Did you Vote?

[Ughmahedhurtz]

We're not talking about small businesses here. We're talking about people making over $250,000 a year. And the Bush tax cuts affect--hugely disproportionately--the top 5% of the population. We're talking about people making millions of dollars. So unless you're planning on breaking into that multi-million dollar tax bracket, why are you so upset about the "success tax", as you call it?

Uh, what does what I make have anything to do with it? You seem to be making a moral assumption (that rich people are all evil bastards that want to squash poor people) based on a non-moral fact of life (they make more income per year). Correct me if I'm wrong.

While it may be politically "cool" to talk shit about the Bush tax cuts really only affecting the top 5% of income earners, that statement doesn't jive with reality. According to government tax records, the progressivity of the tax system can be measured in four ways: (1) the share of taxes paid by different income groups, (2) the share of income paid in taxes, (3) the change in taxes relative to the change in income over time, and (4) a comparison of inequality of income to the inequality of taxes over time. By the first 3 measures:

• The top 1 percent of income earners pay more than one in every three dollars the IRS collects in taxes. From 1986 to 2004, the total share of the income tax burden paid by the top 1 percent of earners grew from 25.8 percent to 36.9 percent, while the total share of the tax burden paid by the bottom half of earners fell from 6.5 percent to only 3.3 percent.
• During the same period, the percentage of income the top 1 percent of tax filers paid in federal income taxes rose from 18.3 percent to 19.6 percent. By contrast, the percentage of income the bottom fifth of tax filers paid in federal income taxes dropped from 0.4 percent to zero.
• The income share of the top 1 percent rose 7.7 percentage points, from 11.3 percent to 19 percent, while their income tax burden rose even more, by 11 percentage points, from 26 percent to 37 percent.

The "progressivity index" measures, on a scale of 0 to 1 with numbers closer to 1 indicating a steeper rate of increased taxation, the inequality of income to the inequality of taxes paid over time.

• From 1990 to 2000, the progressivity index increased from 0.476 to 0.617, during a period where marginal tax rates increased but capital gains tax rates fell.
• From 2001 to 2004, under George W. Bush's tax reforms, the tax progressivity index continued to rise from 0.608 to 0.664.

It is critical, when arguing tax reforms, to consider the way the system reacts to them vis-a-vis the disretionary nature of the way high-income earners actually earn income and pay taxes. In terms of actual income, the "Bush tax cuts" have actually served to CLOSE the income gap between high-earners and the "poor."

Considering that, according to 2001 data, the top 5% of wage earners paid ~53% of ALL taxes while only earning ~32% of all income, with the top 50% of wage earners paying ~96% of ALL income taxes paid in the US while earning only ~86% of all income, just how much would you prefer the top 5% paid before we have "economic justice?" 75%? 90%? 100%?

The principle of taxation is simple here. There is a certain amount of money required--by necessity--to survive. Those on the lower end of the income spectrum need that money to survive, and taxes necessarily comprise a much higher percentage of their income, so their tax burden is higher than that of a multi-millionaire, who owns 12 houses. There's a difference between necessity and luxury. Similarly, the poor tend to have no savings and spend their paycheck--almost all of it--every month. So giving the poor a tax break leads to them spending more of their income.

Again, why is it inherently evil to have enough money that you have more cushion to protect you from predatory taxation by the imperial federal (and sometimes state/local) government? You're right, the principle is quite simple: government taxes us so they can "run" the government. I don't recall anywhere in our constitution that it says "government shall tax the richest 5% and give that money to ACORN (to the tune of $8billion+) for screwing people out of loan equity."

Meanwhile, "the rich", who are in no danger of starving or trying to figure out how to put their kids through college end up shouldering a larger percentage of the tax burden. So, okay, a person who makes $20 million a year is now paying an extra $200,000 a year in taxes. Boo hoo for them. Do you really expect anyone to get up in arms about this "success tax"?

Sure! Everyone affected by this "tax the rich" mentality who will end up paying confiscatory rates on "real" income. When I say "real" income, I mean income earned from their businesses and investments and risked-money earnings. Now, guess who gets the shaft when the "rich" decide that it's just not worth it to stay in business or invest or risk money any more? Yep, you guessed it, those same "poor" who you think this will help. "Rich" people will just put it in relatively safe low-interest bonds and savings accounts or "tax shelters" such as trust funds for family. Which means they're no longer spending that money on hiring "poor" people or investing in startups started by "poor" people through venture capital and such. In the end, raping the "rich" has always shown the unintended consequence of retarding growth in the US's capitalist society.

Whereas every single time they've reduced capital gains and upper-bracket tax rates, the economy goes into a boom over the next decade. Why do you think Clinton enjoyed such a successful economy? It wasn't because he instantly made it happen, it was the results of the Reagan tax cuts. This stuff always takes years to actually start affecting things materially, so the correlation isn't always obvious, which makes it ripe for demagoguery. /shrug I can't help people being ignorant of the facts; that requires folks to actually go get edumacated.

(cont'd next post)