[flying ^]

Originally Posted by Asuras

I tried relaying this info my mom told me to my Republican friends, who still refused to think imposing higher taxes (or stopping these nonsensical tax breaks) on the wealthy is a good idea. BLAH.

here's what happens when you dare soak 'em dry

http://online.wsj.com/article/SB124329282377252471.html


speaking of fleecing the rich...

here's a good read by Roshawn Watson

Statements such as "the rich don't pay their taxes" can be misleading because they often ignore factual evidence to the contrary.

Mr. Warren Buffett has been a frequent critic of US tax laws and a proponent for a more progressive tax system. At a 2007 fundraiser, he mentioned...

Mr. Buffett said that he made $46 million in 2006 and was taxed at 17.7 percent, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 percent. It's troubling statistics such as these that fuel cries of income inequality and the deterioration of democracy. However, a new paper by Greg Mankiw entitled “Spreading the Wealth Around: Reflections on Joe the Plumber” elucidates a completely different perspective, citing the Congressional Budget Office calculations.

Accordingly, he concludes that it is simply inaccurate to argue that we do not have a progressive tax system and that the "best analysis shows that average federal tax rates rise steeply with income.” The truth is the "lower tax rates" mentioned by Buffett and others often excludes corporate taxes, which would boost the rate significantly (remember double-taxation).

Additionally, consider that nearly 50% of all filers pay nothing in federal income taxes. These non-payers are families with children, the elderly, low income households, those who either have too little income to pay taxes or who benefit enough from all the deductions, credits and exemptions in the income tax, so they're zeroed out on the bottom line of their 1040.

This leaves the higher income earners and upper middle class paying the bulk of income taxes. Those who earn over $500,000 per year pay about 24% of all US taxes and earn about 16-17% of all income. Those who earn over $100,000 per year pay about 70% of all US taxes and earn about 56% of all income.

Source Of Income Matters...Much

Just because our tax system is progressive doesn't mean that there aren't tax-avoidance strategies to shelter income.

If the majority of your income is derived from tax-advantaged sources, then your tax burden can be minimized...drastically. For example, it is estimated that Ross Perot took in $230 million in 1995 but only paid 8.5 percent of that income in taxes. Compare this to the person with an earned income over $259,700, who would pay 31.1 percent in taxes. The Atlanta Journal-Constitution reported that this is because Perot "minimizes his tax bill by investing heavily in tax free municipals, tax-sheltered real estate, and stocks with unrealized gains."

A more recent example is Frank McCourt, the owner of the L.A. Dodgers. He received a reported $108 million and paid no federal and state taxes because of loss-carry forwards.

The truth is that one of the reasons the super-affluent get into that position is by being masters at minimizing their realized income.

Before You Join the Fleece the Rich Crowd

Attempts to use the government to strip wealth from the rich have often failed miserably and publicly. Consider Maryland as a cautionary tale.

The WSJ article Millionaires Go Missing: Maryland's fleeced taxpayers fight back details how Maryland failed to balance in budget, so its governor decided that he was going to enact a special millionaire tax to make up the deficit. The projected revenue was supposed to be $106 million. However, after a year, Maryland collected $100 million less than what they collected the previous year. In addition to the incomes of some of Maryland's high-income tax payers going down (in some cases deliberately), other millionaires simply left the state. It turns out that having a very high income affords one both mobility and control over one's realized income (if you own your own business). [b]All told, one-third of millionaires disappeared from Maryland's tax rolls, of which Maryland got 6.25% of nothing. Of course, the same thing happened in New Jersey, yet Oregon still wants to adopt this strategy.

Increased taxes on high income earners can de-incentivize hard work and innovation. It is no fun feeling like you are being punished for getting ahead financially. Additionally, there are plenty of individuals and companies that take tax laws into consideration before deciding on whether to move into a state. Of course, the fatal flaw of a progressive tax code is that it creates an overdependence on the incomes of relatively few. During economic decline, the net worth and incomes of wealthy and rich individuals typically drop more drastically than the general public, so states with more progressive tax systems often suffer severe budgetary deficits.

Lastly, in some parts of the world, you are considered VERY rich. Do you feel like you pay YOUR fair share? While I certainly have nothing but admiration for Mr. Buffett, I think he can always increase his earned income at his company if he wants to pay more in taxes. His checks to the government would certainly be welcomed. However, I don't think that would solve the problem.

Although I know the likelihood of this is very small, but perhaps it is time for a flat tax based on consumption instead of income. This probably would indeed be a "fair tax." What do you think? Are we ready?