Is it absolutely necessary that the rich pay their fair share tax-wise?

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What does the middle class gain by taxing the rich?

Surprise! Nothing good.

Higher prices at all stores and gas stations. Rich people don’t pay taxes and never have. They just pass it on to the consumer.
 
sedonaman said:
Thank you. The difference between “virtually all” and “all” [2.7%] is not that significant in my mind, so my conclusion seems reasonable to me. It seems when making arguments and doing things like ALL we should be careful. As conservative commentators are fond of saying words have meaning. I am sure those paying taxes in the bottom 50% don’t like being dismissed. I am sure that the single person making $20,000 at his job and paying $1,154 in income tax doesn’t like being dismissed by you as not paying income tax. If we’re being honest this persons life is impacted much more by paying this tax than the single person making $200,000 who pays $47,762 in taxes. If you consider just these two payers the total share of income tax paid by the $20,000 wage earner is 2.4% and if you include social security and medicare taxes then his share of taxes goes up to 4%. But now lets take a look at what happens if you go to a 10% flat tax:

The person making $20,000 share of total income taxes paid is going to rise to 5.2% ($1,050/$20,100). Not a big change. In other words even if we go to a flat tax the top income earners are still going to pay virtually all of the income tax–and there is a crowd out there that is still going to take that data and make the case that the tax system is not fair because the “rich” are paying most of the tax. Unless you go to a regressive tax system–the data you are trying to use to say the system is unfair–is not going to change in any meaningful way.

Your inescapable conclusion from this is that those above the median income are what constitute rich for the government. How does this follow? This conclusion only follows if our government has stated that only the rich should pay taxes and I don’t believe that has been stated. One could argue that it has been claimed that the rich are not paying their fair share–and if you look at proposals on whose tax rates should be raised–one has to draw a different conclusion on who the government considers “rich” and it is not those earning more than the median income. So I am sorry your conclusion is not reasonable.

Of course that’s one of the incentives for the business, but the goal of the politician is to raise money for re-election. I don’t disagree with you but that conclusion doesn’t follow from your Micrsoft anti-trust story. You gave an example and then drew a conclusion that had nothing to do with the story you used–that’s my issue. Your story proves nothing about high taxes being an incentive to lobby. And now you throw in this thing about the “goal of the politician”?

If businesses successfully lobby to get their effective taxes lowered, who makes up the difference? It has to be those who cannot afford to lobby, IOW, those of us on the bottom who cannot pass them on. First you’re changing the argument from the rich passing their taxes on to businesses. Second your argument flies in the face of the position that the rich pay all the taxes. If the rich are paying all the taxes–they are not passing them on to those at the bottom–remember you earlier claimed those at the bottom pay no income tax. Third businesses cannot always pass on their increased costs–whether from taxes, increased regulation, supply costs etc. They can only pass on what the market will bear. If this were not the case then all businesses would be profitable and none of them would lose money and go out of business. In order to compete businesses often have to eat their increased costs and settle for lower profits.

My mistake. From memory, I meant 1913, the first year of the income tax. Besides 1913, the earliest tax schedule I have is for 1969. While the average Joe would have paid nothing in 1913, his rate went up significantly between then and the 1960s, which is my whole point. That’s not how I understood your point. You said: “The rich can also pass the added taxes to those of us lower on the economic pyramid” and then asked us to compare the tax rates or more appropiately the brackets. Again I don’t argue with the fact that average Joe now pays taxes when he previously did not. I just don’t think that proves your argument that the rich passed their taxes on to average Joe. As I stated it would appear to me that the government simply expanded the tax base. The rich are still paying their taxes it’s just now average Joe is also forced to pay tax. I don’t see any evidence that the tax burden of the rich has been shifted to those “lower on the economic pyramid”–and again to say thats what happened flies in the face of your initial point that rich pay all the taxes. I think we all have more tax burden now than we did in 1913–rich and poor alike.

