Almost all of your numbers are misleading. You correctly point out that you are talking about federal income taxes, but the numbers ignore federal "payroll taxes," i.e., Social Security (FICA) and Medicare. FICA taxes hit lower income people much harder than higher income people because there is a fairly low cutoff on the income that is taxed. The numbers also ignore gasoline and other federal taxes that are included in the purchase prices of various goods and the prices of services from businesses that pay such taxes. Those taxes also hit lower income people harder because they spend a much higher percentage of their incomes on goods and services. The numbers also ignore state and local taxes, largely sales taxes, which also hit poor people harder as a percentage of total income. Finally, those of us "lucky" enough to be footing the bill for federal income taxes on our wages and salaries pay a much higher rate than people who get large incomes from capital gains and dividends.
In my opinion, the high income folks were paying closer to their fair share in the 1990's, when the economy was doing well, rich folks were doing well, and jobs really were being created. The idea that low taxes on rich folks will create jobs has been disproven throughout the period of the current, extended, "temporary" Bush tax cuts.
I love the words "fair share" or "economic justice."
Some points that should be noted:
1. Dividends are taxed twice - once when the corporation earns it and again when it is paid out as a dividend. Isn't this enough to make it a "fair share."
2. Capital gains are applicable only to stocks held for more than one year. Anything less than one year is taxed at regular rates.
3. Capital losses are limited to only $3,000 on a joint return even if your capital loss is $100,000. Is this fair or "economic justice."
4. You don't see the difference in the amount of total tax the wealthy in income tax and what a "poor person" pays on gasoline? If people take advantage of roads, defense, etc. shouldn't they pay something?
5. A wealthy person who pays FICA, medicare, etc. taxes gets the same economic benefit that a person in a lesser income tax bracket pays. If you want that individual to pay more shouldn't he be entitled to more of a benefit? Or is this another form of income distribution cloaked in the words "economic justice."
6. If you change the capital gains rates and tax dividends even more where is the economic incentive to invest? When you invest you take a risk with your investment and you expect to get some gain for it. If the government continues to take more the wealthy will invest in tax free municipal bonds or as happened in other countries go to more tax friendly venues. Mr. Scruffy has hit the nail on the head. Keep on taxing these individuals and they will leave.
7. I hear some wealthy individuals who say they want to pay more taxes. Nothing is holding them back - they can do it if they want. For example, Warren Buffett made a huge contribution to the Bill Gates Foundation and then took a charitable deduction. He could have made the contribution without taking the tax deduction. However, when tax deduction for charitable contributions comes under the microscope, these are the first people to cry foul.
Unfortunately, many politicians, media types, and people of a particular political persuasion are victims of class envy: the hate the rich because they are not rich or use this issue for their own gain. It cracks me up when a union president talks about the wealthy - when they draw huge paychecks. For example:
- The president of the NEA made $397,721.
- The President of the S.E.I.U. was paid $306,388.
- The United Food and Commercial Workers Union paid its presdient $709,000 in 2004 and after a hue and cry over that sum paid its current president $360,737 in 2009.
- Jimmy Hoffa from the IBT was paid $362,869 in 2009.
- The American Federation of State, County, and Municipal Employees Union paid its president $479,328.
- The American Federation of Teachers paid Randi Weingarten $428.284.
But as for me my only envy is that I can't play basketball like Michael Jordan did, I can't hit a baseball as good as Pujols, or that I don't earn as much as Sean Penn even though my wife says I am a better actor and better looking than him!
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