Taxes should not be a “buffet” where you get to pick and choose what you like and don’t like. It is supposed to be a just and equal system. Which is preposterous as it is based on penalizing those who are more successful –not quite sure how that is just or equal but we will deal with that later.
Let’s talk about all those millionaires that do not pay taxes or pay less then their secretaries.
The tax codes are difficult to follow and it is fair to say that many people pay taxes multiple times on the same money.
Basically taxes are based on actual income earned from working in a progressive manner with those making more paying a higher percentage rate. But the main problem is with all the loopholes written into that code. Most of us are familiar with mortgage deductions and charitable contribution deductions, but there are many many pages of many more deductions. These are the loopholes everyone is referring to.
So when a millionaire receives income from working they pay at the highest percentage rate of taxes (not counting deductions) then they take that money and invest it (means making it work by putting it into other business) then when they receive additional income from that investment they only pay approximately 15% on that investment. Now that money that they were paid for their investment has already been taxed for the company paying the interest on the investment in several different ways and now that it has been paid back to the investor he must now pay that additional 15% on it. Keep in mind that if he lost his investment he can only deduct that which he lost minus whatever he had received on it (this is very simplistic but close enough I think – if you invested $10,000 and had received $1,000 on it you now lost $9,000). I am not sure if you can declare the complete $9,000 as deduction but even if you can you have lost much more than that in reality as if you had just put it into a bank or some bonds or such you probably would have earned more (unless this is a short term loss) but you can not take that into account – you also can not take into account that you previously paid taxes on the $1,000.
The reason we offer a lower tax rate for investment is that it is good for the economy and society as a whole. Already the tax rate for companies is the highest in the world and the tax rate for investment is the highest in the world so actually we are hurting ourselves when we claim it is not fair for millionaires to pay a lower tax rate. They already paid the higher rate when they actually worked and earned that money now they are only investing it instead of hoarding it like Scrooge McDuck.
Now back to Mr. Buffett – my understanding is that he does still work for his company but chooses to take his pay in the form of stocks. That means that he has enough money to live on so instead of taking actual pay then he pays only 15% on the profit on his investment annually (the stock). Now in reality if he sells that stock he will pay the higher tax rate again but right now he is only being taxed on the capital gains he receives. So you are not comparing apples to apples in this scenario. Of course the ultimate irony about the Buffett rule is that is comes from a man who one minute states he wants to pay more but doesn’t go to the IRS web site that allows him to pay more of his own free will, and who says he should pay more one moment and next the company that he is chief executive of, Berkshire Hathaway, is behind in taxes by millions of dollars dating back to 2002 and is fighting in court what they should pay. Hypocrisy thy name if Buffet.
What we are doing is cutting our own throats to do something that sounds fair on the face of it but if you look at it in the real context you can see that they are not really paying less in taxes but just postponing the inevitable and as the pot grows the inevitable will be a substantial amount. Also keep in mind that with a death tax penalty that for most people the inevitable moment comes when they die and their estate is over taxed at around 45-50%. Gee I think that more than makes up for the lower taxes while they were alive. Especially when you think of all the benefit the economy received by their keeping the money working in the economy instead of hoarding it or accumulating materialistic things.
The Republicans have often but to no avail offered up plans where the tax becomes flat meaning it is a lower rate for all but then there will be no loopholes or deductions. Actually this will bring in more money to the treasury in the long run. But the Democrats want something quick and flashy like an all you can eat buffet sign. Pick whichever group it is popular to beat up on and tax them. Tax them as much as you want, it’s all you can eat. No concern for the long term health of the economy, no concern whether it will have immediate effect, just tax what you want because you want it. Just like a buffet. And when you’re done at the all you can tax buffet, gorge yourself and clogging the arteries the of the economy (yes I know this metaphor is running too long I’m almost done) you can go and put a couple hundred million on Solyndra at Roulette wheel.
It would be great if society started to think long term versus short term and what sounds nicer instead of what will work in the long run and be more just and equal in the long run. I personally will support a VAT tax (and only a VAT, not a combination of VAT and income) as I have serious problems with income taxes due to penalization of success.
And let me add that all persons in the US can of their own volition give money to the treasury or even dedicate additional money to our national debt. So if someone really believes they are not paying enough taxes then they could very easily write that check and the government will gladly accept it from you. So I find it very hypocritical that so-called wealthy/millionaires want the government to pass a law to be able to by force take additional money from them but not want to willingly just give it away to the government. Would it be that they know with their money they can afford the best tax accountants and attorneys in the world that will allow them to still pay less money then the amount the law states????
Please also do some research and you will find that everytime congress has added a tax for the “wealthy” they end up adding it downward as it really does not bring in the funds they want so by wanting someone else to pay up you actually end up making the middle class pay up.
So, logically you must come to the conclusion that all of this is political hype and nothing more! And still no one wants to solve the actual underlying problem – SPENDING!!