Please Poke Some Holes in this Argument (Tax Cuts)

[oostevo]

"
Conservatives support all businesses. They support tax relief to all businesses, not just the rich, a misconception common among those who see the mainstream media. The truth is, the rich recieve a disproportionately small amount of tax cuts. Let's say that there are 100 people representing the U.S. Ten of them are poor, and pay little to no taxes. One of them is rich, paying 80% of all tax money, from their business, or what have you. That one person gets about 30% of the tax relief, and the ones who pay an insignificant amount get less relief, 10%, distributed between them. The majority, the middle class, who pay the rest (about 65% of taxes) get the rest of the cuts, about 60%, about the amouint af taxes they pay. If anyone is being cheated here, it's the rich guy.
"

[mikehiggins]

1. Who benefits?

This is one of those arguments that pops up all the time. It makes perfect sense as long as you allow certain assumptions to be unspoken. The main one, to me, is this.

Is the rich man living on an island in the South Pacific?

If not, he's living in a society and benefiting from that society.

As a rich man he has gained quite a lot from living in that society. In fact, if he was not living in that society and gaining the benefits of doing so, he wouldn't be rich in the first place

Why should he not pay a greater percentage of the taxes, since he gains a greater percentage of the benefits?

It all comes down to infrastructure in the end.

Of course, if you beleive the wealth of the wealthy just appears out of the sky like manna, then this might not apply.

[dreissig]

2. It's an Old Argument

Rich people have argued for years that a progressive tax is unfair. The response generally is that rich people pay more taxes because they benefit more. I'm not sure that this argument holds water, but it's the standard response.

The actual reason rich people pay more taxes is that there are a number of competing theories of fairness. It's obvious that tax proportionality seems fair to rich people, and no wonder.

[sandnsea]

3. The rich guy doesn't care about taxes

He wants power to make profits. To pay his workers less because they get money from food stamps, housing and energy assistance. To pollute and pass on those costs to taxpayers. To overcharge on contracts and have the taxpayer pick up the costs. He deflects his tax burden in other ways. The rich guy is on a whole other level, retaining power. He wants the poor to be poor so he can exploit their labor and the middle incomes to have a tax cut so they can buy things; but mostly he wants to let them "keep their money" so they'll all think he's the good guy. To retain power.

Machiavelli. Very simple really.

[BertrandL]

4. It's not about fairness in taxation

It's about how do we, as a community, get the sort of systems and institutions we agree we need? You can't tax the poor enough to pay for military, education, entitlements, governance, etc. The choice is to either tax the rich disproportionately or eliminate/cut some tax-funded institutions. Or, in Bush's case, borrow.

For all the whining the right does about tax injustice, the sort of society they invision can't exist without a lot of government spending -- too much without graduated taxation.

Feudalism is ugly. People with means move to higher tax countries because those countries have the societies they like.

[alwynsw]

18. Is that why so many Brits become American citizen's?

One comes to mind immediately - Anthony Hopkins. There are a multitude of others, but I have no memory for names. (I posted Hannibal Lechter until I got corrected by my wife.)

As has been evidenced by the UK health care system, those with the funds opt for private care at their own expense.

I, personally plan to move to a lower tax country because I have the means. I'll pay for the services I need.

[alcuno]

5. Cheated? Hardly.

First of all, most of the wealthy people I know are embarassed that the Republicans consider them deserving of even more wealth. Forget the argument of tax cuts. Talk ability to provide your family with food, shelter, health insurance, and clothing; the bare essentials. And while you are at it remember that among the wealthy (I'm talking income above $300,00/year), one hand often greases the other.

Let's say that one guy earns $30,000/year and the other earns $300,000/year. Each of them has to pay for family health insurance that costs $3,000/year (if you can get it that low.) It represents 10% of the low wage earners salary and 1% of the high wage earners salary. The low wage earner now has $27,000/year for his family to live on while the high wage earner has $297,000/year. Who exactly is being cheated here?

[DieboldMustDie]

6. The rich also pay little in payroll taxes...

since the Social Security tax is capped at about $87,000.

[alcuno]

10. Amen to that.

I notice that the flat taxers are never interested in that particular tax, which is only flat up to $87,000.

[stevebreeze]

7. if the rich guy is being over taxed

Would not the after tax income of the rich decline? Of course, this would be recognizable symptom of the over taxation. Instead what has happened is the after tax income of the richest 1% has soared 115% since '80 when the GOP tax cut frenzy started at the national level with Reagan. The after tax income of other Americans has been an anemic 8% or so. Now this is family income so it is even worse then that stat would indicate as more people in families are working now and most workers work more hours. In inflation adjusted terms people on average earn LESS today the 23 years ago.

