Wealthy Americans will recoil at the suggestion, likely responding with the tired mantra that the top earners pay most of the income tax. But two points can be made in response to that: (1) federal income tax is only a small part of the burden on the middle class. Based on data from the Institute on Taxation and Economic Policy, the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 21% of the annual incomes of the poorest half of America. For the richest 1% of Americans, the same taxes consume 7% of their incomes. And (2) the richest people pay most of the federal income taxes because they've made ALMOST ALL the new income over the past 30 years. Based on Tax Foundation figures, the richest 1% has TRIPLED ITS SHARE of America's income since 1980, AFTER TAXES.

But there are better reasons why the rich should pay higher taxes.


Do we want our national parks sold to billionaires? Do we want programs for music and the arts eliminated from schools, so that only children of the wealthy can participate in them? (photo: Plashing Vole)
The very rich benefit most from national security, government-funded research, infrastructure, and property laws. Defending the country benefits the rich more, because they have more to defend. Taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for their idea-building. The interstates and airports and FAA and TSA benefit people who have the money to travel.

Over a hundred years ago, Teddy Roosevelt, facing an epidemic of inequality not unlike today, reminded us that "Great corporations exist only because they are created and safeguarded by [democratic] institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."

Here's another good reason for the rich to pay more taxes: With the drop in tax revenue, funding for the preservation of American culture is disappearing. Do we want our national treasures deprived of maintenance because of budget cuts, as is currently happening in Italy? Do we want our national parks sold to billionaires? Do we want programs for music and the arts eliminated from schools, so that only children of the wealthy can participate in them?

The 1912 book "Promised Land" by Mary Antin revealed the wonder of a Russian immigrant coming to the U.S.: "In America, then, everything was free...light was free...music was free."

Not that capitalist markets don't have their place. But the current view of democracy has gone to the other extreme, in which individualism and personal gain trump societal responsibility, and growing inequality makes community support and safeguards unnecessary for the privileged elite.

Finally, back to the tax statistics. Why should financial earnings (i.e., capital gains) be taxed less than wage earnings from actual work? The richest 10% of Americans own over 80% of the stocks, the gains from which are taxed at a 15% rate. Most wage earners pay more.

Furthermore, over the past 15 years millionaires have seen their income tax rates drop from 30% to 22%. During approximately the same time period, American economic growth declined from an annual 3.2 percent rate to 1.7 percent. Lower taxes for the rich do not lead to productivity.

Will the rich stop investing or move to another country if their taxes are increased? Not likely. They have it too good here. As Warren Buffett recently stated, "I have worked with investors for 60 years and I have yet to see anyone - not even when capital gains rates were 39.9 percent in 1976-77 - shy away from a sensible investment because of the tax rate on the potential gain."

Mr. Buffett is admitting what everyone else is beginning to realize. The rich take much more than they pay for.

http://www.commondreams.org/view/2011/08/22-5

Also while most other Americans pay 20% or so of their income to taxes, the rich pay 17% per Warren Buffet. Most of their income is derived from capital gains which is a 15% tax.

I think income should be income and counted as such on the tax rates, not special like capital gains! The rich, other than Warren Buffet, will yell about that.

the top 2% of the population control over 70% of the wealth, theres something wrong there.

You can argue that they make more so should pay more but the bottom line is that whatever percentage of earnings are being paid in tax, the overall contribution to the national coffers is significantly more for high earners than they are given credit for. Since the bottom line for the nation's economy is why taxes are even an issue...

Excerpt from: http://www.taxfoundation.org/research/show/250.html

The Internal Revenue Service has released new data on individual income taxes, reporting on calendar year 2008, a year of economic recession in which the world's financial system was temporarily in a perilous state.

The amount of individual income taxes paid fell substantially in 2008, by $84 billion, and nationally, average income tax rates were at their lowest levels since 2004.

...incomes reported by tax returns at the high end of the income spectrum plummeted from 2007 to 2008, as did their share of the nation's income and income taxes paid...largely due to differences in capital gains.

During 2008, the bottom 95 percent (AGI under $159,619) paid 41.3 percent of the total [Federal Taxes] collected...

38.0 percent [was] paid by the top 1 percent (AGI over $380,354).

The top-earning 5 percent of taxpayers (AGI over $159,619)earned 34.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.

You can also dig up lots of fun facts about who pays what at:
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=134951,00.html but be warned, that is gonna cut seriously into Mingle time!

Would I like to be in that top earning bracket? You bet. Am I happy there are rich people there paying taxes? You bet. Am I benefiting from working at a company owned by rich people? You bet!

Do I want to stick it to them individually so they cut back and don't spend (as in, companies closed/jobs lost?) Uh...I don't think so! Remember, they have enough money to cut back and still enjoy a very nice lifestyle - they don't HAVE to be actively investing all the time.

Can I get there and contribute to the overall bottom line disproportionally? Wow! I hope so :)

Thank God there are rich people.

That there is.

Class warfare is stupid.

