The 60 minutes piece on taxing the rich, the stat that one has to stop & take note of is the following, "In 1985, the top wealthiest 5% of the US population collectively held $8 trillion. Today, that same demographic holds $40 trillion." Granted some of that increase has to be adjusted for inflation. However, that's still a multi fold increase. There is a need to overhaul the tax code as it is quite obvious & almost doesn't even require mentioning that the rest of the 95% is not enjoying such a benefit. This is not some platform to initiate some sort of asinine class warfare, but rather a move to bring things a lil closer back to balance. One where our middle class is able to a lifestyle consistent with the traditional American lifestyle that was enjoyed but others in years past. I'm a conservative republican & not an current administration supporter. But, ever since Herman Cain has disappeared from the presidential race this issue has been put to the back burner. I myself do not wish to see our country experience such a wealth disparity equivalent to South American country. Thoughts? Ps I know the current state of affairs are shit. We need not be reminded. But, more interested in creating a dialogue of how to get creative in adjusting the code & the pros & cons of such.
The Tax code is written to exempt the rich, and weigh heavy on the middle class (percentage-wise). It's not really a case of wealth distribution, but creation. Excessive taxation, regulation, workplace insurance and labor arbitrage all make it uncompetitive for the upstart to create and grow a business in America. Manufacturing something? Forget it. The best bet is protectionism against low-cost producers that have zero social safety nets and environmental regulations (Chindia/Mexico), which incentivizes manufacturing jobs to move back home. Then, cut taxes and regulation across the board, to encourage the creation and hiring for all types of business. That creates jobs, wealth and encourages it to stay in America. Close the border, end H1B's and U99'ers. This puts the onus back on the American worker to get a job, and employers to pay a decent (higher) wage. H1B's are a sorta a joke, because the labor market is flush with comp sci graduates, but employers still import Indian programmers at 15 bucks an hour. Then, end the federal subsidy for US corporations to move *offshore*. Not that MFN status for China and these other third-world shitholes was enough. We're dealing with extremely powerful lobbies (Fortune 500), and it won't be as easy as a flick of the pen to right this listing ship. Limiting regulation would be fought tooth and nail by Fortune 500, who own the regulators and use to them to stamp out competition from the little guy. Even stream-lining the taxcode would be met with a legion of protest from CPA's, tax attorneys and all sorts of lawyers that make their living negotiating their clients around it's sholes. Simplify it - like a 10% flat tax, or a 2% national sales tax - they'd go apeshit. Something like 400 billion is spent every year just on *compliance* with the tax code. That's over half the Pentagon budget. Imagine if Congress axed half the defense budget? Contractors would go batshit? Things are designed to be this way. No accident. http://online.wsj.com/article/SB10001424052748704116404576262761032853554.html
Simplification and a flat tax are always being conflated by righties. They are separate and distinct issues. You can have a progressive tax system that makes sure the middle class doesn't get socked with crazy costs that is at the same time very simple by eliminating deductions and making all income, whatever the source, taxable at the same rate. The 1986 act made cap gains and wages taxable at the same rates and at the same time reduced the brackets from a multitude to three: 0 for low income folks, 15 for the middle, and 28 for the high end. This can be done again. The structure is still in the code, it's just buried under all the stuff that got added back in since then (a destiny predicted by a cynical writer at the time; I remember reading that assessment and wondering how many years it would take to go back to the same mess we had before. Took about ten years all together). Compliance costs would collapse and the system would still tax those who are able to pay more than it would those who aren't. The trick won't be passing it once the will is there; the trick will be keeping it in place, as the fate of the 1986 reform illustrates.
I'm all for simplification. A flat-tax is much better than a progressive tax system, because then the entire country is forced to shoulder the burden of any tax hikes, making it unpopular to raise it. Much easier to discriminate against a targeted minority to "pay their fair share". Then we get rates and exemptions that are all over the map, and we're left in the same place we started. It's bullshit. Make it the same for everyone, with some exemptions, and that's it. Don't fuck with it. That's what the "no unapportioned tax" was all about.
The S&P 500 started 1985 at 164.57 and today is at 1405.82 (increased by a factor of 8.542). If the top wealthiest 5% of the US population had invested their $8 trillion in the S&P 500 at the start of 1985 and spent every cent of dividends received along the way they would have $68.336 trillion today. The fact that they only have $40 trillion today says they have very badly underperformed the market. If "the rest of the 95% is not enjoying such a benefit" than they are even worse investors than the top 5%. Why is wealth disparity such a problem? How does Bill Gates or Warren Buffet having tens of billions of dollars make me worse off? Not that I wouldn't mind if they dropped a couple hundred million dollars in my pockets. There are two easy ways to reduce wealth disparity. First is the communist way. Execute or force into exile all successful people and confiscate their wealth. Then everyone will be as rich and happy as the mass populations of the low wealth disparity paradises of Cuba and North Korea. The second way is to end the income tax. Instead of taxing income, tax wealth. With no tax on income more people will beome wealthy and pay tax on their wealth. Of course if the tax rate on wealth is set too high you will run out of wealth and end up with the communist way. The current tax system is purposely perverse. It is designed to preserve wealth, punish the production of income and subsidize losers. There are seven states with no personal income tax and two more states with no personal income tax on earned income. If multiple states can exist without a personal income tax then why can't the federal government?
Increasing taxes on the rich is a popular idea but won't address the inequality in wealth the OP points out. The problem is that government and the FED are involved in picking winners and losers in the economy with their policies as well as outright transfers of wealth to favored parties. I am apolitical but Ron Paul has it exactly right when he says the current system is not capitalism but corporatism. He also has it right that taxation is just another form of encroachment on personal liberty, and I am suspicious of any supposed tax increase targeting the "wealthy" because there just aren't enough Warren Buffetts around to make a difference to the Treasury. What is likely to happen is that any tax increase that passes in the name of "making the rich pay their fair share" (the Buffett Rule) will hit people who are not in the same income universe as the Buffett-types begging to be taxed more. It has to for revenue generation. There has been some talk about $250,000 per year as a threshold. No doubt, it will be easy to convince the $30,000 per year earner that $250,000 per year is wealthy.
Well said. The current tax code punishes success and rewards failure. The creation of a permanent underclass who feast off those who strive, but never get ahead. Why can't the Feds go without an income tax? Good points.
the best stimulus for the economy and the best deal for the working poor would be to eliminate social security taxes (it doesn't go to social security anyway) and medicare taxes, because that is still a tax all working poor and just regular Joes have to pay, and to eliminate the employee taxes employers have to pay to hire a new worker. And to eliminate all federal sales taxes especially the fuel tax. Where would the money come from to compensate for the drop in tax revenue? Who cares? We have to borrow anyway for any stimulus anyway. The way they have it set up now the taxpayers have to pay for a stimulus and borrowing. Isn't it about time the government starts paying? You can take it out of my paycheck, or you can take it out of the governments paycheck. Taxing the rich? Warren has about 60 billion and Bill has about 60 billion, so would 120 billion help? Let's see, what's 15 trillion minus 120 billion? It aint the rich, it's the government draining the lifeblood out of us poor working stiffs, and now they want more.
you have discovered the holy grail of taxation. the middle class, bourgeoisie, always pays through the nose. confiscating the wealth of the super rich is a occupy wall street's wet dream. it doesn't begin to solve the debt issue as your number begin to show.
I'm against wealth redistribution, especially when it involves taking it from the people and giving it to the government.