by John Lawrence / Will Blog For Food / April 11, 2011
The Tea Party says we are Taxed Enough Already. But who exactly is “We.” Are upper income individuals and families taxed enough already or is it just lower income individuals and families? Here’s the tax brackets for 2010:
How many middle class families would object to adding a few higher brackets like say a Tax Rate of 40% for Married Couples and Individuals with Incomes over $500,000. Why not 50% for incomes over $1 million, 60% for incomes over $5 million, 70% for incomes over $10 million, 80% for incomes over $100 million and 90% for incomes over $1 billion? Even at the 90% tax rate, a billionaire filing would still have 10% of $1 billion left over in disposable income which is $100 million.
Pity the poor person who can’t live on that! And then why are the real high earners whose income is mostly capital gains only taxed 15% when everyone who makes at least $16,750. or higher by the sweat of their brow is taxed at least 15%. A married couple making $16, 570 is poverty level. Why is some single billionaire taxed at the same rate as a poverty level family? Note there is no reduction in tax rate when there are children in the family. CEOs take most of their income in stock options. When they cash them in, their profit is all capital gains taxed at 15%. And please note that adding higher tax brackets for millionaires and billionaires while keeping the lower brackets exactly the way they are will not add one iota of taxation to the poor and middle class.
On January 28, 2011, it was reported in various news media on television and online that John Paulson earned at least $5,000,000,000 (five billion USD) in 2010. Since Paulson is a hedge fund manager he paid taxes at the 15% rate due to the tax loophole of “carried interest.” If capital gains were taxed the same as regular income, he would have paid at the 35% rate, the same as someone making $373,650. If my tax table given above was in effect he would have paid at a 90% rate.
The reason why the Federal government has such large deficits is that tax rates for the rich under Republican Presidents have been systematically lowered. Tax breaks have been given to the rich with the result that now there is a debt crisis and Republicans are attemtping at this late date to balance the budget on the backs of the poor and middle class while continuing to give even greater tax breaks to the rich.
From 1946 to 1954 the top tax rate was either 89% or 90%. From 1956 to 1960 the top rate was 75%. Does it make sense that millionaires and billionaires, if they are not paying most of their tax at the 15% capital gains rate, are paying at the same rate as those making $373,650? Shouldn’t there be a few higher brackets in the tax code say for income over $1 million and income over $1 billion at least?
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{ 15 comments… read them below or add one }
When the increase in government spending is two or three times the rate of inflation, you have a spending problem. Taxes under any system can’t keep up with 7-8% annual growth of government and government spending that doubles every ten years.
The media fell for a fabulous Yes-Men like prank. A phony email was sent by “GE” that revealed that the the company ” will be gifting its entire 2010 tax refund, worth $3.2 Billion, to the US Treasury on April 18, Tax Day, and will furthermore adopt a host of new policies that secure its position as a leader in corporate social responsibility. ” The prank email is smart and worth reading.
http://www.huffingtonpost.com/2011/04/13/media-taken-in-by-fake-ge_n_848600.html
That was pretty good!
I like the idea of more brackets to better separate higher earners (someone making over $375,000 is definitely well paid, but not necessarily wealthy) – if the 35% bracket didn’t kick in until $500,000 and then we had a 45% bracket starting at $1M, I could get on board with that. The capital gains issue is also huge – it’s disgusting to me that people who earn their money simply by already having money pay taxes at a lower rate than those who earn their money by working.
And what about the inheritance tax? As perpetual Republican senate candidate John Raese said “I made my money the old-fashioned way, I inherited it. I think that’s a great thing to do. I hope more people in this country have that opportunity as soon as we abolish inheritance tax in this country, which is a key part of my program.”
Inheritance tax? Heck, that sounds even closer to what it is than Estate Tax! ‘Round them GOP parts, we call it the Death Tax, ‘cuz what’s more fuggdup (regardless of whether it’s an accurate depiction or not) than paying a tax to die?
The public debate on this issue I’m most familiar with dates back to when W was pushing the estate tax holiday. Remember when he talked about the small family farmer losing the homestead that had been in the family for generations because of the evil nature of the tax that wouldn’t allow Pappy to pass the corn rows on to Sonny Boy, the third-generation dirt farmer? For his book ‘What’s the Matter With Kansas?,’ Thomas Frank spent a few months roaming the Midwest and Texas looking for a single example of someone who had lost a family business due to the estate tax burdens being so punitive on someone who might just eke out a mediocre living but used millions in hard, estate-taxable assets to do it. He didn’t find one, and instead recounted the experience of being laughed out of not a few country bars and town meetings for even bringing up such a ludicrous idea.
I think the estate tax is one of the best taxes. It’s got something like a $2 million exemption, meaning anyone of modest wealth and many with considerable wealth can still pass on to their family the things they’ve earned without being taxed again. And it means people have some incentive to continue growing whatever business their heirs left behind to rebuild the fortune.
