Bush's Tax Code: Long Live the Aristocracy!

[showcase]

Interesting article on MSNBC about some of the realities of Bush's "tax cut" and current policy.

If Bush gets what he wants, the income tax will become a misnomer?it will really be a salary tax. Almost all income taxes would come from paychecks?80 percent of income for most families, less than half for the top 1 percent. Meanwhile taxpayers receiving dividends, interest and capital gains, known collectively as investment income, would have a much lighter burden than salary earners?or maybe none at all. And here's the topper. In the name of preserving family farms and keeping small businesses in the family, Bush would eliminate the estate tax and create a new class of landed aristocrats who could inherit billions tax-free, invest the money, watch it compound tax-free and hand it down tax-free to their heirs.

By drastically favoring investment income over salary, fees and other "earned income," Bush would make it harder for people who start out with nothing to earn their way up the economic ladder, because they'd pay full taxes on almost everything they make, but he'd shower rewards on people who have already made it to the top rungs.

www.msnbc.msn.com/id/4660655/

Basically, between the favorable treatment for investment income, the continuing healthy mordita that SS & Medicare takes out, and the fact that the AMT will reach more and more people without reaching investment income, the US will have a salary tax over a true income tax. I was particularly thrilled to see the prospect of a 1% VAT bandied about as the only way to make up the Bush Administration's deficits. I am hard pressed to imagine a more regressive tax policy that the one we have now and are heading towards.

Eventually, there will have to be a correction. Either an easier one now, or a really painful one in 4-8 years. Not that anyone asked, but this is one of the reasons I'm pulling for change now.

[DallasHoya]

When I go to the store, I pay the same amount for goods and services that everyone else does, regardless of my income. Why should I have to pay more in taxes just because I have a higher income - whether from salary or return on investments - than someone who makes less? In fact, I use less government services than someone who is poor, so shouldn't I really pay less in tax?

[showcase]

DallasHoya said:

When I go to the store, I pay the same amount for goods and services that everyone else does, regardless of my income. Why should I have to pay more in taxes just because I have a higher income - whether from salary or return on investments - than someone who makes less?

So if A and B go to the store to buy the exact same things at the exact same price, and doing so eats up only 1% of A's yearly income, but 70% of B's yearly income, it's fair to demand the same amount from A & B in taxes as well? Or perhaps MORE from B because "he uses more government services than A"? How is B supposed to be able to take advantage of all that is great about the US and advance himself or his children to A's status if he's living paycheck to paycheck? What if some unpredictable misfortune befalls A and he winds up in B's financial situation? He should be penalized for that by being prevented from working hard to return his previous position?

In fact, I use less government services than someone who is poor, so shouldn't I really pay less in tax?

This is likely true as far as direct services, but this line of reasoning conveniently overlooks the indirect benefits the weathy receive from government. The tax-funded military and police protect the wealthy against forcible and uncontrolled redistribution of wealth. More importantly, tax-funded or tax-subsidized institutions permit the continued accumulation of wealth: the highways over which the goods you or your client sell are transported, the banks from which you borrow for your house or business, the electricity grid, the phone lines, etc., etc.. The wealthy benefit from tax dollars same as the poor; they just don't benefit by receiving a check or food-stamps.

A tax system that ensures that the rich get richer and the poor stay poor is a wholly unhealthy proposition for a nation. More importantly, as a relative matter the dollar earned from the sweat of one's brow is, in my view, worth more than the dollar earned sitting at a desk. Both of which, by the way, are worth a hell of a lot more than the dollar earned by sitting on your keister and letting your money do the work for you. The thought that we should reward people for resting on their laurels is ridiculous.

[DallasHoya]

www.baltimoresun.com/news/bal-te.obscenity06apr06,0,3004361.story?coll=bal-home-headlines

[DallasHoya]

It is very important that we all pay our taxes. For a fine example of the very good use of our taxes, see:

www.baltimoresun.com/news/bal-te.obscenity06apr06,0,3004361.story?coll=bal-home-headlines

By the way, how do I get that guy's job?

