Jun

7

Center for American Progress: "Ending Special Tax Treatment for the Very Wealthy"

Kim Zussman writes: 

(Cue Sonny and Cher "The Beat Goes On")

In the US the top 10pc pay most of the taxes, and a large portion of low income pay no income tax. Maybe we need leveraged taxes, like SPU: the top must pay 300pc and the bottom pays -200pc. This will not only be fair to the poor, but will also importantly maintain governing apparatchik's vig and fiefdoms.

Stefan Jovanovich writes: 

The analysis has the usual academic corruption; it only examines the facts that support its conclusions. There is no mention of the other direct and indirect taxes that are levied in the U.S. against people, property, spending and incomes. The people with "low" incomes pay almost all the employment taxes collected. If the authors were serious about taxing the rich, they would have spared us the elaborate discussion and simply advocated removing the income ceiling on Social Security and other employment taxes. That alone would make Social Security's pay-go financing secure for this century. Those of us who have fond memories of our anarchist grandfather would be happy to add a further adjustment in the name of having one big tax. (The Wobblies platform was "one big union"). Abolish all confiscations of income from savings (interest, dividends, pass-through distributions, capital gains, "excess" Social Security) and tax those incomes as further employment income. That alone solves the inequality of the Federal tax system and the unfunded liabilities for Medicare as well as Social Security.

So, why don't Lefties offer this alternative - which would be simple and avoid all further adjustment of the income tax? Because "fairness" is about assuring that the rich use the Buffett Dodge to subsidize the non-profitistas. Keeping high marginal rates at the top guarantees a continuing flow to foundations.

That motivation explains the authors' other glaring omission. They do not discuss the Federal estate tax. All the subsidies for income on securities (the special rates for interest, dividends, long-term capital gains) are more than successfully recaptured by the estate tax. If, instead of the current system, estates had a single flat rate equal to the employee share for Social Security, net collections from the estate tax would go up ten-fold. But, that would crush the rake-off by recipients of the deductible bequests. Can't have that either.


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1 Comment so far

  1. Gregory Rehmke on June 8, 2019 5:59 pm

    It’s worth noting too that few with very high incomes ever paid the high income tax rates. Just as they wouldn’t pay them if tax rates were raised to 70% or above again. This post explains: “The Rich Never Actually Paid 70 Percent” https://www.aier.org/article/rich-never-actually-paid-70-percent

    And the Hollywood connection: “The Golden Age of Hollywood Tax Avoidance
    Do you really think Bing Crosby and Bob Hope paid 90 percent of their income to the taxman?” https://www.bloomberg.com/opinion/articles/2019-01-29/hollywood-stars-didn-t-pay-90-percent-tax-they-created-loopholes

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