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

[AndyCothran]

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 and i am sick of ultra right wing conservatives who want to present it as that .

BTW i am not calling you one

 

[AndyCothran]

Those who pass tax laws or influence tax legislation should be barred from receiving help in preparing their personal tax returns. :yup:

I have to agree with you there

 

[Buck_Crosswhite]

Karl Marx said that income taxes, inheritance taxes, and property taxes are necessary for a country to become Communist. I wonder which way we are going. The government is the enemy of the people and needs to be controlled or America will continue on its downward spiral.

 

[AndyCothran]

Karl Marx said that income taxes, inheritance taxes, and property taxes are necessary for a country to become Communist. I wonder which way we are going. The government is the enemy of the people and needs to be controlled or America will continue on its downward spiral.

I am against property takes but how does a government exist period without some taxation ?

 

[LisaA]

I am against property takes but how does a government exist period without some taxation ?

We can then ask how did government exist prior to income taxes (since we have a defined point on that one). Apparently tariffs and fees were a major source of revenue for the government in the pre-income tax days. Even today, the gas tax funds highway construction and maintenance, we have toll roads and toll bridges, we have fees for hunting licences and building permits. So the concept is still there but has taken a back seat to income taxes which offers the government a far broader base of support.

That being said, I think the REAL issue is not what government should receive to do what it wants to do but what is NECESSARY for the government to do? The expansion of the income tax and expansion of the government’s role in our lives is NOT a coincidence!

While I am certainly not a Paulinista, and think there is some role for the government (speaking more of the federal government), I do think the scope of its reach has expanded far beyond the necessary. The many departments, the ever expanding role of government into the most minute details of our lives (I mean REALLY, do we need the government to tell us what kind of lightbulbs to buy?) is bankrupting this country. It is not the government’s role to give loans to failing green energy companies or failing car companies or to support cowboy poetry. We have high taxes because we need to feed the beast. Funny thing we keep hearing about needing more government interference in our food choices due to obesity. Why don’t they notice the morbid obesity of this government. It needs a crash diet!
Lisa

 

[sedonaman]

I hate the use of scripture in political discussions ,

Why? People should use their properly formed consciences to guide them to responsible citizenship. For Catholics, our guide to a properly formed conscience is scripture and the bishops.

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 ,

When you get into the realm of “fair” taxes, you are, in reality, talking about taxation for its own sake. Taxation should be to pay for services we have asked the government to provide, in accordance with subsidiarity, and not so the government can buy our votes.

This is not a robin hood story .

Sounds like it to me.

 

[sedonaman]

I am against property takes but how does a government exist period without some taxation ?

I don’t think anyone is saying there should be no taxation, but rather how much and on what. A flat tax has been proposed and shot down, but sales taxes are flat, and no one seems to object to them on that basis.

What I would like to see explored is the severing of the tax authority of the individual by the federal government, to be replaced by a tax on the states, say X% of their GDPs. Let the states decide how to collect it. Some might opt for a graduated income tax; others might opt for a sales tax; and in order to raise taxes, the states would have to agree to increasing “X”. Seems like this might allow for closer citizen involvement. Would also make more difficult the lobbying for such things as federal funding for free sandals for gay ex-nuns with a foot fetish, or to count dogs in Oxnard.

Thoughts?

 

[Erich]

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.

Stephen Moore noted in 1997:
Since its frugal beginnings, the U.S. federal government has come to subsidize everything from Belgian endive research to maple syrup production to the advertising of commercial brand names in Europe and Japan. In a recent moment of high drama before the Supreme Court, during oral arguments involving the application of the interstate commerce clause of the Constitution, a bewildered Justice Antonin Scalia pressed the solicitor general to name a single activity or program that our modern-day Congress might undertake that would fall outside the bounds of the Constitution. The stunned Clinton appointee could not think of one.

During the debate in Congress over the controversial 1994 Crime Bill, not a single Republican or Democrat challenged the $10 billion in social spending on the grounds that it was meant to pay for programs that were not the proper responsibility of the federal government. No one asked, for example, where is the authority under the Constitution for Congress to spend money on midnight basketball, modern dance classes, selfesteem training, and the construction of swimming pools? Certainly, there was plenty of concern about “wasteful spending,” but none about unconstitutional spending.

Most federal spending today falls in this latter category because it lies outside Congress’s spending powers under the Constitution and it represents a radical departure from the past. For the first one hundred years of our nation’s history, proponents of limited government in Congress and the White House routinely argued—with great success—a philosophical and legal case against the creation and expansion of federal social welfare programs.
…
The federal government has no authority to pay money to farmers, run the health care industry, impose wage and price controls, give welfare to the poor and unemployed, provide job training, subsidize electricity and telephone service, lend money to businesses and foreign governments, or build parking garages, tennis courts, and swimming pools. The Founders did not create a Department of Commerce, a Department of Education, or a Department of Housing and Urban Development. This was no oversight: They did not believe that government was authorized to establish such agencies.

