Last weekend, my roommate and I had an argument. I told him to go to politicalcompass.org, a website that gauges where an individual stands on the socioeconomic spectrum by asking how strongly you agree or disagree with a particular statement. We either completely agreed or mostly agreed on virtually every statement that was presented except for one: "the rich are taxed too highly." He strongly agreed with that statement, whereas I marked "Strongly Disagree". Name calling ensued (the word "Democrat" and the phrase "You hate poor people" were thrown around freely. I guess to advocate any type of increase in taxes make you a "liberal" in this day and age.), though luckily a fight didn't break out (even though he likes to tell everyone that comes over that he was "this close" to kicking my ass. I'll take that challenge any day of the week.). Coincidentally, the very next day Mitt Romney agreed to release his tax returns.
One tax that needs to be substantially lower is the corporate tax rate. Switzerland's maximum corporate tax rate is 22%, while South Korea's is a flat 24%. At 35%, the United States is uncompetitive with the rest of the developed world. lowering this tax rate would help to bring corporations who do business overseas because of this unfavorable tax rate back to our shores. This is the tax that we should be talking about lowering because in my view the "job creators" are corporations, who's job is to hire individuals to do their work, rather than wealthy individuals who's job is to make more money.
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A few points to make before I make you feel like shit. To equate a higher tax rate with economic vitality during the Clinton administration is disingenuous. Was there anything else coinciding with the Clinton presidency that might have accounted for, in your words, the “booming economy” of this time? Maybe the dot-com bubble? Also I think I can speak for everyone when I say no one gives a shit about the Heritage Foundation. If anyone wants to move to the wasteland that is Australia that was once Great Britain’s Alcatraz and pay 45% income tax on top of a 10% sales tax, go for it, send me a post card. And finally I don't tell people that I almost kicked your ass doofus. I say to girls who tell me they are in a fight with their roommates over curling irons that me and my roommate almost came to blows once over taxes on the rich. They roll their eyes but they don't understand that I'm making fun of them for fighting over something so trivial. But to be honest arguing over anything political is like masturbation, it feels good but in the end, we didn’t really get anywhere.
ReplyDeleteHowever there is so much wrong with increasing the taxes on the rich I don’t know where to start. I am a numbers guy so I guess I’ll start there. The simple math of it is that the so called “rich” already pay too much in income taxes as it is and it is not fair. Note: I’m basing all my arguments on IRS data that is released every year so if you think I’m just pulling numbers out of a hat, blow me. In 2009 the top 1 percent of income earners in this country were those with an annual income of over $344,000. Total taxes paid to the government for all taxpayers was about 865 billion dollars of which the top 1% paid 318 billion dollars. For those mathematical illiterate that’s 37%. The top 1%, which is comprised of only 1.3 million tax paying individuals, paid 37% of all income tax paid to the government. These people aren’t taxed enough? We want to penalize them for being successful? You know what the bottom 50% of income earners paid of all income tax to the government? That’s 70 million tax returns. 2.3%. So to recap, the top earning 1.3 million income earners in this country paid 318 billion to our government, the bottom 70 million paid 19 billion. That’s fair?
When people say that the rich need to pay their fair share it shows how obviously ignorant they are. The tax liability on an average income earner in this country is roughly $2000. The tax liability on those that make the top 1%? $98,000. So not only do they pay their fair share but they pay the fair share of 48 others. But do they drive on roads that are 48 times better?
My point concerning the higher tax rate paid by the rich during the Clinton Administration is not the "effect" it had on the economy, but the lack of one. The dot-com bubble? I think that probably has more to do with the boom in human capital focused in a specific area such as the internet. Equating having lower tax rates with having a direct effect on stimulating the economy is what is disingenuous. Helping people to have more upward mobility in life through things like education can be directly linked to having a long term positive effect on the economy. And how does one propose we increase educational opportunity with no extra revenue coming into the system? Borrowing. Oh yeah, that has been reallllyyyy popular with people who hate taxes as of late.
DeleteAs to your argument that those poor rich guys are just being punished by those damn lower people, I find it absolutely baffling. Whether Mitt Romney pays 35% or 39.6% in taxes, he is still going to be a very wealthy man. Additionally, there is a fundamental disagreement between us over whether taxes are a "punishment". To be a citizen of this country requires that one accept that the government is a necessary institution. Being a good citizen requires that one give a certain amount for the greater good of all. It shouldn't be considered a "punishment" or "class warfare", it should be considered civic responsibility.
