Tax the Rich

Let’s see, if the tax percentage were the same, someone making 250,000 pays more five times more taxes than someone making 50,000 dollars, but with a tax system that digs more out of the higher income citizens, they pay a lot more.Why? Because there are a lot more voters making 50,000 than making 250,000 regardless of what the “rich” can contribute to campaigns.We keep hearing about all the protection and so forth, the wealthy get..LIKE WHAT? Chances are their kids go to private school but they pay the full tab as if their kids were serviced by public schools. They have almost zero demands on social services, seldom need to call the police.Well to do people really drive people of lesser means crazy because they are a constant reminder that if you use your intelligence wisely, are well-motvated, work extremely hard, and are very persistent at achieving goals, if your efforts produce something that the public is willing to pay for, you will be rewarded. Unless one is born into old money or wins a lottery, the formula for wealth is obvious. It must be hard to accept that nost people earn what they deserve because we are all rewarded or punished for the choices we make. People who have contempt for the wealthy, think the so-called rich are ripping people off, and want to see them as the piggy bank for everything they think they are entitled too suffer from a serious disconnect from reality. Maryland decided to stick it to the rich in 2007. The net result, more than enough wealthy Marylanders split the state for lower taxed states but Maryland’s so-called progressive government couldn’t appreciate, it’s better to have the wealthy paying the same tax rate as everyone else and stay in Maryland than bolt for greener pastures and Maryland gets nothing.The wealthy are less likely to split the United States, but they can surely move their income around where it is not subject to the IRS.The basic philsophical argument is between having financial equality forced on the state by a government that is wasteful, bureaucratic and has an enormous overhead that sucks resources from the economy while returning little –OR– having a system of equality of opportunity where all can go as far as their efforts and hard work will take them. The “progressive” world and labor unions seem to believe everyone is entitled to an upper middle class lifestyle and it is up to them to decide how much is too much.Is it any wonder movements like the Tea Party have arisen. Everybody who pays taxes can see the extent to which their money is being wasted on unproductive pursuits.If Los Angeles can build a school like the RFK complex with amenities most would think of as absurd to spend money on in even the most elite private academies while other schools continue to fail miserably, the government is too powerful and spends too much money. If the billions of dollars extorted from the public to pay for an economic stimulus, that has produced so few jobs and averages out to a six-figure some for each job created something’s wrong. If public employees,such as teachers, use their union clout to concede nothing during these difficult times, something’s wrong. When in Baltimore County, teachers at the top of the pay scale make over 80,000 a year (and even more in Montgomery County) with a generous pension, lifetime health care including dental regardless of their effectiveness in the classroom, something is wrong.One way to secure wealth is to invest wisely. Wealthy people appreciate there is no better place to destroy and waste wealth than for it to go to the Federal Government.The next time you encounter a person who makes $200k or more, than him or her for all the goodies around town they are buying just for you. IF you want to see greed and envy, look in the mirror if you think you are entitled to more and more of someone else’s hard work if you are able-bodied and of sound mind to earn your own living. It is not surprising that folks in academia seem to cry the loudest as if there should be a never ending stream of Federal grants for their continued pursuits without having to demonstrate the economic value to society of their work. It would be unfair to say academics don’t work hard, but those who are working toward careers are paying their dues for which they can be paid handsomely later. If one feels he or she is not getting the proper compensation, another vocation is always an option. We should aim to have a system where more people have access to wealth rather than one that limits and redistributes based on some political notions of what some believe is equitable.Talk to some small business owners and hear their narrative on what they had to do to make their business succeed and all they must do now in these uncertain times.

You are correct that I was referring to federal income taxes when I stated that the top 1percent pay 70percent of the taxes. This is the number I cited because because our national conversation is focused on the federal tax rate. Maybe you didn’t learn this in school, but the federal government does not have the ability to establish state and local tax rates. Beyond that, the money given to state and local governments doesn’t support federal programs or reduce the national debt. However, the data you cited from Citizens for Tax Justice shows that the top 1percent ARE paying their fair share since this is the group that pays the highest proportion of their income in taxes, even if you include state and local taxes. In fact, some might argue that a group that holds 20 percent of the income and pays 23 percent of the taxes IS paying more than their fair share. So is the next bracket down. Of course those who earn more are going to pay more in real dollars, but why should they pay a higher percentage of their income than others? This, my friend, is not a flat tax, although I certainly support a flat tax wholeheartedly. By the way, some of the uber wealthy do pay more than their fair share towards the causes you list, and they do it through substantial charitable contributions. Countries with higher tax rates do not have a system of philanthropy like ours in the US, and frankly, the point of philanthropy is that some feel that their dollars are better spent when given directly to a cause without the government serving as the middle man. I’d love to see numbers that include charitable giving in addition to state and local taxes. But since you support the idea of income redistribution, let’s start with institutions of higher education by forcing them to send all of the charitable contributions they collect into a single, national fund, and then divide it up among institutions based on the percentage of low income students they serve relative to their entire student population. Maybe it is time for colleges and universities to practice what their faculty so boldly preach, or are the uber wealthy okay as long as they are sharing their wealth directly with you? Maybe it’s time to eliminate the tax benefits of charitable contributions to colleges and universities, and maybe those institutions with millions or billions in their endowments should start paying taxes on the capital gains these endowments earn. After all, even among the top 1 percent there are few who have a bank account like Harvard’s.