Recognizing the propensity of governments to expand, and, as Thomas Jefferson put it, for “liberty to yield,” the Founders added the Bill of Rights to the Constitution as an extra layer of protection. The government was never supposed to grow so large that it could trample on the liberties of American citizens. The Tenth Amendment to the Constitution states clearly and unambiguously: “The powers not delegated to the United States by the Constitution…are reserved to the States respectively, or to the people.” In other words, if the Constitution doesn’t specifically permit the federal government to do something, then it doesn’t have the right to do it.

The original budget of the U.S. government abided by this rule. The very first appropriations bill passed by Congress consisted of one hundred and eleven words—not pages, mind you, words. The main expenditures were for the military, including $137,000 for “defraying the expenses” of the Department of War, $190,000 for retiring the debt from the Revolutionary War, and $95,000 for “paying the pensions to invalids.” As for domestic activities, $216,000 was appropriated. This is roughly what federal agencies spend in fifteen seconds today.

 

[MarkInOregon]

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!

For 2010 (and 2011) neither itemized deduction nor exemptions were limited. (Some might not be allowed for AMT purposes but thats a different matter) And those limitations

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.

Lets examine this in greater detail–shall we. Lets take a single person, stnd ded with one exemption for ease of comparison.

In 2011:

Single wage earner will start owing tax with wages of roughly $11,300.

If that single person instead earns their income from qualified dividends (dividends form companies like Google and Microsoft) or from long-term capital gains they do not start paying income tax until the have income of $44,003.

Now lets look at these two people in 1999 prior to the Bush Tax Cuts:

Single wage earner will start owing tax with wages of roughly $8,125 ($11,300 would generate tax of $641).

The single person earning dividend income will start owing tax at **$8,125 **($11,300 would generate tax of $641)

The single person with long-term capital gains will start owing tax at roughly $7.075 ($11,300 would generate tax of $425)

Yes those Bush tax cuts took the investor making $44,000 a year in LT gains and qual dividends off the tax roles (is this one of those you had in mind?). Does that make you sream at your tv as much as the the break that wage earner got–I mean 12 years later the wage earner can make $3,175 more before he pays taxes. Hey did the wage earner even keep up with inflation? Yes, I see what you mean about low incomers raking in those tax benefits! Darn them–I know they can live well on $11,000 a year–it is a travesty that we don’t take income tax from them in addition to social security and medicare taxes. Those dirty cheating thieves.

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. We tax income. Those with greater wealth can generate a greater amount of the type of income that receives a much more favorable tax treatment than the wage earner receives. When people say tax cuts for the rich this is what they mean. When I earn $11,300 at my job and start paying income tax and you earn $44,000 on your Google stock and pay no tax–I am not sure its a question of envy or class warfare–its a question of fairness. Give me a good reason why people shouldn’t be upset about that? Assuming that you purchased you Google stock from another investor–you’ve done nothing productive for our economy–to warrant such a tax break. Scream envy all you want–it doesn’t make it so.

I wish our citizens were more educated about our tax system and depended less on the partisan shrieks from both sides Ditto. Way too much misinformation about taxes on these forums–but no one seems to care about the facts. Hey I heard it on Fox or MSNBC so it must be true.

Lisa

Peace,
Mark

 

[LisaA]

Peace,
Mark

Mark there are still limitations on deductions. Certain deductions must exceed X% of AGI and the higher that AGI, the less one can deduct. There are also limits on charitable contributions—if they exceed a percentage of income. It is the wealthy who are more likely to be making the very large deductions. Ergo, the wealthy have limitations on their itemized deductions, not to mention your very valid point about Alt Min tax which was intended to catch a few taxpayers but now inadvertently hits many in the middle class.

I appreciate all of your examples but my point was not that investment income is favored by lower rates but that that the lower income brackets actually received a greater cut with the old 15% reduced to 10%. Were the cuts to simply expire those in the LOWEST income bracket would have a 50% increase in taxes.

Overall my point is that it is patently not fair that nearly half of our people pay no income taxes. This does not mean they are poor either. My elderly MIL has over a million dollar portfolio and gets Social Security (which she did not pay in a single dime). By using exempt bonds which originated LONG BEFORE THE BUSH TAX CUTS and given her age and exemptions, she pays nothing in taxes. Before we start trying to beat a few more bucks out of middle class wage earners like me, why don’t we broaden the tax base and make everyone pay something?

