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April 17, 2014

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Letter to the editor:

Taxes should be relative to wealth

Another view?

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In Michael O. Kreps’ letter to the editor Saturday, “Raising taxes on anyone isn’t fair,” he complains that raising taxes on anyone, especially the wealthy, is not fair.

We learned from Mitt Romney that the wealthy pay a tax rate of approximately 14 percent and corporations pay an average tax rate of 13 percent, while the average American worker typically pays a much higher tax rate.

The top 20 percent of the taxpayers have around 93 percent of all the wealth and 85 percent of all assets in the country, yet the wealthy are paying a lower tax rate than the average worker.

Based on what the wealthy have in assets, they should be paying a tax rate of about 70 percent. I think that’s equitable.

His second argument is that he believes that raising taxes on the wealthy will not eliminate the deficit, so why bother?

He further states that the government spends too much money on the poor, unemployed, the disabled and elderly and in general, contributing to the common good.

What an unfortunate way to look at the nation’s current situation.

Before President Ronald Reagan, when the top tax rate was 70 percent, the wealthy were still wealthy, the percentage of poor, unemployed and elderly was lower and things were better for everyone, even the wealthy.

The wealthy created the rules, bought the government and still say it’s not fair. Greed is not the solution.

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  1. All Americans are going to have to decide how much government we are willing to fund with our tax dollars.

    Personally, I don't have a problem with asking the very wealthy to pay higher income taxes and polls suggest that a majority of Americans agree.

    I don't favor a 70 % income tax rate on the wealthy or a much higher capital gains rate or a high inheritance tax because I feel those are disincentives to economic growth.

    If we are not willing to raise the income tax rate of say those making over 1 million dollars a year to 70 % or more, raise the capital gains rate to levels that make us less competitive, make the inheritance tax extremely high .... and ask those paying very low income tax rates and those not paying income tax now, to a pay a higher rate and some income tax respectively, we cannot afford the government we now have.

    That is how out of balance our spending is to our revenue. Our problem cannot be fixed with a 'simple' solution, such as lower taxes (for economic growth) as Republicans propose ... or raise taxes on the wealthy (to get more revenue) as the Democrats propose.

    'Many' taxes on 'most' Americans and in 'most' area's would have to be raised and/or large and 'real' cuts in spending in many areas would need to be made to bring spending and revenue into balance.

    Far too many Americans believe the baloney put out by both parties that this problem has a 'simple', 'feel good', fix. IT JUST DOESN'T, and the sooner Americans realize that the better off we will all be.

    Michael

  2. Everyone should pay income taxes, if they work, and everyone should pay more taxes if needed for the well-being of the country and the economy. Not just the rich. Why? Sooner or later you run out of enough rich people to tax more and more. Then what? [Think Europe]. We're ALL in this together. United we stand. Divided we fall.

    CarmineD

  3. Why do you people continue to ignore the fact that it was the wealthy who trashed our economy and forced average citizens to bail them out via their legislative puppets in Washington? Does "Government Sachs" ring a bell? While the richest among us had nearly 300% increase in earnings the working poor and middle class earned less. Yes trickle economics is real, in the wrong direction!

  4. Half of Americans pay no federal income taxes at all so I say there should be a minimum tax applied to all of us fortunate to live in the United States of America. Everyone enjoys the benefits; some more than others. There should be a minimum federal tax of at least $2 per week on every adult in the country who is employed or receives any assistance or subsidy from a governmental agency. That includes Social Security, Medicare, Medicaid, food stamps, unemployment comp, disability, etc. 2 bucks a week, the cost of one bottle of beer or 10 coffin nails, is going to impact no one in a serious way and it gives them some "skin" in the game. And, if the creepolas in Washington D.C. continue their prolific and wasteful spending, that 2 bucks should increase to three or four or 10 or until the parasites finally squeal like the pigs they are and demand a halt to rising deficits and the national debt. As it now stands, why should they care? Not only do they not pay their "fair share," they pay nothing at all. It's easy for parasites to pick the pocket of the productive when it not only costs them nada, but increases their piggishness.

