I realize that it’s been a long while since my last post, and I want to start off by apologizing for that. You know how life goes, getting busy, changing priorities, etc. I’m getting back to it now, and seeing as I’m too cheap to spend a bunch of money on gas and take the bus to work, it seems like I have no excuse to not post on a regular basis anymore.
That said, there is something that has been really bothering me lately. This ignorant idea that the “Rich” pay less in federal taxes than the “Poor”, “Middle Class” and “Less Fortunate”.
Keep in mind, we are talking about Federal taxes. Since there are 50 states, and who knows how many counties, cities, etc. in this country that all have their own taxes, I won’t even pretend to speak on that.
The biggest lie I’ve seen in a long while is this notion that Warren Buffet pays less in taxes then does his secretary. If you look solely at income tax, this may be the case. I don’t know that it is, but I have no knowledge of what he pays himself or his secretary. However, income taxes are based on, what else…. your income. If you are a billionaire, you may not even have an income. You’ve already earned a great deal of income, and in the year that you made it, you paid income tax on it. Income tax has a graduated tax rate, which means the more you earn, the larger percentage they take for taxes. So, based on income tax, the “Rich” person certainly paid not only a higher percentage, but a great deal more in actual dollars than anyone who made less.
Now, if a “Rich” person has earned $20 million a year for 20 years, they may decide to retire. Obviously, they will have plenty of money to live on, so there’s no reason to continue working unless they would like to. They will no have no income. Therefore, they won’t have any income tax. They have already paid taxes on the money they earned, every single year that they earned it.
So the plan, as I understand it, is to make them pay their “fair share” of taxes. Hmmm….. the taxes on $20 million a year would be close to $8 million a year. Now they are retired and have no income. Why should they be forced to pay more taxes on money they have already paid tax on?
So that’s for income tax. There are other federal taxes as well. Most folks making $20 million a year probably aren’t doing so working as a fry cook. Most likely they own or run some sort of business. If they own the business, they are going to get hit for a portion of Social Security and Medicare taxes for every single person they employ. They’ll also get the privilege of paying corporate income tax on the revenues of the business. Remember, we are only talking about federal taxes. There is a whole host of other taxes that business owners will have to pay to the states/counties where they do business. Additionally, they will likely have investments. Any gain they make through an investment would be known as a Capital Gain, and will be subject to a 15% federal tax.
Now, through all the time they’re working, they will be paying ALL of these taxes. Once they have retired, they won’t have income tax anymore, unless they still draw a salary of some sort from any business they might own. If they no longer own a business, they don’t have to worry about paying all the taxes related to employees, gains, corporate income tax, equipment, etc. Like as not, they’ll still have some investments, and still have to pay the 15% capital gains tax on anything they make off that.
So, in theory, if Warren Buffet draws no salary, or less of a salary than he pays his secretary, she most certainly will be paying more than he does for INCOME tax in a year. How can y0u tax him on income he doesn’t have? He’ll still being paying corporate taxes (he still owns a business) and employment taxes (if he’s got a secretary, I have proof that he has at least one employee) and capital gains taxes. How is that remotely close to unfair to working Americans that this man who has already been taxed on all the money he’s earned doesn’t have to get taxed on that same money again? I don’t have to pay income tax for money I’ve already paid income tax for. Do you?
Am I saying we don’t need tax reform? ABSOLUTELY NOT!! We DESPARATELY need tax reform. Painting the picture in broad terms and getting people all pissed off at the people who are successful (you most likely work for one) is not the way to do it. What needs to happen is a complete tear down of the federal tax program. Is it right that someone with millions of dollars in the bank can “earn” more through investment and pay 15% while someone earning that same amount through a salary pays 38% in taxes? Of course not! The entire income tax system is ridiculous to begin with. Income tax punishes success, rewards failure, and discourages economic growth. What we need is one flat rate that EVERYONE pays, regardless of how much they make, with no deductions. We will need to take into consideration basic living expenses and exempt that amount from the taxation scheme, and NO OTHER EXEMPTIONS. Gee, where can we find something like this?
Check out www.fairtax.org to learn about a system that truly is “fair”, and not in the liberal “pillage from success to reward failure” meaning of the word.
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