Why taxing the rich just doesn't work.

[Shannow]

Australia's richest man, Kerry Packer, has not paid a cent in income tax for a decade.

Officially, he doesn't even earn the $6,000 tax free threshold, in spite of $5,000 suits, paying cash for open heart surgery in the U.S., and routinely (and very publicly) losing a quarter million dollars at a time at the casino.

He (well his companies) have done it again, this time avoiding paying $84M in taxes by using lawyers instead of accountants.

http://www.theage.com.au/articles/2004/03/30/1080544487831.html

 

[ALS]

If you notice that the rich never really pay the way the left says they should. How come the Rich pile their money into foundations or trusts to shelter it? Taxes are created to make sure those who have an opportunity to get rich don't. How come there isn't taxes on NET worth if they really wanted to get the rich. It there was such a tax of say 10% on everything over $5 million John and Teresa would have to pony up 50 million in taxes. Yet today the average working stiff that makes $40K a year is paying over $16K in combined taxes.

 

[Shannow]

ALS,
I don't know about in the U.S., but in Oz, we have "deeming" laws for pensioners.

It used to be that retirees would put their funds into low interest accounts, to minimise their income, and maximise their retirement benefits.

The Government intorduced "deeming" legislation, where anyone with cash assets is "deemed" to have earned 8% for taxation purposes, whether they earned 1% or the current maximum available of 5.5%.

I reckon a similar system should apply to this character.

 

[JohnnyO]

Yeah, more avenues available to those folks. I'd prefer a flat 10% on everybody's net or a national sales tax. Either is better than what we have now. I do as a matter of fact like being self-employed since the lease on my cool truck (after truck after truck) comes off my income before child support calculations and this bugs my ex to no end.

 

[Asinine]

a 10% flat tax wouldn't nearly support our budget... 30% might get us close... 40% on the Bush budget.

I believe a flat tax would really hurt the middle class. The flat tax rate would have to be so high that lower and middle class people would get stuck with the big bill.

Besides, do you really want to tax someone at 30% who is making $14k/year cleaning house or working the 5am to 1pm shift at Burger King?

 

[JohnnyO]

quote:

---

Originally posted by Asinine:
I believe a flat tax would really hurt the middle class. The flat tax rate would have to be so high that lower and middle class people would get stuck with the big bill.

---

Not necessarily. My personal feeling is that if the govt can't get by with 10% of all the income generated in this country, then the govt is too big and ought to get by with less. Further, having less people with a vested interest in taxes (like now) is not a good thing. I don't mind supporting the govt to an extent, but too much goes to entitlements and nowhere in the Constitution does it say to take money from one person and give it to someone else. Nor can I see spending a ton of money to go to Mars. When people "can vote themselves largess from the public trough", sooner or later there will be a problem with input vs. output (see Social Security). FWIW, my NIBT last year was (only) $34k and my total tax bite was about 45%, mostly because I have to pay double FICA since I'm self-employed.

 

[sbc350gearhead]

quote:

---

Originally posted by Asinine:
a 10% flat tax wouldn't nearly support our budget... 30% might get us close... 40% on the Bush budget.

I believe a flat tax would really hurt the middle class. The flat tax rate would have to be so high that lower and middle class people would get stuck with the big bill.

Besides, do you really want to tax someone at 30% who is making $14k/year cleaning house or working the 5am to 1pm shift at Burger King?

---

Current budget is 2,019,000,000,000 a year. Of that, only 48% comes from individual income tax.

Let's assume that half the population pays taxes. Let's assume an average income of 40k per year. 17% flat tax rate, would bring in more money than the current system.

 

[ALS]

A flat tax does work well if implemented the way Steve Forbes proposed. You give a family of 4 a starting deduction of $36,000. If they made $36,000 or less they pay zero federal taxes.
So if they made $50,000 a year they would pay tax on $14,000.17% X 14,000 = $2380 in total federal taxes. Total federal tax bill would 4.76 percent
A family of 4 with an income of $200,000 would pay $27,880 in federal taxes. Tax bill would be 14% of their income. So a family that makes 25% of the higher income family only pays 10% of the taxes. Also they were talking of killing the mortgage interest deduction.

[ March 30, 2004, 06:47 PM: Message edited by: ALS ]

 

[sbc350gearhead]

quote:

---

Originally posted by ALS:
A flat tax does work well if implemented the way Steve Forbes proposed. You give a family of 4 a starting deduction of $36,000. If they made $36,000 or less they pay zero federal taxes.
So if they made $50,000 a year they would pay tax on $14,000.17% X 14,000 = $2380 in total federal taxes. Total federal tax bill would 4.76 percent
A family of 4 with an income of $200,000 would pay $27,880 in federal taxes. Tax bill would be 14% of their income. So a family that makes 25% of the higher income family only pays 10% of the taxes. Also they were talking of killing the mortgage interest deduction.