  5. If we accept as fact what you say and we punish the wealthy for what they did with higher taxes and it still doesn't make a dent in the deficits and the debt, then what? What do we do then?

    Polls suggest many Americans support raising taxes on the wealthy but the math says that won't be nearly enough. What else do you suggest be done?

    A one trick pony, such as the President is offering may be better than no pony at all, but it is still a one trick pony, and that can't get the job done.

    Michael

  6. Jerry,

    Three truths are a part of why there isn't support for matching revenues to spending and you hit on one of them:

    1) The wealthy are not really impacted by the taxes they pay and use tax strategies to reduce their taxes so they don't care how much government spends.

    2) Most middle class income taxes are not commensurate with what governments spends so the middle class also ignores what the government spends.

    3) The lower middle class and the poor pay no income taxes so they have no incentive to care about how much the government spends.

    Until and unless we change all three things, enough Americans are NEVER going to care enough about the spending to do anything that matters about it.

    Michael

  7. As a Canadian, I'm much more willing to pay taxes than my American neighbors. After all, taxes are the main tool a government has to maintain a caring and just society.
    However, there is a limit to what is a fair rate. My own opinion is that the income tax rate should never exceed 50 percent. I remember in the best days of my law practice being content to pay that rate to our government. Don't forget also that the top rate only applies to that portion of one's income above the trigger level of income. Even the rich pay only the lowest rate on their first bit of income.
    America will never get out of debt or balance its budget until its citizens change their attitude that taxes constitute some form of theft.

    Donald W. Desaulniers (FromBellevilleCanada)

  8. "America will never get out of debt or balance its budget until its citizens change their attitude that taxes constitute some form of theft."

    Well said Donald.

    These pages are full of victim compaints about income tax rates and who pays. Mitt Romney's estimate that only 47% of us thought we were victims was too low.

  9. Many correspondents have either an incomplete understanding of principles and practices of taxation or conflate taxation as a governmental function with taxation impact on individuals. A worker may have insufficient income or sufficient deductions to pay no Federal income tax, but pays Federal Social Security and Medicare taxes. that same worker pays or may be exempt from State and Local income tax, but cannot avoid sales taxes with a few exempted states. He/she also pays property taxes either through ownership of property or as a portion of his or her rent. He/she pays taxes on insurance premiums, telephone bills, vehicle registration, etc. From one perspective the person who is exempt from Federal income tax is a deadbeat, a non-contributor in our shared sacrifice, while from another perspective he/she, especially at the lower income levels, pays a greater share of income in taxes than does a wealthy person.

    When arguing the application of Federal income tax you may wish to consider why the biggest tax reduction program, the Earned Income Credit, was promulgated and advanced. Its primary purpose was to increase purchasing power and, because it is returned in each paycheck, put more dollars into circulation thus providing immediate economic return.

    While many of you argue that everyone should pay some Federal income tax, is it really your contention that those folks don't already pay their share [and maybe more] of the operations of government?

  10. As I'm reading these posts I'm laughing hysterically at some of these comments. First you must understand the tax code. This year the first $27,100 of income for a family of four is not taxed. This should be a wake up call for all of you complaining about some not paying income tax. To me it shows that the number of low income families is way to high. One example of an employer with low wages is Walmart. The manager's there school the employee's on the amount of help they can get from Federal and state agencies, to supplement employee's income. Too pay for this we need to increase taxes on these businesses, if for no other reason, than to discourage this unamerican practice. This is corporate welfare to the highest. Pay your employee's more, or pay more in taxes. We'll all benefit by more money in the treasury, less money going to entitlements, and a happier population able to pay taxes and support their families in a decent manner.

  11. Re Freeman understands that unless all taxes imposed on Americans have some close relationship to what our government spends, we will have big problems. Just getting Americans to accept that concept is tough.

    In my opinion, our government does many things it should not do, and worse than that, in most of the things it does do, it allows itself and by connection the taxpayers, to be cheated and robbed to the tune of billions and billions of dollars per year.