I included state income taxes in my figure. As I said about business above, if the rich escape taxes, who makes up the difference? Well it is not the bottom 50%. You have already told us that they don’t pay any income tax. I would say no one – unless you want to assign a share of the national debt to each of us.
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Peace,
Mark
 
sedonaman; said:
I think no. And I think you missed my point. If I sell you my IBM stock and take the money you gave me and buy Microsoft stock from another individual–we have done nothing for the economy–though we have helped our stock brokers. IBM and Microsoft don’t receive anything from us that helps them grow. If I sold to you at a gain–I am not sure I should get a reduced tax rate on that income. I would feel differently if I purchased stock through an IPO or invested in a start up company. One would hope that share prices reflected the underlying value of the company but we all know that that is often not the case. When a company borrows money the institution looks at the companies earnings history, earnings potential and balance sheet–assets minus liabilities and the liquidity of those assets and the current or LT nature of the liabilities. Companies care about share price for a number of reasons–executive bonuses are often tied to share price, the ability to exercise options, etc.
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Then why are we discussing the topic of this thread instead of something like, “Should we raise taxes on everyone to balance the budget?” About 20 years ago, the *Wall Street Journal *carried an article [wish I’d kept a copy] about a study that showed that the average person is willing to hurt even himself just to “stick it” to the rich. It seems to me there is a lot of envy and more than a little psychology going on in the way taxes are levied.
I haven’t really been responding to the topic–only to what I perceived to be inaccuracies and conclusions that don’t follow from the stated example. I have no idea why someone would ask the question. It seems to me it is necessary for us all to pay our fair share tax-wise. The discussion it would seem to me is what constitutes fair–and I am guessing that is a discussion that would never end.

I just don’t see all this envy of the rich going on. What I see are people who can’t afford to live being told they need pay more so that those who have an abundance can pay less and get even more. Is it envy to want to be able to feed your family? To be able to pay your rent? To be paid a living wage by companies that pay executives 10’s of millions in bonuses? Envy is wanting what they have–envy is not a desire to feed your family and keep a roof over their heads. Envy rears its ugly head when someone needs a larger house in the Hamptons because their neighbor just expanded their house. Envy is when you need a Bently instead of a Mecedes. Envy is when the $500,000 motor coach is not good enough because everyone else has a million dollar one. Envy is called keeping up with the Jones.

From 1942 until roughly 1982 the income share of the top 10% in this county averaged between roughly 32-35%. Starting in 1982 that began to rise and as of 2007 it had rissen to roughly 50% according to Thomas Piketty and Emmanuael Saez. I don’t think that is healthy for this nation. Something changed and it didn’t change for the better. Many here rail against raising tax rates and call it stealing from the wealthy, but no one railed agaist the lowering of tax rates and the transfer of income from the middle class to the upper 10%. No one called that stealing. I am just currious?

Peace,
Mark
 
sedonaman said:
One way the rich have been able to avoid high death taxes is to buy life insurance. Life insurance benefits pass tax-free to the policyholder’s beneficiaries [IOW, heirs].

GEICO sells life insurance: “Life insurance helps provide you peace of mind and can provide your family with financial stability and security when it matters most.” geico.com/getaquote/life.

So Buffett stands to gain from high death taxes by selling more life insurance to rich people. This will increase the value of GEICO stock. Needless to say, he can avoid those taxes by buying some insurance for himself.

Nothing like being able to feather your own nest. Apparently, it is more profitable for Buffett, et al, to lobby for special favors than to actually make money the old fashioned way.

So, it makes sense if you help write the rules.
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Could we add a little bit of truth or fact to the above statements please. Life Insurance is indeed subject to the estate tax (or what you want to call death taxes). Life insurance is included on Schedule D for Form 706 and is included in ones gross estate and subject to the estate tax if ones estate is large enough. So it is untrue to say the rich avoid high death taxes by purchasing life insurance. It is true that the life insurance may help provide the funds to pay the estate tax–but it doesn’t help them avoid the estate tax.

