|
Townhall
Finance...
Do
The Rich
Pay More Taxes?
by Jeff
Carter
January 22, 2012
The short
answer is sure they do. They have more income so they pay more taxes.
Statistically, the upper income earners pay almost 100% of the taxes to
the
federal government. The tax debate is so skewed with misinformation
that it’s
hard to make sense.
When it’s
hard to make sense, it’s easier to drive home fallacious points about
income
gap’s, a smaller middle class, salary and wage discrepancies and the
rest of the
class warfare arguments you see popping up all over the media and in
virtually
every left wing political comment or speech.
The Wall
Street Journal brought some sense to the debate with a look at
Republican
candidate Mitt Romney’s taxes. Romney, like Warren Buffett and other
wealthy
individuals that live off investment income pays a tax rate close to
15%. But
when you look at the reality behind that tax rate, it’s closer to 50%.
Why?
Because
they are paid via dividends and interest on bonds they own. The
companies that
they are invested in pay a corporate rate of 35%. Wealthy investors
that live
off investments are paid after all the costs of running the business
and taxes
are taken out of the cash flow. They get the remains. In many cases,
companies choose
to buyback stock instead of pay a dividend. When that happens they get
even
less, and there is no guarantee that the stock will go up because of
the
buyback.
Instead of
looking at who pays what, wouldn’t it be better to change the tax
policy to
incent everyone to do better? The job creation in America since Obama
began
driving the car has been abysmal. He likes to say the car was in the
ditch when
he took over control of the wheel. But, he hasn’t even had the presence
of mind
to call a wrecker to get us out of that ditch and on the road again.
Instead he
has taken it deeper into the ditch.
What we
need going forward is a tax plan that doesn’t pick and choose winners
and
losers like the archaic one today. Currently there are deductions for
this,
alternative minimum taxes, add ons for that. What we should do is have
a flat
rate for both companies and individuals. 15%, no write offs. For
individuals,
that would mean take your income, subtract out FICA taxes you pay,
multiply the
net number by 15% and send it in.
That would
be a far bigger stimulus to the economy than any government spending.
Remember
too, all the time, money and energy that is paid to accountants to
figure all
this tax stuff out could be re-allocated to different uses. The human
capital that
is used to decipher the tax code could also be used differently. A flat
tax
with no write offs would have huge effects on our society believe it or
not.
The tax code influences your behavior.
Read this
and other columns at Townhall Finance
|
