Haves and Have-nots

Here are some quips from an interesting article:
http://money.cnn.com/2008/03/31/news/economy/tax_debate.fortune/index.htm?postversion=2008040211

"The first surprise for most people is the large proportion of Americans who don't pay any income tax at all. The number of people who actually get money back - not a refund, but a net payment - through the income tax system, is huge. In 2005 (the most recent year for which data is available), the bottom 40% of Americans by income had, in the aggregate, an effective tax rate that's negative: their households received more money through the income tax system, largely from the earned income tax credit, than they paid.

That means that the number of people who actually pay America's income taxes - totaling almost $1 trillion in 2005 - is surprisingly small. Of those who filed returns (themselves a subset of the population), just half accounted for 97% of the Treasury's total income tax revenue. The top half's share of total payments has been growing steadily for the past 20 years. The top 10% of taxpayers kicked in 70% of total income tax. And the famous top 1% paid almost 40% of all income tax, a proportion that has jumped dramatically since 1986.

Now consider some of the heated tax controversies of recent years. Did Bush cut taxes for the rich? Yes. But he cut taxes for the poor even more. If we look at the measure that really matters - the change in effective tax rates - the bottom 50% got a much bigger tax cut than the top 1%. Did the dollar value of Bush's tax cuts go mostly to the wealthy? Absolutely. It could hardly be otherwise. Since the well-off pay the overwhelming majority of taxes, any tax cut with a prayer of influencing the economy would have to go mostly to them. You could completely eliminate income taxes for the bottom half of the population, and the Treasury would hardly notice.

The real issues here are clear. One is having a shrinking minority of citizens pay most of Washington's bills. Social cohesion falls apart. The majority who pay nothing resent those with higher incomes; the minority who pay heavily resent those who don't pay.

More fundamental is why some people's incomes are growing so much faster than other people's incomes. That, and not taxes, is what the supposed tax debate is really about. Watch to see if the candidates make substantive proposals for dealing with the issue, including how low-income citizens can get some of the earning power now going heavily to the better educated, plus how U.S. workers in general can be worth their high cost in a global labor market. It's a lot harder than changing income tax rates. "

Ok so the way I see it the tax system is not fair to the rich. But in our hearts we feel that it is not fair that they make so much money to begin with. If they are earning it wrongly then by all means stop whatever injustice there is. But no one is arguing that they are criminals. That we would know what to do with. They're just better at earning money than most of the rest of us.

Is the solution to punish them or to empower everyone else?

Our public schools in the cities are more likely to kill a person than to graduate them (hyperbole), racism though improved is real, the masses are content to watch tv rather than work harder, health problems which are largely the result of eating fast food four times a week drastically reduce a families earning potential, welfare recipients find themselves in a pattern of dependence, etc...

What would you do to reduce the vast difference between the haves and the have-nots? Do we need to do anything?

 

Under the belief that all people are created equal, everyone should pay the exact same % of income in taxes, regardless of any other outside condition. If you pay it, I should pay it. If I pay it, you should pay it.

If you have a hybrid, I don't care. You are not special. If you have children, I don't care. That shouldn't matter. Children is not some special status to a limited few. (nearly) Every family has them.

Fair tax. We all pay the exact same % from our income, with no tax on the first $15K of yearly income.

 

The Poor don't pay taxes in America.
It's only a myth that liberal politicians spread to sound important.

Even better, the true poor don't pay for health insurance.
If they show up at US hospitals they can't be denied help.

Sometimes being poor is good!

 

when you say fair tax you mean just a fair even tax, or do you mean the "fair tax" as its called that is set Sales tax for all things? I dont agree with any of them, but the sales tax Idea is horrible in my view.

 

One thing not taken into account is the large ability of the rich and corporations to pass on taxes by not increasing wages and increasing prices.

The best tax is the land value tax.

 

how is that the best tax? its completely up to the judgement of someone what the value is. Also it effectively taxes people out of there own homes or small companies if something changes the value of that land, such as a new development that went in and made the land worth more...? It would get rid of the need to raise taxes though ...goverment could just claim land is worth more and bring more in.

NO good tax system ever taxes all income from the same source, its best to tax a few ways to make sure you have flexability and greater fairness.

 

Excellent post PFOS,
I actually got into a conversation over beers Friday night about moving to a Federal property tax system. There is some merits to the idea, but some important pit falls. In my town, we recently passed a school bond, the city council said there would be no increase in the local mill rate. While that is true, the city is doing the property assessment this year and even though the rate wont go up, the actual bill will.

I will agree whole heartedly that having a variety of taxes from different sources is the most fair and wise. Governments protect thier revenues better this way. If for some reason one segment were to dip another could take up the slack.

 

Not really, the it is easy enough to estimate what part of the value of a property or rent is formed by site and ground rent.

Actually I don't think you understand it, it is not a property tax. It is the collection of site rent and ground rent when realised, which means that part of the value of the land which comes from society and nature. It means that if you wanted to sell a piece of untouched land in the centre of a major city for $2 million, then they'd compare to similar land in a regular area(I'm not being very technical here.) or an uninhabitated area and guess the amount of value added by society ie by the land being in the centre of a major city. If the land would otherwise be estimated to be $500,000, the difference would be collected. The same would go for rent.

Any money however due to improvements you have made to the land, is yours to keep. And it is only drawn when realised, which is important, if you aren't selling or renting it out or making money in some way off it then you will pay nothing. At least in the way I envisage it.

I personally believe the money should be collected locally and either used to fund local services, or better yet simply given out equally to those in the local area. Many don't hold this view, but I'm a decentralist and a left-libertarian.

The beauty of this taxation method is that it has a real effect on the average person. It removes the ability of people to speculate on land and derive income simply from the produce of society and nature, to a large degree. Therefore it should have a knock on effect in lowering the price of land, increasing profits and increasing real wages, if not the ability of the average man to start his own business and work in some comfort and reasonable self-employed conditions.

This is why it meant far more to Henry George and many others from the similar ideas of Tom Paine through to conservatives like Churchill and Albert.J.Nock to liberals and even radicals such as Tolstoy.