Also if you talk about tax burdens it is important to talk about ALL taxes. When you do this you realize that Bill Gates' effective tax rate is 15 %( the new rate for long term capital gains. There is no SS or Medicare tax due, nor is there in the state of Washington any state income tax. Most working class people on the other hand pay 15.3% on every dollar then earn just in SS and Medicare tax. On top of that they pay federal income and state taxes and on average pay about 25-30% in all taxes.


:kick:

[kcwayne]

8. The rich benefit disproportionately from tax expenditures

When a road is built, or a dam is constructed, schools are created, university research develops a new technology, or a foreign oil field is protected with lives and treasure, who benefits the most? Is it the corporate CEO that makes 600 times what the workers in the company make and who shares in the equity growth of the business, or is it the hourly worker who makes minimum wage and is fired the first time there a slight downturn in quarterly profits?

Given that workers gain nothing more than a marginally livable wage from their toil, why should they be required to pay taxes to build the infrastructure needed to support business?

When a multi-million publically financed road project goes in to allow easy access to a shopping or industrial area for tens of thousands of people, the worker gets a $5.00 per hour job, and the business owners make millions. The owners get golden parachutes and financial security for generations, and the workers get no return on their investment of tax dollars, other than an opportunity to survive. They also get a quick boot to the street with no financial protection when the owners spy better opportunities elsewhere for their capital deployment.

The capitalization of EVERYONE's tax contributions is used to increase the wealth of the wealthy. Since the wealthy are the beneficiaries of the public investment, they should bear a larger percentage of the cost. In fact low income earners should not pay any of these costs, since they receive no benefit. Taxes for the low income are nothing more than redistribution of wealth from the poor back to the wealthy.

[pasadenaboy]

9. You have to use real numbers.

Your numbers don't add up.

How can 1 person pay 80% of the tax and the majority pay the rest 65%. That leads to 145% of taxes.

Say your arguement is 1 wealthy person pays 80% of taxes, 89 middle class people pay 20% of taxes, and 10 people pay no taxes.

Since the top income tax rate in the us is now I think 33%, and the average middle class persons rate is 25%, he would be making approx 6000% the income of the average person.


If the average income were $30,000, this guy would be making $1,800,000 per year, or which he would pay $600K per year in taxes. Those making $30K pay 7.5K in taxes.

So, the one guy keeps 1,200,000, the others keep 22,500.


Now, say the tax relief is enough to wipe out all taxes for the middle class (which of course it wouldn't be) the middle class would get $7,500 each for a total of $667,500
The one at the top gets $333,750 in tax relied.

So, the middle class each nets $30,000 a year.

The wealthy guy now nets $1,565,250 a year

Now, explain to me how that is unfair to the wealthy guy?

[WhoCountsTheVotes]

11. I support tax cuts

Really, I do. I don't think anyone who makes 30k or so should pay federal income tax. I think millionaires should pay the difference. Social Security and Medicare pay for themselves, and should continue to do so.

We should sic Eliot Spitzer on rich tax dodgers that make money in America but don't pay their fair share of taxes. (Spitzer 2008!)

[Eric J in MN]

12. The overall taxes paid by the rich

The overall taxes paid by the rich are proportionately lower than the middle class, because dividends and capital gains are taxed at a lower-rate than income.

John Edwards referred to this during the last debate, moderated by Ted Koppel.

http://www.johnedwards2004.com/budget-and-taxes.asp


"Create A Tax Code That Reflects Our Values

Tax Millionaires No Less Than Secretaries
Edwards will make the tax rate for the unearned income of the wealthiest 1 percent equal to the top income tax rate on earned income for middle-class families consisting of teachers, nurses, and secretaries. Edwards will set the top rate on capital gains at 25 percent for people earning over about $400,000, less than the top 1 percent of Americans.

Edwards will also repeal the Bush tax cuts that benefit only the top 2 percent of Americans, including the new top two tax rates on income, and the new rates on income from dividends and capital gains for the wealthiest 2 percent of Americans. Only those earning about $240,000 or more are in the top two income tax brackets. In addition, Edwards will retain the tax on very large estates."

[punpirate]

It's a wonderful argument, except...

... that it's not true. Taxes on small business, for example, are proportionally higher than on the typical multinational corporation, so that part of it is BS.

Second, the rich have never paid 80% of their income in taxes... ever, even when the federal nominal top rate was 91% (btw, that rate was reduced at the end of the Kennedy administration to 77%, while the top rate has now been reduced to 33% with the recent tax cuts, and stood at 38% previously). The opportunity for the wealthy to shelter income has been there for a long time, and the opportunities to do so have increased in the last couple of decades.

If Kevin Phillips' data is accurate (and it comes from the IRS, so I guess it is), the wealthy now pay a _lower_ percentage of their income in federal taxes than do those in the middle class, as of 2001.

As for the mathematical sophistry in the last couple of sentences, it hardly deserves addressing. The dollar amount lost to the treasury is spread out over all income groups, but the individual gain per individual disproportionately favors the wealthy (and corporations, which are rarely mentioned in this context these days).

