Tuesday, February 17, 2009

TW Pet Peeves: "Wealthy Pay All the Taxes" (cont.)

Question from a reader:
"I’ll take your point and counter:
#1 Maybe you should include property taxes in your equation.The problem is the tax as a % of income is greatest in counties with the most expensive homes and highest median incomes. http://taxfoundation.org/taxdata/show/24052.htmlNon-starter.
TW: My answer is so what? Wealthy folks live in expensive houses with commensurate property taxes. Most of those counties are NY and NJ so maybe that is the driving variable as well.

#2 Social Security and medicare are benefits. Non sequitor. To quote Harry Truman--"Social Security...is not a dole or a device for giving everybody something for nothing. True Social Security must consist of rights which are earned rights -- guaranteed by the law of the land."When we add back the EITC then we’re looking at payroll taxes and federal taxes wiped out for earners under $20k and nearly a quarter of payroll tax wiped out for earners making $30k.
TW: Not sure where u r headed with this. Are you saying that those making under $30K are not earning the benefit therefore should not receive the coverage? Are u arguing against progressive taxation?

#3 Should marginal tax rates be raised? OK maybe on the super wealthy but why the working wealthy?
TW: Raised back to where they were pre-Bush is my plan, why? Because fiscal deficits must be addressed in the long-run and I believe in progressive taxation. Wealth begets more wealth (education opportunities, social connections, network effects, parenting dynamics etc.), progressive taxation addresses that tendency.

#4 On the upper end, shouldn’t a graduated capital gains tax be considered so Warren Buffet pays as much on the margin as his secretary?
TW: Works for me although my guess is practically speaking it gets pretty tricky and would create room for all kinds of tax plays.

#5 The fact remains that 5% of taxpayers (making over $153, 542) comprise 37% of the income and 60% of the federal taxes. 30% of taxpayers have zero tax or refunds.
TW: You are making the point I was rebutting in my post. Yes the wealthy pay a high % of FEDERAL taxes but merely a proportional % of ALL taxes. Yet conservatives talk over and over about the former and rarely about the latter.

#6 What truly needs to be addressed is the AMT. A political hot potato that impacts blue states more than red. All the tax reform in the world does nothing without a permanent fix for AMT."
TW: Re AMT, it has evolved from its original purpose so yes it needs to be addressed but not by just saying no one pays it thereby creating a huge revenue void. How do u propose making up the revenue?

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