What would be true is to say that life insurance proceeds are not subject to the income tax but that is a different matter from what you are discussing in your post. So the beneficiaries don’t pay income tax on the life insurance proceeds they receive but those proceeds may well be subject to estate tax–depending on the size of the decedents estate. You have conflated two issues.

Nothing like mistating the facts to try and make your point.

May I also suggest you read a biography about Mr. Buffett?

Peace,
Mark
 
MarkInOregon said:
… those above the median income are what constitute rich for the government. How does this follow? This conclusion only follows if our government has stated that only the rich should pay taxes and I don’t believe that has been stated.
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That’s what I am saying, although the government doesn’t have to state it for it to be true.

I have never met a rich person in my life because everyone I have asked, “Who are the rich?” the answer is invariably, “Not me!” even though they are if you look at their lifestyle. When I look at the tax rates and what the various quintiles pay, and what people and politicians say, I conclude that the rich are those above median.
One could argue that it has been claimed that the rich are not paying their fair share–and if you look at proposals on whose tax rates should be raised–one has to draw a different conclusion on who the government considers “rich” and it is not those earning more than the median income. …
Mark
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Look, these debates will never be settled because they depend too much on the definitions of “fair” and “rich”. People can look at a set of statistics and draw different conclusion, which we obviously have. I don’t consider myself a conspiracy theorist, but I also believe that arriving at a realistic conclusion on what is going on politically requires determining what is going on beneath the surface, as was shown by manualman’s experience in post #18.
 
MarkInOregon said:
I just don’t see all this envy of the rich going on. What I see are people who can’t afford to live being told they need pay more so that those who have an abundance can pay less and get even more.
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You talk as though only rich people can be envious. Taxing the rich more is not going to feed poor people. If it generates additional revenue at all, it merely gives politicians more money to waste.
 
sedonaman said:
That’s what I am saying, although the government doesn’t have to state it for it to be true.

I have never met a rich person in my life because everyone I have asked, “Who are the rich?” the answer is invariably, “Not me!” even though they are if you look at their lifestyle. When I look at the tax rates and what the various quintiles pay, and what people and politicians say, I conclude that the rich are those above median.

Look, these debates will never be settled because they depend too much on the definitions of “fair” and “rich”. People can look at a set of statistics and draw different conclusion, which we obviously have. I don’t consider myself a conspiracy theorist, but I also believe that arriving at a realistic conclusion on what is going on politically requires determining what is going on beneath the surface, as was shown by manualman’s experience in post #18.
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I beleive you are referring to a press conference from february of 1993 possibly given the day before they were going to announce the specifics of the tax proposal. This in no way gives credence to the idea that the government considers anyone above the median income “rich”. You can go into the negotiations wanting to only raise taxes on those you consider “rich” lets go with $250,000 for discussion purposes and come out with a deal that falls all the way down to those earning $30,000 because thats the only deal you could get that would raise taxes on those you consider rich. It doesn’t mean you consider the guy making $30,000 rich. It just means this is what it took to get deal and you were willing to go there. I’d be willing to bet if they could have gotten a deal done that only increased taxes on those earning over $250,000 raising the same revenue–they’d have done it in a heart beat–they didn’t have the votes. Took what they could get.

You’re right and thats why I am not engaging in a discussion of what is fair. You are also correct in that we can draw different conclusions from the statistics. I just want the facts to be correct (i.e. like the statements regarding life insurance not being subject to the “death” tax which is incorrect) and the examples to be relevant to the conclusions that are being drawn. I guess an area where we would differ is that I don’t see going into a negotiation with a stated goal and ideal and coming out with something different because that’s where the give and take between the two sides led–means I was lying about my goals and my ideal and that’s the take I get from your instistence the the government considers anyone above the median rich.

Take care. I’ve enjoyed the back and forth. Hope there are no hard feelings.

Peace,
Mark
 
You talk as though only rich people can be envious. Taxing the rich more is not going to feed poor people. If it generates additional revenue at all, it merely gives politicians more money to waste.