    There are too many 'interested' parties that gain by this system for it to be voluntarily changed by the government itself. Citizens are going to have to force the change, and they will not do it, as long as they only pay 60 % of what it really costs to run the government.

    President Obama is on the right track to raise taxes on the wealthy, but if he really has any interest in putting us on a sane fiscal path, he cannot stop with raising taxes on the wealthy. He must keep raising all taxes on all Americans until they squeal that 'it's too much'. When that happens, we could finally open a 'real' discussion on government spending.

    It is very sad that we can't just decide to raise taxes a bit and cut some spending, but the interests that benefit from the present system are huge in numbers and powerful, so that isn't going to happen.

    So, we can either stay the course and wait for financial circumstances to force a damaging change in the future, or we can force the change now by taxing and creating the suffering now.

    I didn't think Romney/Ryan would force the change now and I also do not believe Obama/Biden will.

    That's too bad because that means the change will be forced on us, unplanned and uncontrolled.

    Michael

  12. El_Lobo,

    I'm not someone who has a fixed view and cannot be moved. I don't actually know how many times the debt ceiling was raising under Reagan but I am sure it was several. Reagan cut taxes and when his budget director David Stockman said it's time to cut spending, Reagan did not do it and Stockman quit. Please don't treat me like I am intentionally blind and can't see the errors on the Republican and Conservative side.

    I also support cutting defense spending and putting a stop to our role as the world's policeman, so let's also dispel the myth that I think defense spending is untouchable. I don't belong to that camp.

    The economy is growing, slowly, but so is government spending, and not very slowly. And this is where 'your' argument runs into trouble. Read my post of 8:47 AM and you'll see my view on this.

    Without the imposition of higher taxes at almost all levels...not all at once but over time, we will continue to see government spending far outpace tax revenue and that will eventually be our undoing.

    Americans at this point are not ready to accept higher taxes and/or spending cuts to a degree large enough to turn our direction around. Until they are, we remain in trouble.

    Michael

  13. EL_Lobo,

    I also want to say this to you and all the other Progressive letter writers that send written slings and arrows my way:

    I never have and never will criticize you or anyone else for the way they vote. Here is why:

    Two of the biggest expenses and the biggest drivers of our deficits and our debt are Defense Spending and Entitlement spending.

    The Republicans find it almost impossible to do ANYTHING about Defense spending, even though that spending threatens our survival as a nation.

    Democrats find it almost impossible to do ANYTHING about entitlement spending even though that spending threatens our survival as a nation.

    And neither party is willing to call for enough revenue to actually pay for all that government spends.

    I love my country and don't want to see it destroyed, and I suspect you feel the same. Each of us has to support one side, one of which won't address defense spending, the other won't address entitlements and both won't tax to pay for what is spent.

    It's a heck of a bad choice. I respect your choice and I'd hope you'd respect mine. And I hope we both work to see reform in both defense spending and entitlement spending. We are both Americans, after all.

    Michael

  14. El_Lobo,

    No I didn't miss that you advocated cutting in other areas as well. Good for you. I agree.

    Did you miss my 8:47 post? As long as Americans only pay for 60 % of what government spends, why should they support spending cuts? That's my point. Did you miss it or do you just disagree.

    I did not know the debt ceiling was raised that many times. That's not good. Are you arguing that we should just raise it willy nilly now because we did then. Compare our GDP and debt ratio then to what it is now. I don't think we should have done what we did then and it is even worse to do it now. We have to, of course, but it should be done at the same time we impose higher taxes and reduce spending.

    I am not a budget expert so I don't know what percentage the defense budget should be cut. What I would do is decide what we are not going to do anymore...IE provide a defense shield for nations that should provide their own protection.... not have bases and troops in hundreds of places around the globe... stop provide aid to so many countries, both military and non military, etc. I think if we did that, we could probably cut defense spending in some %.

    You act like you don't believe anything I say and I just make it up to convince you I'm not what you have decided I am. That's wasted effort if so. I believe what I write and am not out to fool anyone.

