This morning I got into a discussion (well, argument) at the Kresgeville Post Office. A patron was extolling the positive features of a flat tax, so everyone would pay something. Then he proclaimed, “At least that would be fair.”
I pointed out that a 10% tax on a $30,000 a year income would be much more burdensome than a 20% tax on someone who made $3 million a year. He disagreed, so I knew he was a Republican.
Then he said, we should make more use of the sales tax. In Pennsylvania everybody pays 6%.
Here is a quick primer on taxes. If poor people pay a greater percentage than the rich, that is a regressive tax. Think lottery or cigarettes. I know, I know. Poor people shouldn’t gamble or smoke, but they do, and you have a regressive tax.
A progressive tax is one that takes a greater percentage from the rich than from the poor. The federal income tax is supposed to be an example, but at least one year I paid a higher percentage than President Reagan. With the loopholes and deductions, the progressiveness breaks down, but at least in theory the income tax should be progressive.
A flat tax takes the same percentage no matter what the income. Interestingly, a sales tax is not a flat tax. Here’s the reason. Let’s say it is the end of the year, and we will add up all the sales taxes paid by someone making $40,000 a year and someone making $4 million year. We will find in almost every case that the person making $40,000 has paid a greater percentage of his or her income than the person making $4 million. The $4 million guy has not spent that $4 million on taxable goods (unless he is really stupid.) The $40,000 guy will, because he has to.
While definitely not a fan of the Republican party, after observing government for over 25 years I get the feeling that both parties are straw men being promoted by the owners of the USA. Thereby setting up a constant us vs them scenario that keeps our attention off of the real looters of our economy.
ReplyDeleteThe Democrat vs Republican, left vs right, blue vs red, FOX vs any news channel with brains, pro-gun vs anti-gun....is like watching...well...the Cowboys vs the Eagles or the Dodgers vs the Giants. It's all a distraction for the masses while we get ripped off by the ultra rich.
I had an old mentor who told me that if I ever wanted to find the answer in government to simply follow the money... well, read this and see that if we are the us...the them is very small. http://www.dailyfinance.com/on/Wealth-Inequality-in-America-viral-video-Politizane/?ncid=webmail1
We need to raise tax rates. If fact we need to add tiers to the tax bracket, add tiers that look something like this.
ReplyDelete1. $500,000 - 45%
2. $1 million - 50% - with a de facto 30% on all income regardless of how it is earned and regardless of "charitiable contributions". If you make over $1 million you pay 30%. That simple.
3. $2.5 millon - 55%
4. $5 million 60%
5 Over $5 million - 65%
I don't know why we aren't rioting in the streets over this!