Wow! Has this thread grown!
I have said this before, but I’ll repeat it. It is unlikely that any tax increases will significantly affect the truly rich. The burden of increased tax RATES will fall on the middle class, and we ought to think about that.
Warren Buffett has said that his RATE is lower than his secretary’s. No reason to doubt him. But why? Well, I don’t know for sure, but it’s easy to think of ways he could do that.
First of all, people with a lot of asset wealth (particularly that was bought cheap and is now much more valuable…as with Buffett…can control their income. For one thing, their “consumer assets”…home, etc, are already paid for. So they don’t need cash flow to buy those things in installments the way the rest of us do. They only draw out of their asset wealth what they need at any point in time. A high-earning plant manager somewhere can’t do that. His salary is fixed, and he can’t control its inflow the way Buffett can.
Second, the truly rich can, and do, give quite a bit of it away. Take Buffett for example, or Gates. They have donated billions to a private foundation they control. That means they have enormous offsets to income. It’s a wonder Buffett pays income taxes at all.
Unless that whole thing gets changed somehow, raising tax rates won’t affect what some feel is an inequity in the tax burden.
It’s true that lower income people can end up paying more in taxes as a percentage of income than people who make much more. That’s because of Social Security and medicare taxes. It amazes me when people who say that’s a “tax”, then turn around and say SS benefits are somehow “earned”. “I paid that in, and I’m entitled to it.” It’s either a tax or a retirement trust fund, but it isn’t both. One could just as well say low income workers are bigger savers.
But it is a tax. There’s no trust fund. It’s really “pay as you go”. So, should SS taxes be made more progressive? And if so, is there really any good reason to pretend any longer that it’s some sort of “savings account”?
Aside from the fact that wages from work go down as entitlement spending goes up (a problem all its own) the system would have to be changed significantly to adapt to the notion that SS taxes are really just a “tax” and not a 'retirement contribution". For one thing, SS benefits are based on what a person pays in over a lifetime of work, relative the maximum benefit payable at the time. So, when we increase the income on which SS tax is collected, we automatically reduce benefits for those who earn less than the maximum upon which tax is paid.
Obama’s “tax the rich” proposal is just one more piece of scotch tape on a machine that is, by now, largely composed of bits of scotch tape, and nobody seems to notice that the underlying machine fell into a heap long ago, leaving only the scotch tape.
What a truly, genuinely “Catholic approach” to all of this is another story, far too long to expound further here. I’ll be lucky if this post isn’t too long already.
is advocating it.