[showcase]

That link ought to have a thread unto itself. Plenty of material to work with there.

This Administration's Justice Department has been plenty heavy-handed (and I'm not referring to the Patriot Act) in a number of areas, and this fits that mold. I'm not quite sure why they're devoting ANY resources to this type of thing when there are Patriot Act warrants to serve and points of entry to secure, unless this Lam Nyguen has got a set of porn pictures he's using against the Atty. Gen. for a cushy job.

Seriously, how DOES someone get that job?

[thebin]

Stuff like this really irks the libertarian in me. A total waste of time and money, and an unwarranted invasion of personal liberty.

[hlb2]

Why paying a tax on every dollar might be the way to go: The government put in place and maintains in place all of the conditions--the infrastructure, the laws and treaties, the security arrangements, etc.--necessary for you and your investments to earn each and every dollar. Doesn't it seem reasonable that it should therefore get to tax, as it were get payment for, each and every dollar it enabled you to earn? Just as it might be in any partnership arrangement. Certainly that is not the only way to go--and broad economic objectives need to be considered in deciding the way to go--but it isn't exactly unjust or unfair either.

[showcase]

What bothers me the most about this effort is that the Government isn't attempting to enforce a particular law that says such-and-such is illegal (and by inference that this-and-that isn't), but gaming an undisputably vague decision by the Supreme Court that ties illegal pornography to "the prevailing community standard" in an effort to enforce a particular moral code. Trying indecency cases involving California porn distributors in, say, the town where Bob Jones University is located is claerly an attempt to circumvent Congress in an attempt to establish a national standard of decency.

If you want to crusade for a particular standard of decency, the only constitutional thing is to do so through the legislative branch, rather than by virtue of your position the top law enforcer in the executive branch.

[HOYAinDC]

The top 5% of income earners pay more than 50% of income taxes. The top 10% pay over 2/3rds of the income tax. Umm, sounds fair and just to me.

"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

-Winston Churchill

Hey Showcase, stop being a socialist.

[Deleted]

The top 10% also hold something like 85-90% of the wealth in this country, so their tax burden isn't exactly unfair.

[showcase]

HOYAinDC said:

The top 5% of income earners pay more than 50% of income taxes. The top 10% pay over 2/3rds of the income tax. Umm, sounds fair and just to me.

"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

-Winston Churchill

Hey Showcase, stop being a socialist.

Oh God - I'm a socialist! How could I have been so wrong?

Hey HOYAinDC, here's something to ponder:

"A facility for quotation covers the absence of original thought."

-Dorothy Leigh Sayers

[HOYAinDC]

Cam said:

The top 10% also hold something like 85-90% of the wealth in this country, so their tax burden isn't exactly unfair.

Actually the top 10% accounts for 33% of the national income.

[HOYAinDC]

Also, jobless claims are now at their lowest point in three years and the US economy has grown more than any other developed country in the last three worlds. Not attributing it to tax cuts but they didn't hurt.

Sorry if I'm being an a$$. As an economist (and more of a fiscally conservative democrat than a repub) it's just something in which I fully believe.

[showcase]

HOYAinDC said:

Actually the top 10% accounts for 33% of the national income.

Yeah, and average pre-tax income for the top 10% is 260K, the top 5% is 380K, and the top 1% is 1.05M. I weep for these people.

www.cbo.gov/showdoc.cfm?index=5324&sequence=0#table1B

And as I'm sure you're well aware, HOYAinDC, this is before the Bush tax cuts went into effect. I can't wait to see how much richer the rich got in 2002 and 2003.

[Deleted]

This link (a little dated) shows 35% to the top 5%, so your 33% number is definitely low. Plus, the top 10% do hold a ridiculous amount of the wealth (actual annual income levels aside).
www.cbpp.org/12-16-02tax.htm