If the government wants money why don’t they stop issuing tax refunds to those who take advantage of so called entitlement programs. Example: A 24 year old nurse, makes $9/hr, single mother of 3, baby’s daddy sits at home all day not working, is on WIC and Medicaid, received an $8,000 tax refund. My wife and I, both employed, are on private insurance, make every loan payment on time, have graduate degrees, own a home, make just enough to not write off our student loan interest, barely break even if at all on our tax returns. I have no problem breaking even, but do not tell me I owe taxes when those that are using the programs funded by taxpayer money are also getting tax refunds. Disclaimer: This is an organizational account; however the views expressed in this comment are those of RS only and not of the organization.

Does this include increases in capital gains and dividend taxes?Although these will effect more than just the wealthy, as promised in the elections.

The figures that are cited in the original post are a bit misleading. Assume that there are 115 million households in the US. (I know this figure is probably off by 20-30%, but bear with me.) If the top two percent of these households pay an additional $700 billion in taxes, each household will pay an additional $300,000 in taxes. Big difference from the figure ($3,000) cited in the original post.

@ dajonesQUOTE”Of course those who earn more are going to pay more in real dollars, but why should they pay a higher percentage of their income than others?”First, I noticed that you were purposely vague about “others”. Who are you talking about? Second, it might be nice to integrate a history of income tax in America into the discussion that points out that current income tax rates are the lowest they have been in a long time. Lastly, it does not take “a former assistant secretary of post-secondary education at DOE” to realize that the last time tax rates were cut (Bush tax cuts for the wealthy) our deficits skyrocketed while interests rate remained historically low (leading to a housing bubble). For me, it seems that you are unclear, devoid of an historic tax rate context and willfully omitting the biggest mistake in tax rate legislation in 75 years… But I digress, let me provide you with a few why “they” (making over $250K or $500K and up) should have to pay more: The wealthy benefit disproportionately from:1) Accounting tricks/loopholes that limit their tax bills (usually snuck into obscure legislation with little notice)2) Investments & Assets: most making above $250K and much more have a safety net… These assets (barring estate taxes) will most likely not be re-distributed. The wealthy tend to hold onto it. However, income is one place where wealth can be equitably re-distributed allowing everyone the opportunity to build a safety net (that has been stripped away so recently)… 3) Those who benefit the most financially from living in this economy have the greatest responsibility to ensure its sustainability not bribe leaders into making everyone resemble them. This is narcissistic and usurious if the working poor’s only role in society is to get out the way or follow…. 4) They should pay more because they benefit from the illegal transfer of wealth from the public sector to their own domain the private sector. Diane, explain how so many of our wealthy americans have swiss bank accounts avoiding detection (58K in 2009). It seems the wealthy have one foot in this country when it suits them (profits are private) and another foot out of America when they can advantage themselves personally at the expense of the collective whole (socializing losses, decreasing tax revenues by state and local municipalities)… Explain why they shouldn’t have to take on more tax burden! 5) Also, they have mobility (social, physical, financial). When things are not going well, they can opt out of their commitments to others. This is well known is the circles of people looking to profit from informational asymmetries, data mining and exploiting distressed economies (vultures)….6) Average Labor Wages vs. Executive Pay over the last 40 years has grown to an obscene ratio of what was 30-40 to 1 ratio to increments 10 and 20 times greater. The rise in productivity over the last few decades has led to greater profitability disporportionately at the top with average wages staying relatively the same. This is more a claw-back by workers than taking away something that is rightfully possessed by the wealthy. In ending, Diane there are so many more reasons why our wealthiest should be forced to take on more of the overall tax burden (btw we need a better definition of this beyond income), but (for many) their resistance to financial reform, single payer healthcare and the reinvigorating New Deal policies is the best indicator that they only care about themselves in this dying banana republic.