You threw a lot of numbers around in your second paragraph, like the "1%" paid "318 billion dollars" to the US government. I would be curious to know what the actual tax burden was for those 1.3 million people. My guess is that most wealthy people pay significantly less than 35% in taxes. Upon checking it, according to The Tax Foundation, a non-partisan group informing taxpayers, the average tax rate for those making over 1 million dollars annually is 25%, significantly lower than the 35% they are supposedly being taxed at. It's fair to represent the net worth of an individual by percentage, but it's not fair to represent the effective tax rates on individuals by the same standard? If I take 15% away from a person making a million dollars a year, and 15% from a person making 50,000 dollars a year, who in the end is going to be more burdened. Try telling the guy making the 50,000 that the rich are "just getting by" with a straight face.
"Jeez, if only those stupid poor people could be rich. They are the ones that should be paying their fair share!" Oh yeah, I forgot that they can't. So go ahead, introduce your "flat tax" to make it "fair" so the rich can get richer and the poor can get poorer. Forget about that "great middle class" these assholes on TV keep talking about. You'll probably get it. Because I hear that those stupid poor people have shitty lobbyists.
"I hear those stupid poor people have shitty lobbyists" - Jon Stewart. Matt make sure you source your quotes.
DeleteThe surging economy in the late 90’s didn’t have anything to do with taxes. It had to do with everyone jumping on board with a new technology. But you’re still trying to say the higher tax rate didn’t have an effect on the economy or job creation in this historical case so it’s ok to have a higher tax rate. The highest tax band in 1937 was 79% and we weren’t doing that super then.
And I never said they are being punished by those dirty poor people (God they are so poor and dirty). They are being taken advantage of by progressives for being successful. My girl Brooke hit the nail on the head, why should I work hard just for the government to take more money out of my pay check? And don’t give me the romantic idea of civil responsibility. This is America. If I want to treat every living person like dirt , that’s my Natural God given right. Yes I owe something to live in this country but why should I owe any more than anyone else? Because I worked hard, paid attention in school, got a job and prospered? Now I have to pay the unemployment of a drug addict who dropped out and has been arrested half a dozen times. That’s horseshit. There are ways to combat this, ways I’m not going to get into (consumption tax, etc.), but to penalize those who pursue their life, liberty and happiness with more gusto than others is un-American.
Matt I completely agree with everything with which you have stated here. I believe Obama made a point about this in his state of the Union address. Tax codes need to be reformed. The corporate tax rate may be considered a bit high. I feel it may do good to decrease it, but I will note what I feel maybe more effective to bring companies back to the U.S. without necessarily doing this is by implementing taxes on domestic companies that take their jobs overseas instead of creating jobs here because it forces companies to come back home. However, this is just my opinion and either way I really like this post because of its context and look forward to commenting on this in the future.
ReplyDeleteI also remember whatching the State of the Union and hearing Obama say that the rich need to be taxed more. Although I am not as politically and economically knowledgeable as you, I believe that since the rich are not taxed as high as they should be, that this causes great class differences in our country. The rich keep getting richer, the poor keep getting poorer and the middle-class is starting to fade away.
ReplyDeleteI just wanted to touch on the statement, "...the rich are taxed too highly". I had an experience in which I was at work one time. I don't even know how Obama got brought up but she said she will never get on a plane until Obama is out of office. I asked her why and she said because the rich are taxed to highly. She is not rich but she is very well off. She said, "...my husband was dirt poor. Every American has the opportunity to get ahead and receive an education to put you in a better financial situation. Why should my husband be taxed higher when he worked his ass off to collect higher income?" I was shocked, because although I believe that the rich are not taxed enough, her feelings made total sense. I know that I am going to college and grad school to put myself in a more-than-comfortable finacial situation. I do not want to have to worry about money. I know that I too will have worked my ass off and taking more money out of MY HARD EARNED pay check would piss me off. Just saying.
ReplyDeleteMatt, you really hit the issue head on. This one sampling everything you've said should put everything into perspective:
ReplyDelete" To be a citizen of this country requires that one accept that the government is a necessary institution. Being a good citizen requires that one give a certain amount for the greater good of all. It shouldn't be considered a "punishment" or "class warfare", it should be considered civic responsibility. "
I definetly agree with your point that the rich should be taxed more and remember Obama pointing that out in the State of the Union address. I feel like the fact that the rich aren't taxed much is what is coming to divide our economy even more. I also completely agree about the fact that the corporate tax should be lowered because that could help our economy in various ways.
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