Lisa

 

[MarkInOregon]

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

Agreed. I am not a fan of the “greed” chargers either. I am reluctant to accuse someone of excessive or reprehensible acquisitiveness–though I think we all know it when we actually see it. I think both sides throw these terms around with out much actual thought about what they are saying. Its just easier to accuse than engaging in actual discussion.

Peace,
Mark

 

[usnlt76]

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 .

The concept of “fair” is a complex one b/c who has the right to decide what the “fair share” is? The government needs to worry about balancing the budget and deciding what money they need in order to run the government responsibly. They don’t need to worry about trying answer the impossible question of what is “fair share”. Someone who works hard and makes good money for his family probably has a different idea of what “fair share” is than the less successful person who blames others for his misfortune.

 

[sedonaman]

Stephen Moore noted in 1997:
… where is the authority under the Constitution for Congress to spend money on midnight basketball, modern dance classes, selfesteem training, and the construction of swimming pools? …

“To promote the general welfare.”

 

[usnlt76]

“To promote the general welfare.”

That’s the problem…we have let Congress get away with covering everything they do as somehow “promoting the general welfare” when in fact it promotes either their own welfare or the welfare of a few people in their district.

 

[LisaA]

“To promote the general welfare.”

No please check the meaning of this term. “Welfare” does not mean the giveaways that we envision when we hear this term, particularly as these giveaways are targeted to a specific group…Midnight Basketball for example is not likely to be attractive to senior citizens.

General Welfare referred to such things that would be of “general” benefit to all rather than targeting one interest group and then extracting from another group the funds to pay for their largesse. Think of something like the military which protects all of us or public roads that we are all free to use. General benefit, not welfare benefit.

We have contorted this and the commerce clause for the purpose of social engineering promoted by some to the detriment of others…they are called taxpayers!
Lisa

 

[MarkInOregon]

Mark there are still limitations on deductions. Certain deductions must exceed X% of AGI and the higher that AGI, the less one can deduct. There are also limits on charitable contributions—if they exceed a percentage of income. It is the wealthy who are more likely to be making the very large deductions. Ergo, the wealthy have limitations on their itemized deductions, not to mention your very valid point about Alt Min tax which was intended to catch a few taxpayers but now inadvertently hits many in the middle class.
Sorry–since those limitations have been around since I started practice in 1988–I assumed we were talking about the more recent limitation of total deductions based on AGI and the exemption phase out.
I appreciate all of your examples but my point was not that investment income is favored by lower rates but that that the lower income brackets actually received a greater cut with the old 15% reduced to 10%. Were the cuts to simply expire those in the LOWEST income bracket would have a 50% increase in taxes.
I am sorry I read your point to be that the lowest incomers received the most benefit under the Bush tax cuts. I was questioning that. The old 15% bracket didn’t become a 10% bracket rather a new 10% bracket was added–I would point out that when the Bush tax cuts took affect in 2002 those with taxable incomes between 12,001 and $43,850 didn’t see their tax rate fall. It was 15% before and 15% after. This issue is probably beyond a forum discussion such as this.

So I guess, in my mind, it depends how one wants to spin it. For example lets look at 3 single wage earners claiming stnd ded and one exemption:

$25,000. In 1999 paid $2,696 in 2011 they paid $1,686. A drop of $1,010 or 62%
$100,000 In 1999 paid $23,601 in 2011 they paid $18,558. A drop of $5,043 or 21%
$250,000 in 1999 paid $76,719 in 2011 they paid $63,784. A drop of $12,935 or 17%

Who saved the most in taxes the high income earners or the low income earners? Where did most of the tax cuts go? Some would argue that the low income earners received the most benefit because their taxes dropped by the largest %age. Others would argue the high income earners because there taxes dropped by the larger $ amount. Who is right? Are both right? What does your gut tell you? I’d be currious how people come down on this question. (Oh and what kind of increase does the investor see?)

Overall my point is that it is patently not fair that nearly half of our people pay no income taxes. This does not mean they are poor either. My elderly MIL has over a million dollar portfolio and gets Social Security (which she did not pay in a single dime). By using exempt bonds which originated LONG BEFORE THE BUSH TAX CUTS and given her age and exemptions, she pays nothing in taxes. Before we start trying to beat a few more bucks out of middle class wage earners like me, why don’t we broaden the tax base and make everyone pay something? I don’t know anything about your MIL’s tax situation. As you know exempt bonds, in theory, because they are exempt pay a lower return and allow municipalities to borrow money more cheaply to fund public projects like sewers and encourage investors to fund said projects. Said exempt bonds are alive and well today.We can debate if thats good public policy–but thats a different discussion. Depending on the amount of her exempt income and her deductions she could well be subject to a small amount of income tax on her SS in any given year. 50k in exempt income $15,000 in SS benefits and stnd ded will get you there. Am I to infer that you don’t think muni interest should be exempt from taxation?