Obama is not targetting wealth but rather income. He will do nothing to go after billionaires who pay a lower income tax rate than the rest of us. He will not make Microsoft pay corporate income tax (they currently don’t). Income tax was sold to the public as a way of getting money from the rich. It doesn’t do that. It stops the middle class from accumulating wealth.

I think the author erred in not pointing out the $700B figure is for a 10 year span of time, something dank48 (#12) evidently is unaware of. That is also about the amount the Bush tax cuts for the wealthy have cost the treasury since they were enacted early in his administration. It is somehow ironic that dramatic tax cuts for the truly wealthy have occurred in tandem with the development of ridiculously overcompensated CEO’s and high ranking corporate officialdom. These are salaried folks, not people making money from owning a business. I don’t think anyone one is worth the kind of salaries these folks are being paid. As a stockholder, I have come to believe the practice of multimillion dollar compensation “packages” for high ranking executives, in many cases regardless of corporate performance, is tantamount to theft from the stockholders. Since my dividends are being reduced to support this kind of thievery, I find it hard to sympathize with any movement that will raise taxes on folks of this ilk, who I suggest are the vast majority of those squalling about sunsetting the Bush tax cuts for the wealthy.

Well put, rbannist. The article and many comments reveal an ignorance of economics which is disturbing but probably reflective of the US in general. One statement by Ms Ghilarducci, that “without the tax hike, we aid and abet already perky markets for luxurious services, glittery baubles, and the other marginal stuff the rich buy” is either stunningly uninformed or politically motivated (I suspect the latter). Tax implications notwithstanding, who does she think produces those baubles (like cars, boats, planes, etc.) and is employed to do so? Middle class and upper middle class Americans! There is a great deal of employment in meeting consumption including consumption by the wealthy (the “luxury” tax imposed on goods 20 years ago was a disaterous experiment). The authors math is bad and she also ignores the fact that a huge number of Subchapter S small businesses (some estimate 55%) will be subject to a tax increase. What will those businesses do since they’ll suddenly have less money? Cut expenses which means cut employees.Introductory macroeconomics should be a required course. Unfortunately, politics drives the decision process much of the time without regard to sound economic policy.

Okay, thanks, Cwinton. If the $700 billion is spread over ten years, and we use the richest 2.1% rather than the richest 1%, then the annual additional tax per richest household is still $28,986. This is a far cry from $608K, but it’s also a lot more than $3K. And of course this isn’t like payroll-deduction, but still . . .

Stinkcat,First, I provided more than one reason than the one you counter; so lets keep the context instead of cherry-picking the ones’ you are most reactive to. Second,the amounts in these accounts that are shielded from taxation are astronomic (look them it up)… Either way, single mothers’ on welfare are easier targets than rich white men with attorneys. Logic always applies, but in a de-regulated world of private ownership and exploitation (the biggest of pools of money to go after if you want to reduce the deficit (are with the wealthy)….Also stink, 58,000 accounts is more than just some…. At my high in mid nineties while working at Merrill, I managed 65 million dollars between 1000-2000 accounts that fluctuated…. We are talking serious money that is being shielded from taxation that belongs to our economy because of cheating. This is only one form that we know about! There are so many others on Wall Streetflash-trading, derivative investments, and accounting fraud occurs more than you know… The logic is that our economy has become more about exploiting the flaws in a de-regulated system and less about exploring new avenues of growth. It has become less about entrepreneurial research and development and more about financializing all those industries that have yet to fold under the weight of the neoliberal turn: higher education being one!The point being is that if there is no one to enforce the rules that most accept and play by, then there are few external incentives for people to adhere (this is most aggregious when people who can pay do not because they are greedy; I suspect the I am not the best one to decide if the welfare mom or wall street offshore banker is most to blame for this type of cheating) I suspect it is systemic and those who have most benefit the most!

“First, I provided more than one reason than the one you counter; so lets keep the context instead of cherry-picking the ones’ you are most reactive to.”The point is that you were confusing two different issues. If people cheat on their taxes that is unequivically bad. To tax all rich people more because some of them cheat on their taxes is a particularly bad way to make public policy.

