Guys, as usual the truth is somewhere in the middle. We need to have an intelligent discussion about appropriate marginal rates. I've discussed this recently in another thread where I talked about the need for among other things: a lower corporate tax rate, additional marginal rates above the current $250k threshold, and a phase out of favorable 15% capital gains treatment if you make > $15 million /yr in investment income.
It's absolutely true that the top 400 families in this country pay an effective tax rate of only ~ 16.7% because 81% of their income comes from investments rather than their salaries. A lot is also in Munis which are tax free at the Federal level and at the state level too if it's a muni or muni fund in the state where the taxpayer resides. Keep in mind we are talking about annual income > $138 million to be in this bracket. These people need to have a phase out applied such that they pay closer to 30-35% all in.
Higher marginal rates will also discourage high CEO pay and outrageous pro-sports players contracts which are also a fvcking joke. No way a company is going to continue to pay $30 mil / yr to someone if that money is taxed at a 55% marginal rate over $5 million. Finally, let's stop with talk of abolishing the inheritance tax. It was created to prevent the formation of dynastic wealth...a good thing. Set the exclusion at a reasonable level ($3 mil ?) and move on.
I am an economic conservative but even I can see the imbalances that exist. So if there are any politicians out there reading this tonight...do you have the courage to take up this challenge? Do you have the balls to stop framing this into a constant black or white debate...i.e. confiscatory tax policy (Dems) vs tax cuts for all (Repubs).
Can we have a serious discussion on appropriate marginal rates (we need more at the truly high end) and closing corporate loopholes while lowering the U.S. corporate tax to spur business investment here? Stop the crap! Is there anyone among you left in Washington that cares enough to think critically about this issue??
Sorry... /end rant.
Wow, an actual discussion. I'd love to join in:
I concur that we need at least 2 more tax brackets, maybe 1 at $2M/year and another at $10M, maybe even a 3rd for the absurdly wealthy at $100M/year or so. While all rich, those three incomes enjoy a wildly different "class". The tax the rich, who we consider any family making over $250K exclusively, is the wrong tact in my opinion. It affects too many of our actual bosses, who they will get relatively little extra revenue from AND whose reduction of income just might affect you or I, while extracting revenue from the people they really want too (the wealthy).
IMO, we also need a vastly simplified tax code. Our current system is beyond absurd, I should not have to pay some asshole a decent chunk of money to figure out what I owe the .gov and hope like hell that he didn't fuck up. This would also allow us to target actual tax rates on each of the brackets. 5% means 5%, 10% means 10% and so on, you remove the all the deductions and other crap that allows people to avoid taxation legally. Of course that would need to be done in conjunction with significant rate decreases across the board. That is extremely unlikely though consider our politics. The tax code is purposely used for basically social engineering (enticing certain actions and vice versa), I doubt the .gov will want to give up that power.
At the same time we need to put a quick end to BOTH offshoring jobs and importing cheap labor. American workers simply can't compete with people making dollars a day and until we fix that problem we will continue to see jobs exported overseas. Its just good business to do so, we need to end that. I am sure someone smarter than me can come up with a relatively easy way to do this (wage tariff or something?) but it must be done. Same thing with importing cheap labor, I go to construction sites today which have hundreds of "middle class" jobs and even more lower middle class jobs and a very large percentage of the workers can't speak English. This is a rather new thing in this area but again, when business has incentive to do something it will, it really is that simple. The incentive is that the imported labor is much cheaper than traditional labor. When you can replace a guy making $25 an hour with one that makes $12 an hour and their production is anywhere close to equal, its a no brainer. Furthermore, a lot of companies are finding they MUST do this in order to compete with companies who already have. This isn't politically popular either (on either side) but you can't argue with the math. If we want wages to rise in this country it WILL NOT be done by importing cheaper labor. That has the exact opposite affect which compounds itself in times like these when you have very high unemployment and as a result a high supply of labor/low demand. BTW, this doesn't make me a racist, it simply means I can do basic arithmetic
As far as the tippity top, they should definitely be paying more in taxes. I personally don't think the .gov should ever be able to take more than 49% of a persons money. We should get to keep at least more of what we make than the government gets to take from us. This is relatively a non-issue since the tippity top isn't paying anywhere near that right now, regardless of what the actual rates are. Even doubling their taxes doesn't get them anywhere close but it does require the additional brackets so you don't pound the small business owner making a couple hundred K a year.
Next we need to stop propping up the housing market. I can make a very strong argument that the absolute largest reason the middle class has stagnated is primarily because of increases in housing and insurance. Housing must get to a point that the average family income can afford the average house. In 2007 the median house went for roughly $250K while the median family income was somewhere around $45K. The median house price needs to fall to somewhere around $150K (3 times earnings) to become truly affordable. We have developed the wrong mentality about houses in this country. They are a place to live and not an investment vehicle. We think we are all winning when our houses go up in value faster than wages but we aren't. We are really just giving the financial sector (and the tippity top eventually) a larger percentage of our incomes. I know this isn't a popular idea but again, the math doesn't lie.
I have quite a few more but its already getting to be a wall of text so I will stop at that for now.