My point is that all those screaming the top 50% pay all the taxes, that it’s not fair and on and on and on are by implication suggesting that those below the median income are not paying their fair share, are envious and just want to take and take and take from the rich. I am suggesting that most just want a decent job that allows them to live, feed, clothe and house their families and maybe take them to the doctor when they are sick. I am sorry that doesn’t seem like a lot to ask. I think if they had that they’d be better citizens and better employees. No I’m not suggesting higher tax rates on the rich are going to provide that. But to just scream envy and class warfare seems to me to be a tactic used when one doesn’t want to have a substantive debate on the issue (not suggesting this is what you are doing but it is the predominate argument I read on the forums). I do know that the deficits are not going down overnight. I do know that cutting 3 trillion out of the budget overnight wll not be good for the economy. I know that you are not closing the budget gap with spending cuts alone without doing immense damage. I know that the rich were not calling for cuts as their banks, brokerage houses and companies were being bailed out–they only call for cuts and restraint when there are calls to extend unemployment benefits for those who can’t get a job–as if they’re all not trying, or to help homeowners avoid foreclosure.

The charge is often leveled here that any suggestion of returning to the higher tax rates of the 90’s (no ones even considering the rates of the 40’s 50’s or 60’s) is motivated soley by envy. I was responding to that idea. Why the accusation? When others make the charge that the poor are motivated by envy–I don’t come back and accuse you of talking like only poor people can be envious? I have already pointed out that taxes are not punishment–can we stop with the punishment talk please. Those in government believe they need more revenue. Where is that revenue going to come from? Those upper income earners are the only ones with money–envys got nothing to do with it. Those making less than the median just don’t have it to give and even if you take it all your not going to get close to what you need. I guess I just see the envy card as played as a way to try and stop a discussion of the issue. To accuse people who work for an employer that won’t provide health insurance and who can’t afford health insurance and who believe that maybe our nation is rich enough to provide basic health care to its citizens of envy–seems well wrong. It seems that we could discuss the best way to provide care and disagree about the means without resorting to accusations of envy, laziness etc.

Oh well.

Peace,
Mark
 
fakename said:
Is it absolutely necessary that the rich pay their fair share tax-wise?

Just wondering, if this is a magisterial issue or if it is not.
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What’s a “fair share”?

Is that different from a “fair” share?
 
MarkInOregon said:
My point is that all those screaming the top 50% pay all the taxes, that it’s not fair and on and on and on are by implication suggesting that those below the median income are not paying their fair share, are envious and just want to take and take and take from the rich. I am suggesting that most just want a decent job that allows them to live, feed, clothe and house their families and maybe take them to the doctor when they are sick. I am sorry that doesn’t seem like a lot to ask. I think if they had that they’d be better citizens and better employees. No I’m not suggesting higher tax rates on the rich are going to provide that. But to just scream envy and class warfare seems to me to be a tactic used when one doesn’t want to have a substantive debate on the issue (not suggesting this is what you are doing but it is the predominate argument I read on the forums). I do know that the deficits are not going down overnight. I do know that cutting 3 trillion out of the budget overnight wll not be good for the economy. I know that you are not closing the budget gap with spending cuts alone without doing immense damage. I know that the rich were not calling for cuts as their banks, brokerage houses and companies were being bailed out–they only call for cuts and restraint when there are calls to extend unemployment benefits for those who can’t get a job–as if they’re all not trying, or to help homeowners avoid foreclosure.

The charge is often leveled here that any suggestion of returning to the higher tax rates of the 90’s (no ones even considering the rates of the 40’s 50’s or 60’s) is motivated soley by envy. I was responding to that idea. Why the accusation? When others make the charge that the poor are motivated by envy–I don’t come back and accuse you of talking like only poor people can be envious? I have already pointed out that taxes are not punishment–can we stop with the punishment talk please. Those in government believe they need more revenue. Where is that revenue going to come from? Those upper income earners are the only ones with money–envys got nothing to do with it. Those making less than the median just don’t have it to give and even if you take it all your not going to get close to what you need. I guess I just see the envy card as played as a way to try and stop a discussion of the issue. To accuse people who work for an employer that won’t provide health insurance and who can’t afford health insurance and who believe that maybe our nation is rich enough to provide basic health care to its citizens of envy–seems well wrong. It seems that we could discuss the best way to provide care and disagree about the means without resorting to accusations of envy, laziness etc.

