Total Pageviews

Tuesday, January 8, 2013

Taxing the Wealthy

It brings tears to eyes watching all those in the middle class standing up for the rich and protecting them from an increase of 4% of their income earned that’s above the $400,000 threshold. They use the same vigor to protect the rich from regulations; health care for their employees, unions, and the Estate Tax. They use what’s left of their anger to rail on the unemployed. Those people should be happy that a low-wage job is available and if that means they will remain at the bottom for the rest of their lives; it's somehow their fault. When a student asked Mitt Romney a question of how to cope with the high cost of education, Mitt replied “borrow the money from your family.”

The question of fairness always comes up, but a poster said that the dictionary definition of fairness amounts to being equal. We don’t make laws using a dictionary definition; equal is defined by 535 elected representatives of Congress. It’s not that democrats want to necessarily tax the rich; they want to apply the tax rates proportionally with the ability to pay. The 4% increase will not balance the budget by itself; it won’t keep the wealthy from pursuing their profits either and besides 97% of small businesses got 18 tax breaks since 2009, and their taxes will not go up a single dime.

Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.”

One of the reasons' corporations pay so little is that they are not taxed on income of foreign subsidiaries; that’s a provision in our tax code that encourages the firms to invest abroad. The multinationals will bring those profits home but only if we give them a favorable lower corporate rate. Tax cuts for the rich not only increases our deficit and debt; it creates pressure on our government to reduce spending for education, innovation and infrastructure.

President Reagan was wrong when he said that making the tax system less progressive-lowering the top rate would raise more revenues because savings and work would increase. Studies show that tax revenues fell significantly as they did under President George W. Bush; they simply increased the deficit. I‘m not calling for the 70% top rate that we had in the seventies but at those rates ,the rich created more wealth by reinvesting their money on research and development, their employees and the community they reside in, rather than write a big check to Uncle Sam. In an utopian economy, corporate profits have to be low, ensuring that vendors get an equitable price, employees get a decent wage, and that they pay a fair amount for the resources they use and abuse. We don’t have an ideal economy, so we pay patronage to monopolies and a call for an unfettered free market. A monopoly discourages innovation and discourages competition.

It’s about this time the year when taxpayers start complaining about the tax refunds that people receive because they are eligible for the earned income credit. Taxpayers who get a small refund or no refund at all,will use all the anger from their resentfulness to call for an end to the credit or will use cherry-picked stories to try and convince others that it's creating a culture of dependency.

 It’s also the time of the year when people start thinking that a flat tax is the way to go. Think about that; right now, we are in an era of a very high rate of income inequality. Income inequality means that the highest proportion of the wealth is concentrated at the top. The rich would love to pay a flat 20%, and that rate would assure us of forever having a greater disparity between the top and bottom. The right loves to demonize the word “distribution” and will say that’s socialism. Goldman Sachs will call themselves a bank so that they can get the below 1% loans, but they will not re-loan that money to small businesses; instead, they choose to participate in risky derivatives because they’re so much more profitable. They know that they can capitalize their profits and socialize their losses.

I think Kelli Gill did a great job explaining the need to tax the wealthy in her on-line VA post, and she didn’t exaggerate her points. She didn’t pick the 75% tax on the affluent out of the air to prove her point, as some posters did. One poster said that the less taxes the wealthy pay, the more they pay in charitable contributions. I think that logic could be used for everyone but is that the intent of charity? Do you have to get something back in return in order to contribute or does it come from the heart?

I saw where some posters used the 20% tax rate, but I wonder if they misunderstood that Romney said that he wanted a 20% tax cut across the board. He didn’t tell us that he was going to take away the deductions that the middle class uses.

It’s not that lefty democrats love tax increases; it’s more about them wanting a balanced approach in reducing our deficit and debt. We went for a decade thinking that revenues should never be part of our solution for reducing our debt; that’s over.


Mike said...

A question for those of you expecting to get a refund within the next month or so and especially since the IRS has already said there will probably be a delay this year.

Is this the time for the GOP to threaten to shut down the government unless they get the spending cuts they want?

born2Bme said...

I just wish we had a magic wand and could put them in our place for a few months. Should we be paying for their healthcare, pensions, travel expenses, etc., when they deny those things to the average American?
Delaying tax refunds won't hurt them a bit, so why should they care?
Maybe us little people should start one of those petitions to equal things out a bit.

Mike said...

But it's only one party who is advocating shutting down the government. Should we punish both for the actions of one party? back in 19995 New Gingrich and the GOP shut down the government twice.

We have 435 congressional districts and only 35 of them are competitive.

I wonder how many people would vote against their own interest in Texas..Quite a few or Rick Perry would not have been elected all those times and neither would have all the crazy republicans our state keeps sending to Washington.

Good questions.

born2Bme said...

Mike, I guess yes, it has to be fair. For what they make, they can afford to pay for health insurance and save for their own retirement.
Lifelong payments for working so few years is not exactly a smart thing to do, nor would any company do that for it's employees.
Maybe without those perks, we'd actually get people in office that want to serve the people.
And, maybe an houly pay, or performance pay would be in order too. They work so few hours for what they get.

born2Bme said...

The funny part, and I don't mean HAHA, the government is the largest Union in the Country and they just refuse to put that label on it, in fear of being called a hypocrite.

Mike said...

Congresspersons are actually working less these days;I think the house will only meet for 126 days this year.

I understand what you are saying but in reality it doesn't usually work that way. These days it takes a millionaire to run(campaign costs) or they will be beholden to the lobbyist,so cutting off the perks won't change things ...IMO..Believe me,the tea party is not working for perks,committee chairs,or pork for their district;they have a single goal of reducing the size of government so it can be drowned in a bathtub. If it takes destroying our fragile economy;so be it.

I ask the same question;what contemplates serving the people since we are so diverse and polarized?...The legislators who want to shut down government unless they get some serious tax cuts are applauded for their action by their constituents. Over 100,000 Texas taxpayers want to leave the union.

Yes the government has the largest union representation and as you know that's why they have good benefits and pensions. That's part II or IV of a continuing blog that asks " who says the public employees should not make more than the private sector?)...:-)

Mike said...

WASHINGTON — Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers -- more than 120 million households -- should be able to start filing tax returns starting Jan 30.

born2Bme said...

I have no idea what my tax returns are going to be like this year, since my husband retired August 1st, and our pension check is about half of his former earnings.
Guess I'll just have to wait to see if it hurts, or helps.

born2Bme said...

I guess now you know why I'm in the saving-pennies-adds-up mode.
It's been quite an experience rethinking our whole lifestyle and making small adjustments, knowing in the longrun, it will all add up.
I know a Country doesn't run that way, but still, you gotta start somewhere.

Mike said...

Usually it's "one man's savings is another man's waste of opportunity."

I have a difficult time convincing my republican friends that when interest rates are near zero it's time to borrow for infrastructure repair and they come back and tell the usually "we incur a $1 trillion a year in deficits as it is and you want us to borrow more."...I have to remind them we in the Great Depression when we spend all that money going to

You'll really have to make adjustments when you become old enough for Medicare...:-)