    Michael

  15. EVERYONE must contribute to federal programs. Each man, woman, and child residing here has a pro rata obligation of several thousand a year--just for defense. The tax code must be revised to eliminate the social welfare refundable credits that are on top of all the federal, state and local (and non profit) gifts to those who claim to be unable to support themselves or their children.
    p.s. Kisses to MC re cutting defense and our pointless support of hundreds of thousands of American troops in Europe, Guam, Japan, Korea, Afghanistan...

  16. Working class Americans are lining up for various entitlements to the tune of tens of thousands a day. Everyone needs to pay the piper.
    Wealth inequality can not be solved by income tax. Too many loop holes.
    Tax the living hell out of the kids. An onerous death tax is needed the next 50 years or so to get things back in sink.
    The letter writer is correct. A hand full of affluent folks own nearly ALL the financial asstes in the country.....ludicrous.

  17. We have third world wealth inequality. We are neck and neck with Turkey and Chile. That and medical inflation are going to cause an entitlement explosion that will knock your socks off.
    Read the Fox Business report on some of our largest employers.
    Wages need to go WAY up and education and medical costs way down.
    http://www.foxbusiness.com/personal-fina...

  18. "Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened" - Peter Robison in Bloomberg, Oct 1 2012.

    There is a descriptive graph in this article that since 1967, the richest 5% have experienced a 29.7% income increase while the poorest 20% have experienced a 20% decrease in income. The middle class have experienced about 17% in the same period.

    From June 20 2012 article in Time, "The typical American family's net worth fell 39% between 2007 and 2010....For people between the ages of 35 and 44, the drop was a staggering 59%, although the dollar amounts were smaller. "

    It is true that only the top 5% are earning their incomes or do they just stand over the money pot and take until it breaks and layoffs occur? Who made billions breaking the Real Estate industry and kept the mortgage fees?

    A progressive tax system is absolutely necessary to prevent this country from becoming like old Europe, where the Aristocrats took the cash and the poor filled the ranks of the military and fought the endless European wars.

  19. According to over 50 percent of Americans polled, the concensus is that the president and the Dems will not just raise taxes on the wealthy but EVERYONE. The consumer confidence index fell to 74 percent which is the lowest in 5 months. So many people have exited the labor force that a meager 150,000 jobs created in November caused the national unemployment rate to drop to 7.7 percent, the lowest since 2008. We need 250,000 per month to stay even.

    And some here still say the GOP should go along with President Obama and forget its principles and vote for bad policy because it's popular. Wrong. Americans are not stupid. They won't blame the Republicans for this mess. Every day into Obama's second term, they will put the blame where it deserves to be: On the president and the democrats. Starting with Obamacare.

    CarmineD

  20. Carmine,

    I have to say I hope that not too many people agree with you. A majority of Americans ALREADY believe the Republicans are responsible for the mess we are in. The election illustrated that. If bad times continue and the Republicans appear to be refusing to cooperate with the President in an effort to protect the wealthy from tax increases, they will be blamed for the poor economy going forward.

    As far as Americans believing that the President will raise taxes on everyone, I doubt that, but if they do, I think they are going to be wrong. The President should raise taxes higher on more Americans to convince them we need to cut spending but I doubt if he will. Unfortunately, he will just keep spending and only raise taxes on the wealthy, on capital gains and at death. He will cut defense, which he should but won't address entitlement spending.

    Michael

  21. Carmine...We are nearing a world wide recession. Unemployment in Europe is approaching 12% and Asia is stagnant. Exports represent 10% of the economy and companies with international exposure are getting killed. The stock market up cycle was broken a while back when DuPont put the worst quarter in years on the books because of the LOUSY international climate.

    It is a miracle we are still growing and unemployment is not a couple points higher.

    In the beginning Reagan and the Rs blasted Medicare. It has become one of the most popular pieces of legislation in history and keeps millions alive.

    Millions have already taken advantage of some of the Obama care provisions and it hasn't even been fully implemented. I would argue that to a large extent Obama care as well as the expansion of entitlements during the recession are what got him reelected.