I guess before I stated that it is patently unfair that over half of our people don’t pay income tax I’d like to see who those people are. I would have no problem with working people living below the poverty line–not paying income tax–seems perfectly fair to me. I do have a problem with investors in common stocks paying no tax on large chunks of income (per previous example) that does seem unfair to me. Your MIL is a situation I am not sure about. I could make a case either way. By investing in muni’s she excepts a lower return and sacrifices growth potential and helps a municipality–possibly she should receive a reduced rate for that. Much like I don’t have a problem with a reduced rate for someone who starts or invests capital in a business. And who is talking about beating a few more dollars out of the middle class? Or how do you define the middle class? From my experience–I don’t see people like your MIL that much. I see a lot of older people with some muni interest but they usually have a mix of taxable and nontaxble investment income. Aside from those who don’t pay because of this weird -0-% capital gains break that they are able to take advantage of it and those who’s businesses are struggling in this economy I don’t see a lot of people who aren’t paying tax. I assume those who are not paying tax are predominately lower income earners–those with W-2’s who go to H&R Block. Like I said I am not bothered that a guy making $11,300 doesn’t pay tax. I am surprised he can live on that.

Lisa

Peace,
Mark

 

[AndyCothran]

Why? People should use their properly formed consciences to guide them to responsible citizenship. For Catholics, our guide to a properly formed conscience is scripture and the bishops.

When you get into the realm of “fair” taxes, you are, in reality, talking about taxation for its own sake. Taxation should be to pay for services we have asked the government to provide, in accordance with subsidiarity, and not so the government can buy our votes.

Sounds like it to me.

The You’s here are plural not singular
You cannot be a responsible citizen without using scripture as a weapon ? You cannot refrain from cherry picking scripture for your own ends ? You must rely on the Bishops to inform your conscious ?

Fair Taxation is never taxation for its own sake ,…The discussion is really about responsibility .

 

[AndyCothran]

The concept of “fair” is a complex one b/c who has the right to decide what the “fair share” is? The government needs to worry about balancing the budget and deciding what money they need in order to run the government responsibly. They don’t need to worry about trying answer the impossible question of what is “fair share”. Someone who works hard and makes good money for his family probably has a different idea of what “fair share” is than the less successful person who blames others for his misfortune.

Neither one of your examples fit because we are talking about those who live promarily off of the labors of others …The wealthy …

 

[LisaA]

Peace,
Mark

Mark I can’t quote your post because the text is already clipped out but to respond to your comments as I recall them, I thought the examples were interesting as it shows a larger percentage decrease for the lower income taxpayer, which is precisely the opposite of what the “tax cuts for the wealthy” protestors claim. Allthough you are correct that in total dollars the high earners benefitted more, but they also paid more and getting a 62% reduction in taxes means a lot more to a lower income person than the 20% reduction means to a higher income taxpayer.

My point about the addition of the 10% bracket is that if the cuts expire their rate goes up 50%, back to the 15% rate The increase for the upper incomes is significantly less. As I recall the Bush cuts also increased the floor for taxation or increased some of the credits and got rid of the marriage penalty. So I think there were a lot of elements benefitting lower and middle income taxpayers. But do you EVER hear about them? No. It’s all “Tax Cuts for the Wealthy!!!” And yes I still want to throw things at the TV.

I think many studies have demonstrated that despite the various tax benefits of investment income, the high earners still pay a much larger percentage of the total taxes than do the lower income people. It’s some amazing figure like the top 1% pay 37% of the total taxes but have 19% of the income while the bottom 50% only pay 3% of the total taxes although their earning power is certainly higher than 3%. So my overall conclusion is that the high earners pay their fair share, and more.

I still think it is fair to ask everyone except the impoverished to pay something, even if just a token amount. Not so much for the revenue it would generate but also in a sense of fairness that everyone benefits from living in this country, so everyone should ‘invest’ at some level.

Lisa

P.S. I suspect that the reason you don’t see that many non tax payers is that those are the people who use one of the inexpensive (or free) computer programs… They aren’t likely to be paying for a CPA.

 

[sedonaman]

No please check the meaning of this term. “Welfare” does not mean the giveaways that we envision when we hear this term, particularly as these giveaways are targeted to a specific group…ineering promoted by some to the detriment of others…they are called taxpayers!
Lisa

I know, but it has been used to justify welfare as we know it.