TRP - Than why raise rates!!!!!!!!!
We operate under a progressive tax system. The more you have/make, the more you pay. I didn't set it up. It was the original code which was thought up during the Civil War by the Yankees and old Abe Lincoln and liked so well it was brought back at a later time. Please say you're not a southerner, I don't want to get in one of those arguments.🙂
Knowing this, is it fair, under a progressive system, for people wealthy enough to receive these supplements to their incomes to continually receive cuts in their tax rates because of the risk/reward/inflation argument? That's bucking the system. I know it's well known that after the rate goes down, the government receives much more income from gains than it did previously and many point to this as a good thing. But if they have to cut it just to get those people to accurately report it and pay - what does that say about the types of people we're dealing with here? If that's the case, I'd say we need to spend our money not on gains tax cuts in the hopes of collecting, but on auditors/police for the wealthy to make sure we do! If we had people who weren't willing to pay 28% and receipts increased by a substantial amount after the 1997 cut when the amount was reduced to 20% (on holdings more than 1 year) that's pretty bad.
...simple redistribution of wealth. Phooey
We're about to embark upon another redistribution of wealth. The Bush taxcut will be distributing hundreds of millions of previously collected payroll taxes in an upward fashion over the next 10 years. Much of this will be received by those who stopped paying these taxes after around $80K of their income and they'll be some of the largest beneficiaries of the cut. Of course, "they'll be getting their past paid taxes back", while others who didn't pay "those kind/the right kind" of taxes (but taxes which the government is including in their supposed "surplus" nonetheless) won't be receiving the same treatment. Shouldn't taxes be taxes? Under our system, they should except for a wealthy part of the population argued that it wasn't in their best interest to contribute to a tax system which couldn't provide the proper return after a certain amount and managed to get themselves excluded from it.
Sure alot of people will be benefitting from increases in EIC (which I don't approve of because it's not equal as well), but in the end, there benefits won't be nearly as much as they paid into those payroll taxes over the years.
Sorry, don't buy it. Still don't see how higher cap gain taxes help alleviate this situation.
But shouldn't those significant cuts (already implemented) have helped to improve it? Or did they just lead to more income polarization? I'm not sold that lending capital leads to a better economy for everyone. I think there is a sob story there for many people if you look at the big picture. Sure almost all income groups increased in wealth over the past decade (except for the poor which even Reagan did a better job of helping than Clinton), but the actual percentages were pretty wide spread. And there was still alot of downsizing which wasn't publicized by the media. By far, the wealthy got phenominal gains of market growth in the last decade alone. My God, the Dow went from 4,000 to 11,000. But we had to coax them into paying for it with a lowered rate in 1997? I say phooey to that!
There are more millionares than ever
In relation to our population growth? This number hasn't kept up. In fact very few people can even file income taxes over $500K. Our national average is something like $35-40K according to the last census.
How about the biggest piece of middle class welfare: the mortgage interest tax deduction
I don't agree with this either. It's the middle class stepping on the others (oftentimes the poor who can't afford their own housing) to support their own lifestyle. But it also benefits business as well. How many people would take those interest-bearing loans if they weren't tax deductible. There's even new strategies for the middle class that I've seen even on this board about taking a loan for the longest period of time (30 years) and then equity loans on top of it to keep deducitng the interest for years while using the savings for investment which has a "better" return than real estate. All on the backs of the other taxpayers with fringe benefits going to the bankers. This is as bad as lowering the gains tax and should be done away with. Even on a 15-year note on my home I wouldn't be able to take this deduction for more than 2 years and it'll only amount to about $1K over the standard decution anyway due to the size of my loan and interest rate. Of course I could resort to some fanciful itemization and join the ranks of the wealthy with the thrill of the scam but I don't think I will.
Jhalpin - Or they will cutback on their risktaking or stop it entirely.
I don't think wealthy people will ever stop trying to invent ways to increase their wealth. They will continue to engage in these activities even if the government doesn't collect. This is evidenced by TRP's gains tax receipts data. Do you think no one was investing because the government didn't collect as many tax receipts before the cut of 1997? Ha, I've also got some land in Florida I could sell you! This has even been documented as far back as the 20's and it's nothing new. Rich folks want to stay rich one way or the other. If it means bending the rules, so be it. And they can because they have the connections. Outside of Leona Helmsley, of the super rich, who have you ever seen on the 6 o' clock news being cuffed for tax evasion?
You've got to let folks who take big financial risks have a reason to continue doing so. You need to let them have their reward.
I say, how about we reward Warren Buffet with a job/lifestyle in one of the few countries in which he has recently raided and devalued the currency for his own gain in the name of "sound investment"? See how he feels about the risk then. Off topic, but globalization has been deemed a failure by a lot of people. I'm not sure the types of investments being made are beneficial to the world or should be rewarded. It's obvious capitalism can't provide prosperity to all the people all the time. There will always be some wealthy while the vast rest remain in a fixed position subject to the boom and bust cycles perpetuated by the wealthy. Such is the nature of the beast. There are many problems which capitalism hasn't solved yet. It still needs alot of work.
As far as raiding Bill's income, I believe he should pay per the progressive tax schedule (because it is adjusted year to year). If progessively he is required to pay 50%, then that's the code and it's not really a new tax. Because he lives in a country which is historically founded on a progressive system for income taxes(all types of income), he will have to live with it or get out. If he has a problem with this, then he needs to go about solving it through the proper means as he would with his own business, not circumventing the tax code by greasing his local politician.