  22. The recession and slowing world economy are a correction in the massive global expansion that has taken place since globalization began 40 years ago. This is nothing new. There have been economic contractions throughout history.

    Countries are shifting from strong growth models to an entitlement model in an attempt to care for countless millions of aging people around the world. High medical costs are causing deficits everywhere. Economic growth is going to slow in the developed world and be below trend in the developing world.

    It's the way these things work. Entitlements are fairly new. They began in the 1800s. Economic corrections are not.

  23. The entire federal income tax system needs to be thrown into the trash can. It's too complex and there are way too many loopholes. We need a much more flexible tax system that we can change on a yearly basis to account for changes in the demand for government services and exogenous factors like wars.

    We've had over 40 million people retire and two wars over the last couple decades and there have been very few tax changes to account for this additional demand. The entire things a joke. When countries start wars the first thing they do is raise taxes to pay for them. Not here. The last Civil War veteran died 1956. The last Civil War widow in 2004. This credit card bill is going to drag on for 100 years.

  24. Taxes are not theft, but we do have two problems. Our government does too much and does much of what it does do inefficiently and at high cost .... and we don't pay enough taxes to pay for all government spends.

    Michael

  25. http://www.infoplease.com/ipa/A0908934.h...
    I have seen 2003 and 2004. Read about it.

  26. "Carmine,

    I have to say I hope that not too many people agree with you. A majority of Americans ALREADY believe the Republicans are responsible for the mess we are in. " Michael

    You're looking at one point in time. Don't. The view never changes when you do. Americans are smarter than you give them credit for. Obama is trying to divide the GOP and it's working. Thanks to those who think he can by GOING ALONG with his bad policy which gives us bad law. Think Obamacare.

    CarmineD

  27. "Carmine...We are nearing a world wide recession. Unemployment in Europe is approaching 12% and Asia is stagnant. Exports represent 10% of the economy and companies with international exposure are getting killed."....

    "Millions have already taken advantage of some of the Obama care provisions and it hasn't even been fully implemented. I would argue that to a large extent Obama care as well as the expansion of entitlements during the recession are what got him reelected." @ Gerry Hageman

    On your first point, blame keynesian economics and trickle down government. Doesn't work.

    On the second, think again. Obamacare is unworkable. It's unravelling. It's two major components: Medicaid expansion and health insurance exchanges WILL NEVER COME TO PASS. They are dead in the water. Bad policy leads to bad law. That's the legacy of Obamacare.

    CarmineD

  28. "Carmine.......

    You already lost this one too." Teamster

    Tell us, what happened on election day in Michigan and still. And Wisconsin. And Indiana. Private sector unions are dead and public sector unions are dying. They no longer have a monopoly. If you want to see the loser Teamster, may I suggest you look no further than your nearest mirror.

    CarmineD

  29. The Bubble reality continues.

    It appear based on the many comments, Republican supporters believe the President didn't win the election?

    Reality, as a reasonable person knows reality, would agree that one can feel a pinch of the skin. Many would respond by saying ouch! It does not mean the person being pinch agrees with being pinched. But there is a response. A moment when both parties are truly aware of each other. A face to face moment. A moment of Reality!

    So, when both parties are face to face, would they agree that 2 + 2 = 4? Or agree, we need a Police Department to protect our Community? Or agree, we need Schools to teach our children? Or agree, we need a clean environment, clean air and clean water?

    Sure, any reasonable person would agree, and set standards to achieve the best productivity from each area. Standards and measurements to ensure quality, ethics, and improvements. Any reasonable person would agree? Right?

    The word Reasonable looms large in America today! In politics. When people of middle class means, or less, began supporting the needs of the Wealthy, something is wrong. I guess if your thinking not of your own interest, but the interest of others who do not have your interest in mind, you could be considered unreasonable. Or, you could be a person wanting to help others? Or, you could be naive? Or, you could be living in the Bubble.

    You can believe the President did not win the election. You can believe 2 + 2 = 3. Why? Because your limited sources of information told you so. That's what you believe...your choice. Your world. Your reality...a Bubble reality.