And (silly commie me), I think there is such a thing as too much money. Look at the Hilton family – Conrad Hilton built an empire on establishing his brand as one of the premier hotels at any destination. He left behind so much that his son Barron has done nothing but run what his dad built into the ground and remains wealthy, and his granddaughter Paris has absolutely no incentive to do anything productive with her life at all – and even at the rate she’s spending, if she ever (shudder) has kids, they’ll be so wealthy they’ll never have a reason to contribute to society. Meritocracy my ass.
/rant
Dave- that is one righteous rant! Teddy Roosevelt, a Republican no less, advocated for a graduated inheritance tax. He was out of office eight years before it became part of the tax code, but it eventually did.
I never felt “entitled” to a penny that my parents worked for and earned. Puts a whole different perspective on entitlement programs, doesn’t it? And John Kyl “this is not meant as a factual statement” had a great deal to do with the current windfall to the wealthy.
As we find easy ways to demand what others should do or contribute and avoid what we need to do or contribute, it is good to look in the mirror and remember the position of one famous democrat.
“And so, my fellow Americans: ask not what your country can do for you – ask what you can do for your country. “JFK
I am willing to do community service.
I am willing to wait longer for my social security.
I am willing to pay higher taxes directed specifically at the debt.
I am willing to pay state sales taxes on purchases of services with a cap on the rate of state spending at the rate of inflation and population growth.
I am willing to cap government spending on my generation to protect future generations.
RB, sounds like a copout to avoid what this article and other comments have been
talking about. You’re diverting the great points made and trying to make those who make and believe in them to be the ones who are the problem.
Preach to the ones who have been having it easy the past few years. Give me stats as to how many of the wealthy do community service. They can wait longer for their Soc. Sec. They CAN pay higher taxes for what the govt. does for them and for all of us; no need to specify what the money should go for; same for paying state taxes. Most of us cannot wait til age 70, and most of us are paying their fair share of taxes already.
It’s easy to say “cap this”, but it cannot work when unforseen things occur that require money to be used, and it would then mean cutting down on what was already deemed necessary.
I believe in what our government provides us, and that we citizens have to pay for this, and it’s only fair that the wealthy pay a higher percentage of what they make for the good of the whole.
Instead of wasting their montenum on a horribly flawed “health plan required, or pay a fine” – the President ought to have passed the Tax Cut for families under $50k per year, & increase for those over $250k per year – as he promised in his campaign.
Ideally, Obama should keep the Bush tax rates for those making less than $100K, because Bush did lower taxes for the poor slightly while he lowered them enormously for the wealthy. With some individuals making upwards of $100 million a year and with one specific individual making $5 billion in 2010, it’s ludicrous that these individuals are paying taxes at a 15% rate. Even if they were paying at the top rate (35%) it’s still ludicrous. There should be higher brackets for those making over $1 million and over $1 billion at least. To put it in perspective it would take 50,000 years for someone making $100,000 a year to earn as much as Paulson earned ($5 billion) in one year.
Another thing: Republicans are playing a shell game with social security. We’ve overpaid into it for years on the assunption that the surplus would be available for the baby boomers. There is a supposed $2.5 trillion surplus in the social security trust fund . There was an outflow from this trust fund to the general fund where the money was spent, and the money was replaced with bonds. Now when it’s time to have the flow go from the general fund to the trust fund to make up the difference in income and outgo and honor the bonds, they don’t want to do it effectively reneging on “the full faith and credit” of the American government – at least when it comes to promises made to its own people if not with respect to foreign investors whose bonds they continue to honor. The bond markets will only get upset if the US reneged on bonds owed to investors, but not on bonds owed to the American people.
HAPPY real April FOOLS DAY everyone. Don’t forget to urge congress to pass the YACHT stamp bill. Dave’s OB Cleanup will now give 50% of all donations to the Lobby the Yacht Stamp Cause. It just ain’t fair that a single mom with 4 little kids can get FOOD stamps to feed them, yet Senator John Kerry of Massachusetts has to buy his own MOP to swab the deck of his YACHT.
An addendum:
John Paulson, the most successful hedge fund manager of all, bet against the mortgage market one year and then bet with Glenn Beck in the gold market the next. Paulson made himself $9 billion in fees in just two years. His current tax bill on that $9 billion? Zero.
Gee, DAVID CAY JOHNSTON said the same exact thing. And you forgot to mention he will be paying taxes at a later time or who lead the way for this portion of the tax law.
“Senator Charles Schumer of New York, fought to keep the tax rate on hedge fund managers at 15 percent, arguing that the profits from hedge funds should be considered capital gains, not ordinary income, which got a lot of attention in the news.”
It is obvious corprorate america and the very wealthy need to do their fair share. When corporate profits have risen over 400% since 1998 and the median income has dropped almost $2,800 in the same time. The price of food, gas etc.. continues to climb. They say by not taxing them they bring in jobs. Where are the jobs that a person can work a 40hr week and still provide for the family and have time to enjoy life? Quite a few people work 2-3 jobs. I don’t necessarily think we have to live up to the fast pace of of corporate greed, who bombard us with ads that tells us we suck,the stuff we have sucks, and we need to get this new stuff, because it does not suck, until we buy it then it sucks because we need new stuff.