Well, these facts are true, and it is good that you acknowledge that you are basing everything on only federal income taxes paid. Unfortunately, you don't acknowledge what that means and what the broader reality is.

Once again, I offer this excellent article by Ezra Klein. http://voices.washingtonpost.com/ezra-klein/2010/04/do_the_poor_really_pay_no_taxe.html
The graph at the bottom shows the obvious slightly progressive bias in taxes paid as it shows the proportion of income paid by all the income brackets. If you click on the "report", you see where the figures come from for that graph. http://www.ctj.org/pdf/taxday2009.pdfThe first note under the table explains the very important fact that these numbers come from tota taxes paid to Government by the various income groupings.

It is a mistake to believe that the rich people are keeping America afloat. Many of us on the left believe that the progressivity curve shouod be much, much steeper, like it was in the 50s and 60s, when America had a very healthy economy.

Your post alludes to the fact that our economy was healthy because of the tax distribution... which isn't true. The economy was healthy because the US was the only major power on Earth that wasn't destroyed by WWII and we produced all the world's goods (at a profit) to rebuild it. Therefore everyone who wanted a job had one. There was an almost endless market for our goods at our prices... somewhat like China now.

So, you believe that income tax distribution has nothing to do with how well an economy works? You believe that, even if the wealthy are allowed to have the lion's share of the wealth and send it overseas, that this would have no impact on how well an economy works at "home"? It's a novel theory. Prove it.

They took all that money they saved on taxes and purchased most of the media companies and built up China. Betrayed by our own people in my mind.

Not all mind you but enough to ruin he economy.

Here is a winner for you.. Do you recall that idiotic luxury tax back in the early 90s?

Here is a refresher..

Concept: "Luxury Tax" to make wealthy pay more taxes
Plan: Price threshold for "luxury" items

Cars: $30,000
Boats: $100,000
Aircraft: $25,000
Jewelry and furs: $10,000

Tax: 10% on part of price over threshold
Projection: Raise $9 billion over 5 years
History: Implemented in 1990.

What Actually Happened?

Lots of Unintended Consequences

Wealthy boat-buyers simply bought boats overseas
U.S. boat sales collapsed
at least 7,600 boat-building jobs lost in first year
Total job losses up to 30,000
Government paid unemployment benefits to laid-off workers
Boat tax yielded only $3 million in 1991
Income tax and FICA revenue lost
U.S. boat-building industry badly damaged
Losses probably exceeded tax revenue
Luxury tax repealed in 1993

http://www.physics.smu.edu/~pseudo/LocalOpt/luxury.html

That certainly had an impact on the economy.

Ahh. The classic "restate the issue in a false way to make your position look better".

My post didn't say that. You don't know what I believe and have no way of stating it. What I stated was the facts. What you stated was complete BS.

Interesting. Doesn't have much to do with what we're discussing, but interesting. Luxury taxes were a stupid idea.

Who is saying anything about a luxury tax? We are talking taxes in general and so is Warren Buffet.

We are talking about fair economic distribution. No one is saying the rich dont deserve what they earned or were accidentaly born into but if everyone else in the economy is makeing sacrafices why cant they? Are americans so dumb to think we all pay our fair share except the most wealthy among us?


Yes wouldnt we all love to be rich but who would dig the ditches if we were?

Wages are totaly stagnant if not going down in terms of real buying power. Are you happy with being a serf?

Good post and strong evidence that taxes hurt jobs.

No it isn't It's strong evidence that luxury taxes are a stupid idea
Also why we should withdraw from all free trade agreements and go back to having tariffs

people who don't go to college?

duh if we were all rich as I stated money would not be a motivator for unpleasant work.

No, it shows the effect of taxes on business. The luxury items were just purchased elsewhere without the tax burden. This partially explains what has happened to US manufacturing and what is happening today. Excessive taxes and regulations hurt the business cycle.

Wasn't it the far left who proposed the luxury taxes?

Lessons Of A Tax Fiasco

The Omnibus Budget Reconciliation Act of 1990 contained a new luxury tax on luxury autos, aircraft, jewelry and yachts. Democratic Senators Ted Kennedy of Massachusetts and George Mitchell of Maine both spoke about how the rich would finally be paying for their share.

The tax however, took in less than one half of the projected income. Why? Because fewer people bought the products that were taxed. People bought yachts overseas. The tax cost the government an estimated $24 million in unemployment benefits alone because of the lost jobs in the aircraft and boating industry. Boat Builders, a key industry in George Mitchell’s and Ted Kennedy’s home states were particularly hard-hit with yacht sales dropping 77 percent and builders laying off an estimated 25,000 people.

In 1993, with bipartisan support, the tax was repealed and Kennedy actually proposed a 20 percent tax credit for the purchase of luxury yachts more than 50 feet long in order to stimulate the boat building industry in his state. The initial luxury tax was an expensive lesson in economics, costing the jobs of thousands of American workers.

http://www.ctlawtribune.com/getarticle.aspx?ID=33538