  30. Mr. Starr and Zippert are WRONG. A few affluent do NOT own most of the wealth. The "middle class" does--do the math dudes. 250 million times your net worth versus 100,000 times a million. As noted and publicized: there are few wealthy so that even confiscating their entire net worth would put but a small dent in deficit spending. However, if we confiscated the net worth of the "middle class" we could PAY OFF THE NATIONAL DEBT. Not suggesting we confiscate anything, but DO THE MATH.

  31. LTV:

    You can believe that living in Wonderland and Oz beats the bubble life too. But don't try to convince others of that fallacy.

    CarmineD

  32. http://www.mybudget360.com/top-1-percent...
    Roslenda....look at the pie chart.

  33. Zippy: Your financial wealth chart is IRRELEVANT. (What portion of your net worth is in M1 or M2--cash, CD's, money markets????) Income and financial wealth are not equal to net worth. One can be worth millions in real estate, even today, and have very little liquid cash. It still gets down to simple math: there are NOT ENOUGH RICH PEOPLE to cover the many minions who are draining our government programs. The "middle class" has the vast majority of the wealth and the "middle class" will pay for most of the spending. KEEP IN MIND that you're going to pay for it--so when you're deciding if you favor funding another government program, you get to pay for it.

  34. Here's a math short cut: Annual deficit spending is now about $1 trillion. We have only one Bill Gates and one Warren Buffet--combined net worth 100B give of take. We'd need 10 of them every year just to cover deficit spending. To tackle the entire debt, we'd need dozens of them. OTHER MATH: Daily deficit borrowing is about $4 Billion or about 40%--so we're spending about $10 Billion a day. We'd use up Warren and Bill in 10 DAYS if we confiscated their entire net worth.

  35. "Carmine.......

    I see that you are still living in complete and
    total denial." @ Teamster

    It's a bad habit I learned form my old union days as Chief Steward. Bad habits are hard to break. Aren't they?

    You and your unions are going down in the rustbelt: Wisconsin, Indiana, Michigan, and next Ohio. Talk about fiscal cliff dive, you union guys are in a free fall.

    CarmineD

  36. Roslenda...you're living in a parallel universe. You need financial assets to pay bills. People that have millions in real estate also have cash to maintain the real estate. The below chart represents net worth wealth distribution as of 2007. This was before the financial crisis. It's much worse today.
    http://freepolitica.org/2011/10/31/what-...

  37. Zippert: There is some correlation between wealth and liquid assets but it is IRRELEVANT HERE. Some people have few tangible assets and lots of liquid gold while others are the reverse. The relevant issues involve how to cut deficit spending: revenue increases AND spending cuts, generally being considered at 1:3 ratio right now. My earlier point was that wealth is not relevant. Income may be relevant to a point but taxable income cannot resolve the spending problems at every level of government. Go back to the Gates / Warren wealth of about $100B. Their annual income is no where near that so even if you go back to 80% tax rates, the feds could get maybe $8B a year out of them--almost enough for ONE DAY of federal spending or 2-3 days of the deficit portion of spending. The pundits cite 80 days if the upper income tax is increased--probably 80 days of total spending or about $800 B. So where is the $240B in spending cuts? Where? I personally don't mind if taxes increase. Might actually like it since we'd be DOING SOMETHING. We just keep devaluing the dollar by borrowing and printing money--unsustainable.

  38. Mr. Starr, you are incorrect here. The wealthy pay more in taxes than the average American, both in real terms and as a percentage of overall income.

    In fact, taxes in the U.S. are actually more progressive than most of Europe... http://www.theatlantic.com/business/arch...

  39. Of course the wealthy pay more taxes. They have more! You can't get taxes from the millions that have nothing.

  40. Roslenda seems to be obsessed with deficit spending. It comes up in every post. Deficit spending has taken place since this nation was founded and will continue to take place until the world comes to an end.

    We paid off the revolutionary war in the 1830s and were free of debt. Did the country thrive? No! We slid into a massive recession.

    The money to pay off large debts has to come from someplace. People don't want to give it up. They never have and they never will. They just talk about it constantly.