Oh well.

Peace,
Mark
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Do you know what? If you replace “envy” in the above with “greed”, you would have how conservatives feel about liberal charges of greed.

Peace.
sedonaman
 
Fascinating stuff from the perspective of a recovering CPA now working for a private company. I prepare taxes for very wealthy people. They DO pay a huge amount in taxes. Further their itemized deductions are limited as are any exemptions for children or dependents. Fair share? I think so!

What I DO NOT think is fair is the very substantial percentage of people who do not pay taxes. Nearly half of the people do not pay income taxes! That is NOT fair nor does it encourage our citizens to feel like they have any skin in the game so to speak. I think everyone should pay something, even if it’s a minimal amount. One of the dirty little secrets about the “Bush” tax cuts is that the LOWER INCOME people had a much greater proportional benefit and it took many people off the tax roles. When I hear “tax cuts for the wealthy” I want to scream and throw things at the TV.

We do not tax WEALTH in this country. You can be extremely wealthy and pay little in the way of income tax because we do not tax that wealth (until death and then only depending on the astuteness of the decedent’s attorney). When you hear “tax cuts for the rich” be aware this is a total canard and does nothing but gin up envy and class warfare.

I wish our citizens were more educated about our tax system and depended less on the partisan shrieks from both sides

Lisa
 
It seems to me that if the “rich” paid their fare share they would be getting a tax cut, and the rest of would have a substantial increase. Not to mention about 47% of the population would be in shock over their portion. 🙂
 
John21652 said:
What’s a “fair share”?

Is that different from a “fair” share?
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Its true. There is no such thing as an empirical fair share. What the rich should pay in taxes is a question of national priorities that, as such, ought to be settled in a democratic way.
 
LisaA said:
Fascinating stuff from the perspective of a recovering CPA now working for a private company. I prepare taxes for very wealthy people. They DO pay a huge amount in taxes. Further their itemized deductions are limited as are any exemptions for children or dependents. Fair share? I think so!

What I DO NOT think is fair is the very substantial percentage of people who do not pay taxes. Nearly half of the people do not pay income taxes! That is NOT fair nor does it encourage our citizens to feel like they have any skin in the game so to speak. I think everyone should pay something, even if it’s a minimal amount. One of the dirty little secrets about the “Bush” tax cuts is that the LOWER INCOME people had a much greater proportional benefit and it took many people off the tax roles. When I hear “tax cuts for the wealthy” I want to scream and throw things at the TV.

We do not tax WEALTH in this country. You can be extremely wealthy and pay little in the way of income tax because we do not tax that wealth (until death and then only depending on the astuteness of the decedent’s attorney). When you hear “tax cuts for the rich” be aware this is a total canard and does nothing but gin up envy and class warfare.

I wish our citizens were more educated about our tax system and depended less on the partisan shrieks from both sides

Lisa
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I agree with everything you have said here. If everyone was required to pay something, two thing might happen: 1) People would learn that it takes money to run a government, and 2) people would learn that they too can give of themselves.

The problem with learning more about our tax system is that finding out almost anything about it inevitably comes down to “it depends”. There use to be a program on TV every year in which a company gave a hypothetical tax situation to a dozen or so of the larger professional tax preparers. They received just as many different bottom line tax obligations as there were preparers, for example, from paying several thousand to getting a refund of several thousand. Then they made the astounding claim that, “the correct answer is $X owed/refunded.” They never explained what made their answer correct.

Then we have the theater of the absurd. I used to live in CA, and during that time, the franchise tax board went ape over worksheets. To figure your personal credit, you had to figure out a worksheet to take you to one of four OTHER worksheets to figure the dollar amount. This final dollar amount was between $68 and $72. All that just for four lousy bucks.

