much inevitable.

There's room to argue about what the brackets should be. There's room to argue that when it comes to small businesses, $250,000 in net profits is too low a point to put the cutoff. I'm willing to listen to folks who've run the numbers and have arguments to make. But though I wish him well, I'm not willing just to take Joe's word for it.