In a broader sense, though, the inference in this is that the wealthy individual alone is solely responsible for his wealth accumulation, and for that reason alone, is entitled to keep a greater percentage than others. That's little more than social Darwinism, and ignores one important fact--that wealth accumulation is in part due to the _system_ as it is in this country. An unwillingness to pay taxes into the system that enabled the wealth accumulation ensures the destruction of the system.

Cheers.

[PurityOfEssence]

13. The rich get infinitely more from society than the poor

Taxation, as represented in progressive taxation, is not punishment or opportunistic thievery, it's an attempt at FAIR BIILLING FOR SERVICES RENDERED. In a truly pure, idiotic libertarian society, we should pay for only those services we use. That's the pretense under which conservatives operate. Thus, the poor man shouldn't be paying to support the FDIC, FSLIC, SEC, Foreign Investment Guarantees, U.S. Military protection of Occidental Petroleum's pipelines in Colombia and a host of foreign ventures that only benefit their investors.

The very society is a huge boon to the rich, and they should also pay for its upkeep and stability because it sees fit to allow them to have as much money as they please. Think of it as tithing to the moneygod or protection money to keep the poor subjugated.

The idea of using the percentage of overall taxation is a hideous use of statistics: if a person has most of everything, he/she should be paying most of the taxes. The rich in this country pay a SMALLER percentage of their income than the working poor, when you factor in things like FICA. These statistics always use "income tax" as if that's the only tax there is. It's ridiculous and deliberately misrepresented, and we haven't even addressed net worth, which does cost society at large to sustain for the individuals who constantly remind us that they're not taking anything for the service.

Far too many of the rich in this country are such sociopathic freeloaders that they can't even see what a shockingly sweet deal they have. It's either shortsightedness or misanthropy that compels them to deny social safety nets and the occasional market substitution. The money they lose through insurance costs, crime and unproductive subsistence programs would be better invested up-front into a more equitable society that caused less strife. This is lost on many of them because of lack of imagination and lack of contact with the working world.

[dpibel]

14. The real killer

Is that 145% of all taxes. At least that's what 80% + 65% adds up to in my world.

If you really meant that the middle class gets 65% of the tax cuts (which is not what you said), then your problem is solved.

As long as the total tax break is 105%.

Please go back to your talking points memo and type up this liberal killer the right way.

Jeez.

[quaker bill]

15. No problem

Taxes are the dues you pay to live in a society worth living in. Progressive programs are expensive. The wealthy benefit most from the provision of infrastructure and a secure marketplace in which conduct business.

Progressive taxes are just. Collecting sufficient taxes to pay for social progress without a deficit is appropriate and just.

[arewethereyet]

16. OK here you go

Conservatives support all businesses. TRUE They support tax relief to all businesses, FALSE (farm subsidies as an example, tarrifs for another) not just the rich, a misconception common among those who see the mainstream media. The truth is, the rich recieve a disproportionately small amount of tax cuts. TRUE Let's say that there are 100 people representing the U.S. Ten of them are poor, and pay little to no taxes. FALSE (ten% are poor but 50% pay little income tax) One of them is rich, paying 80% of all tax money, FALSE (37%) from their business, or what have you. That one person gets about 30% of the tax relief, and the ones who pay an insignificant amount get less relief, 10%, distributed between them. The majority, the middle class, who pay the rest (about 65% of taxes) get the rest of the cuts, about 60%, about the amouint af taxes they pay. If anyone is being cheated here, it's the rich guy. FALSE (it is generally even).

But its rather more complicated than that.

[alwynsw]

17. I won't get into percentages, but as a former CEO

I have to say that the equation was simple. Higher taxes, fewer new hires.

I founded the company, took it through it's growing pains (most of them), and set the wage and bebefits guidelines. My salary was never more than $150,000.00 per year. I got the rest of my compensation through growth in the value of the company's stock. We went public about 3 years after inception.

Here's a sample of the employee compensation package I implemented:

Minimum salary -30K (the average in the area is just under 23K)
Health, vision, dental insurance for all employees and domestic partners, children, too at no cost to the employee
Stock gift plan of up to 5,000 shares per year, beginning at 1,000 shares after the first year.
1 for 1 matching 401K (we used a mutual fund selection)
1 for 1 matching stock purchase plan for all after 60 days employment
2 weeks vacation after one year, 3 weeks after 3 years, 4 weeks after 5 years, 6 weekss after 10 years
Child care at no cost to employees for up to 4 children
Up to $10,000.00 in reimbursement for adoption cost AND time off equal to Federally mandated leave as outlined in the Family Leave Act for those adopting (we treated it as a new birth)

That should give you some idea. We spent far more in benefits than we saved in tax deductions for the benefits.

Tax breaks for the wealthy can be a good thing, IF those folks receiving the breaks do the right thing. Alas, we can't always rely upon them to do so.