According to CA tax law, non-residents don’t have to pay taxes on non-CA sources; BUT, they have figured a complex calculation so that if you are a resident for only part year, you pay taxes on it at the highest rate for your bracket. Been there, done that. [My only consolation was I used their own method to prove I didn’t owe as much as they claimed.]
 
LisaA said:
Fascinating stuff from the perspective of a recovering CPA now working for a private company. I prepare taxes for very wealthy people. They DO pay a huge amount in taxes. Further their itemized deductions are limited as are any exemptions for children or dependents. Fair share? I think so!

What I DO NOT think is fair is the very substantial percentage of people who do not pay taxes. Nearly half of the people do not pay income taxes! That is NOT fair nor does it encourage our citizens to feel like they have any skin in the game so to speak. I think everyone should pay something, even if it’s a minimal amount. One of the dirty little secrets about the “Bush” tax cuts is that the LOWER INCOME people had a much greater proportional benefit and it took many people off the tax roles. When I hear “tax cuts for the wealthy” I want to scream and throw things at the TV.

We do not tax WEALTH in this country. You can be extremely wealthy and pay little in the way of income tax because we do not tax that wealth (until death and then only depending on the astuteness of the decedent’s attorney). When you hear “tax cuts for the rich” be aware this is a total canard and does nothing but gin up envy and class warfare.

I wish our citizens were more educated about our tax system and depended less on the partisan shrieks from both sides

Lisa
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👍👍 Those that speak of “fair share” and “tax the rich” are playing on the natural envy in all of us and on the fact that most people do not understand economics. It is so easy to repeat these phrases and I am concerned about those who accept them without doing their own investigation. They are playing to the ignorance of the masses and for me, that is an insult.
 
Those who pass tax laws or influence tax legislation should be barred from receiving help in preparing their personal tax returns. :yup:
 
The people we work for don’t get rich. The people that work for us get rich. The people that work for us make the rules so that we do not get rich.
 
Marie77 said:
If it is not in the “CCC 2nd Ed”, it is not a teaching of the Magisterium.
Jesus never taught “forced redistribution of wealth”.

Those of us who are not rich cannot “covet thy neighbors goods”, or support the “stealing of our neighbor’s goods” through - forced redistribution of wealth.
We all have an obligation to help our family members and the poor to the best of our ability.
Greed is sinful.

We must pay our taxes, and VOTE for politicians who are fair and not morally corrupt. As voters in the USA, we determine our elected officials and judges.

CCC - “1903 Authority is exercised legitimately only when it seeks the common good of the group concerned and if it employs morally licit means to attain it. If rulers were to enact unjust laws or take measures contrary to the moral order, such arrangements would not be binding in conscience. In such a case, authority breaks down completely and results in shameful abuse.”

CCC - "1894 In accordance with the principle of subsidiarity, neither the state nor any larger society should substitute itself for the initiative and responsibility of individuals and intermediary bodies.

CCC - "2411 Contracts are subject to commutative justice which regulates exchanges between persons and between institutions in accordance with a strict respect for their rights.
Commutative justice obliges strictly; it requires safeguarding property rights, paying debts, and fulfilling obligations freely contracted.
Without commutative justice, no other form of justice is possible.
One distinguishes commutative justice from legal justice which concerns what the citizen owes in fairness to the community, and from **distributive justice which regulates **what the community owes its citizens in proportion to their contributions and needs.

The real problem is government waste, unneeded government programs, abuses and corruption in decent government programs, too many federal employees (wages, benefits and retirement costs), etc.
This all wastes/costs billions.
We are now over $15 Trillion dollars in debt, with no end is sight.
This all needs to be turned around through the election process so that we can help only those truly in need, rather than those looking for a free ride.
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I hate the use of scripture in political discussions , The issue is not the redistribution of wealth it is what the wealthy should pay in regards to their fair share ,No one is suggesting that we strip the wealthy of all of thier property and give it away to the poor ,We are talking about responsibility and what is fair , This is not a robin hood story .
 
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