Jaynicks, the issue isn’t Microsoft’s business practices, but whether high marginal income tax rates lead to economic growth. They do not. If Bill Gates is too distressing for you to contemplate, then substitute Warren Buffet, or your local neurosurgeon’s office. As the marginal rate approaches 100%, people work less. If a doctor is taxed 20% on Monday, 40% on Tuesday, and by Friday the tax rate is 100%, the doctor will withhold surgical services and prefer other activities. (As for Microsoft, a monopoly only occurs when there is one supplier who collects rents. Microsoft may be “monopolist” because of its large market share, which its competitors certainly don’t like, but where is the harm to consumers? There is more than one supplier in the market. Consumers can buy an Apple or Linux operating system. Office suites are available from suppliers such as Corel and there is the free OpenOffice suite.) Again the issue is marginal tax rates. The higher they are, the more economic activity is curtailed.Fizmath, Microsoft’s audited financial statements for the year ended June 30, 2010 show a provision for income taxes of $6.253 billion. I agree with you the world would be different if wealth were taxed, not income. Trendisnotdestiny, you are right that the wealthy can hire accountants and lawyers to plan how to avoid taxes. For example, John Kerry, sometimes presidential candidate, knows how to moor his yacht in Rhode Island to avoid Massachucetts taxes.

lucapacioli, you have pointed out exactly why the top marginal tax rate should approach 100%: at some point, we need to encourage our citizens to stop the wild pursuit of money. Just think what would happen if that neurosurgeon were encouraged to work less. It would free up slots so that more people could become neurosurgeons, helping solve unemployment and spreading the intellectual wealth of our society with the result that we would become less dependent on specialized knowledge monopolized by the few. That neurosurgeon might also then find it worthwhile to fulfill his or her citizen duties and participate in local government, where someone who understands science and medicine would be a tremendous asset, particular in hidebound states with aggressive populations of creationists. In short, it is a basic failing of our society that so much emphasis is placed on acquiring wealth for social prestige.

If we take rich people’s money when they die they will find a way to hide it, or pass it untaxed, etc. If we close every loophole they will still find a way (the sneaky bastards) and we still won’t get the money….. And that’s not right because we know how to use the money properly.(I learned this multiple period thing from trendis; makes it appear that you have much more to say by mysterious implication…). Anyway. I’m thinking maybe we could lock the rich bastards up and make them shit money, milk ‘em like cows and don’t give them a chance to keep it themselves. What do you think?Hey, THAT was uncalled for…

“Mortgage Fraud… just another narrative showing how very wealthy entrepreneurs extract resources from unwittingly people we call customers….”If a company engages in mortgage fraud then they should be punished. However, why should honest wealthy people be forced to pay for the sins of others, anymore than honest welfare recipients should have to pay for the sins of the welfare cheats?

unemployedacademic, it’s hard to tell if you are serious. Assuming you are, discouraging neurosurgeons from working on Fridays so they can get in touch with nature and their feelings means less economic output. It means no surgeon when you have a traffic accident on Friday. Discouraging them from working doesn’t solve the unemployment problem; I don’t know the statistics for unemployed neurosurgeons, but I assume it is low. Further, if they don’t work on Friday, it doesn’t free space in medical schools to produce more surgeons.If more were interested in science that would be wonderful, and certainly having neurosurgeons interested in civic affairs is commendable. Personally, I prefer my neurosurgeons to be obsessed only with learning about how to cure disease and repair trauma. As for comments on mortgage fraud, are you talking about the Community Reinvestment Act that forced banks to make sub-prime loans, and the Fed with an accommodative monetary policy, both of which set the stage for Fannie Mae, collateralized mortgage obligations, liar loans, etc.?t_paine is right, rich people have accounting and legal advisers. For example, John Kerry’s yacht was owned by a trust headquartered in Pittsburgh. Coincidentally, that’s the city where his wife’s fortune originates.

lucapacioli, I am quite serious. You egregiously underestimate the talent pool in our society. We waste vast amounts of talent just so that some people can siphon off most of the wealth. Medical schools tightly control the number of doctors. And, frankly, the people I want to tax so much that they stop trying to make more money are the fiends in finance and the extraction industries. They spend far too much time dreaming up ways to — how did Matt Taibbi put it? — “relentlessly [jam their] blood funnel into anything that smells like money.” They don’t do much of anything productive anymore. They don’t make things. They don’t plan how to make things. They don’t plan how to make things more efficiently. They just figure out ways to extract wealth from other industries in the short term, causing them to collapse. The worst part is that they don’t need the money. It’s all a social competition because they are too insecure and unimaginative to do something worthwhile for several hours each week.

“Since the marginal utility or happiness from an extra 1 percent of income is worth a lot more to the middle class than millionaires we have a mighty good deal.” Sorry, but you can’t make interpersonal comparison’s of value. Value is subjective. Marginal utility of a good (e.g. money) decreases the more of the good one has, but the extent to which marginal utility decreases cannot be measured and compared; the degree to which marginal utility decreases as a good increases varies with the individual. Indeed, even comparison of value between owners of the good when its quantity is the same (for the two owners) is impossible. It is very possible that though the extra one percent of income of millionaires goes toward satisfying ends that are lower on their own scale of values, those ends could still be valued more highly by the millionaires than the ends that the money would go to satisfying of the middle class.