Tuesday, July 1, 2008

Tax System Unfair

I received phone calls in enthusiastic agreement with my article in the St. Cloud Times.
http://www.sctimes.com/apps/pbcs.dll/article?AID=/20080630/OPINION/106300049/-1/archives
Our democracy is in danger of becoming a plutocracy, a nation controlled by the rich.
A really “free market” would not slather economic rewards on a favored few. We need to tax the wealthiest Americans fairly to avoid going the way of Latin America or Asia.

6 comments:

Anonymous said...

We are taxing the wealthiest Americans. Everybody who earns money is taxed.

In your article, you say, "The shame is not that there are billionaires. Let them indulge their obsession with making money." But how can people make money when the government takes all their money away from them?

I say ALL their money because in 1944, the tax rate for the top earners was not 65% as you said in your article, but 94%--that's pretty much ALL of one's money. Now the rate is 35%, not 23%. I don't know where you're getting your numbers from.

It does not seem fair to me for someone to earn a buck and then to turn around and give 94 cents of it to someone else who didn't earn it. It makes more sense to keep most of the money you earn; so a tax rate of less than 50% seems most reasonable, and that's the sort of rate we have now.

Of course, nobody ever paid 94% of all their income, just their taxable income. And then there are the tax loopholes which allow one to pay even less taxes.

But there is a simple way to get rid of loopholes. Simplify the tax code. In fact, why not have a tax system that's really simple and is literally fair: a flat tax? Everyone pays the same rate. That's fair. Former congressman Dick Armey suggests a rate of 15%-20%. That sounds low, but we just need to require people to pay all of it (minus exemptions for self and dependents). No more loopholes. Actually, we could also just get rid of the loopholes while keeping the tax system somewhat progressive. In any case, we can keep tax revenues high by taking away loopholes and deductions instead of having high tax rates.

Jeanette said...

You rebut yourself with this paragraph: "Of course, nobody ever paid 94% of all their income, just their taxable income. And then there are the tax loopholes which allow one to pay even less taxes."

This explains my 65% figure and renders your claim "the government takes all their money away from them" false. During the 1950s income taxes remained highly progressive but the wealthy had no trouble creating more wealth.

I'm all for simplifying the tax code as long as it taxes wealth fairly. You and I come close to common ground in your statement, "we could also just get rid of the loopholes while keeping the tax system somewhat progressive."

Anonymous said...

Okay. Well, 65% is still most of one's money. Ideally, a society should strive for rates below 50%.

Jeanette said...

If all the people who earn a million dollars or more a year would pay 50% in taxes, our country would not be in financial distress.

Jeanette said...
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Jeanette said...
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