Wednesday, July 09, 2008

Let's Soak The Rich!

If you're one of those people who think the rich should pay even *more* taxes--probably because you're coveting what they have and therefore want them to suffer--note this from today's Wall Street Journal:

New data from the IRS will be out in a few weeks on who pays how much in taxes. My contacts at the Treasury Department tell me that for the first time in decades, and perhaps ever, the richest 1% of tax filers will have paid more than 40% of the income tax burden. The top 50% will account for 97% of all federal income taxes, while the bottom 50% will have paid just 3%.

If you think the rich should pay more because they can afford to, or because you're jealous that they have more than you, you're a socialist.

I don't know if I'm in the top or bottom 50%.

16 comments:

Ronnie said...

I believe in the ability to pay principle because its practical. Collective ownership and forced wealth redistribution have nothing to do with my view, and my goal isn't to take from the rich and give to the poor. At a certain point an increase in the amount of money you make provides no real positive benefit in your life. Some people get to this point at $200k a year, some a million, but eventually everyone has a point where any more earnings provides no more realistic value. People will often earn more than this point because they might get enjoyment from however they make their money or possibly from just the thought of making more money, but the actual money doesn't provide anything for them. At this point higher taxes doesn't hurt the rich, but benefits society in general. If we effectively used this money not in the form of welfare or handouts and put it into research all of society benefits, more so then without the ability to pay principle being used. I usually advocate a relatively proportional tax system in the lower middle to upper middle classes with a highly progress tax rate at poverty levels and over $5 million a year in earnings. By giving a break to the extreme poor, keeping the middle classes "fair", and having those with the ability to pay without loss of any realistic benefit pay a larger percentage, society can operate without harming any group through taxes.

Dr Pezz said...

How do you feel about a flat rate for everyone (and no tax breaks for anything)?

My accountant friend says her job would be so much easier (I laughed) and maybe non-existent (I stopped).

Ellen K said...

The definition of rich is rather a fluid matter. While until this last May I had three kids in college, it was a struggle to put them through due to the federal vision of our family as wealthy. I have a 26 year old fridge, drive an eleven year old minivan, line in a house with peeling wallpaper that we can't afford to have someone fix because we don't hire illegals. Yet we are the "rich" who will probably see our incomes taxed and our retirements swindled through a number of promised programs.

Anonymous said...

I think everyone should pay a set percentage of their total income in taxes. What do you think about that?

Secondly, what's wrong with being a socialist? Is that the new communist these days?

Darren said...

Ronnie, I point you to EllenK's comment.

And anonymous, there's nothing wrong with being a socialist--if you want a dying society. Socialism is just communism-lite, often without the police state.

gbradley said...

Here is some old Data (2005)that shows the percentiles.

VisualizingEconomics

Ronnie said...

I point you to "Some people get to this point at $200k a year, some a million, but eventually everyone has a point where any more earnings provides no more realistic value" and then to "over $5 million a year in earnings." I clearly see her point, but I don't think you see mine. It would take more research to come up with an exact number, but I would say most people at $5 million a year in income gain very little if anything from additional income. Ellen K clearly wasn't at that point, and probably doesn't make over $5 million a year either, so I don't see the relevance.

allen (in Michigan) said...

> By giving a break to the extreme poor, keeping the middle classes "fair", and having those with the ability to pay without loss of any realistic benefit pay a larger percentage, society can operate *without harming any group* through taxes.

I remember some years back, to the accompaniment of a tsunami of applause from the left, at heavy tax was enacted on yachts and high-end private planes. The rich were going to have to pay for the privilege of buying their expensive toys. Huzzah.

Of course, it didn't work out that way. What did happen was that a lot of rich people put off buying a new yacht which put a much greater number of yacht builder's personnel on the street.

Ronnie said...

I didn't say a specific tax on items only the rich buy would be a good idea, I said an income tax at the point where most peoples lives wouldn't change if they where taxed more benefits more people and hurts almost no one. Now looking at yacht prices maybe the higher tax rate should kick in at $30 million instead $5 million, but still there would be a more formal way to help determine where that line should be.

Darren said...

I'm not comfortable with *anybody*, especially in government, saying to a productive member of society: "You make enough money. You don't need anymore."

jhcox said...

According to your definition of socialist, even a flat tax would be socialist. Mandatory subsidized public education would also be socialist since it can only exist by making higher income people subsidize that system. The reason the wealthy are paying more in taxes is because their income is rising faster than other income groups. I guess the socialist system hasn't hurt them too much.

Darren said...

jhcox, please be a little more intellectual if you're going to post here.

allen (in Michigan) said...

My example of the tax on yachts was just that, an example. Do you really think that someone smart enough to amass a fortune that would allow them to buy a yacht wouldn't similarly accommodate their behavior to other taxes aimed at them?

More important then that though is the unexamined assumption that redistributive policies actually help those they are sold as being designed to help.

The bigger lesson is that soaking the rich means that voluntary exchanges of considerations of value - buying stuff you want - are curtailed and that the loss of those purchases/investments is offset by the money that's diverted to the poor. That society sees a net benefit by preventing the rich from buying/investing and diverting that money to the poor.

On the record, it don't work like that. The larger the component of the economy seized by the government the lower the overall standard of living and in the philosophy's ultimate expression - communism - its a gradual descent into national economic dissolution, i.e the country goes bankrupt.

That, along with a judicious shove by Ron Reagan, is what brought about the end of the Soviet Union and that lesson is what turned the Chinese away from communism.

Erica said...

I have a hard time believing Ronnie apparantly grew up in California.

At least down here in SD, you practically need to be making $100 grand a year to buy a house, and the for-tax-purposes definition of "rich" starts at about $70k.

ricki said...

Perhaps this is a poor analogy, but I liken a tax that is steeper on higher-wage earners to a classroom situation.

The teacher in this hypothetical classroom has decided that "C" is the average grade, and they want to encourage grade parity. So when some of the students work hard and earn "As" on their papers, the teacher takes some of the points away from those students...and reassigns them to students who didn't do squat and got Ds or Fs.

Now, true, there may be some students ambitious enough - or quixotic enough not to care about grades. But I'm willing to bet that in the future, most of the A and B students are darn careful not to work so hard, not to earn so many points, lest they be taken away.

People who want to soak the rich often forget that the rich tend to be the ones who create jobs and who give large sums to charity or endowments.

neko said...

That is a brillant analogy! I need to start using that one.