---

That would eliminate 90% of the IRS. We can't have that.

 

[sciroccoGTX16V]

so who needs a bloated bureaucratic agency such as the IRS ?

 

[Asinine]

ALS, that's very similar to what we already have. As it stands, a person is only going to pay the same percentage on the first $20k that someone who only makes a total of $20k makes (in the grand scheme of things).

sbc, look at how many elderly, kids, and unemployed we have not paying taxes at all. Then consider that $40k/year is a $20/hour job at 40hrs/week. That's terribly optimistic. Check out average salaries from around the country--and not just major cities. It doesn't work out. As Bush said to Gore, "Fuzzy math! Fuzzy math!"

 

[sbc350gearhead]

It is hard to convey sarcasm over the computer.

 

[Gary Allan]

The cost of government has typically been about 21% of the GDP. But no one is going to supporta 21% federal sales tax in spite of the advantages.

Tax the rich? I'm all for it. Not for the revenue involved ...you get more with jar full of dimes than you do with a jar full of quarters (flawed example, but

).

The reason you tax the rich is so that those most influential (the rich) have a vested interest in sound public fiscal policy.

Right now they elected a politician in who refunded MORE of their money than he did to the rabble ...when the bill comes in to pay for his "gift" ...the rabble will have to pay the lion's share of the debt service.

As it stands now ...it doesn't matter how far out the taxation gets ..the rich are basically exempt.

 

[Asinine]

That's about right....... people purposefully turn a blind eye to the fact that one day this debt will need to be paid. But that would get in the way of the feel-good policies of today.

 

[sbc350gearhead]

That is an interesting point. I have heard of a movement for a federal sales tax, to replace income tax. That way, illegal aliens, drug dealers, etc. would have to pay taxes. Interesting concept to say the least.

 

[sbc350gearhead]

quote:

---

Originally posted by Asinine:
sbc, look at how many elderly, kids, and unemployed we have not paying taxes at all. Then consider that $40k/year is a $20/hour job at 40hrs/week. That's terribly optimistic. Check out average salaries from around the country--and not just major cities. It doesn't work out. As Bush said to Gore, "Fuzzy math! Fuzzy math!"

---

The lower 60% of wage earners, make less than 46k a year. That is why I chose 40k as the 50 percentile mark. It may be off slightly, but I would imagine that it is fairly close. That is a national average, not an average in a major city. There are about 300 million people in the US. With an average life span of about 75, and an average retirement age of 65-70.......I guessed that with at least 47 working years in a person's life,........that 150 million taxpayers is a fairly conservative estimate.

[ March 30, 2004, 10:25 PM: Message edited by: sbc350gearhead ]

 

[JohnnyO]

Interesting that we have Karl Marx's progressive tax and Russia now has Steve Forbes' flat tax (13% I think it is). Also remember that FICA is a flat tax to a point (7.65%) and for lower wage earners, the most costly tax they pay. I can no longer see why we have to have separate SS and Federal taxes since the SS money has gone into the general fund anyway since about 1967 or thereabouts. I would slightly prefer a flat tax in order that the poor might pay their fair share

. OTOH being that I'm in a line of work that I do legitimately while 99% of my competitors work under-the-table for half the price, I can see the benefit of a national sales tax to catch more people and level the field a bit. Wouldn't change things much for me though. Heck, might make it worse.

 

[tweeker43]

here's some information regarding per capita income

university of new mexico

or, here's 1.1 million hits on google

anyway, as of 2002 the per capita income was $30832.

 

[sbc350gearhead]

Per capita income is calculated by total population.........not number of taxpayers. Therefore it is irrelevant to my rough calculation.

http://www.co.larimer.co.us/compass/percapitaincome_ec_ind.htm

 

[keith]

In the US, the top 50% of wage earners pay more than 96% of all federal income taxes. The 50% threshold happens somewhere near a family income of $30K.

The top 1% earns approx. 20% of all income, and pays approx. 35% of all federal income taxes. The perception that the rich don't pay their fair share is not based in fact, but is falsely perpetuated by class warfare scammers (mostly, but not exclusively, on the liberal side of the aisle).

Obviously these numbers jiggle around from year to year, but the numbers are clear - the more you earn, the higher the percentage of your income goes to income taxes (on average).

The Bush tax cuts shifted the overall federal income tax burden even more to the higher wage earners, but you would never know from listening to JF Kerry and his friends at ABC/CBS/NBC/CNN/MSNBC, LOL.

Keith.