Why do Republicans think that it's the rich who pay the most in taxes? I get this BS all the time

and I know there is good logic to be used in debunking this, but cannot find any: Here's what an asshole sent me the other day:



"The top 1% of wage earners already pay nearly 40% of the federal taxes. The bottom 50% pay about 4%. Don't believe me, look it up...IRS numbers."

Their premise is that we should unleash the rich, give their free rein, and lower taxes, and everything will be just honky-dory.


:puke:

So until they're paying 60% of the taxes, they're undertaxed.

Do you want to pay more taxes because the stinky rich don't pay their share?

I need to read more carefully.

One, that your assertion they have 60% of the wealth is true.

Two, that we had a federal wealth tax. We don't. We have a federal *income* tax.

The top 1% are so wealthy they literally don't know what their net worth is, because it fluctuates so much from day to day. Maybe they pay 40%. Who knows? Who cares? All I know is, when 1% of society owns 70% of the wealth the system isn't broken, it's dead. The social contract is dead. Property is a tacit agreement by the many to accept the claims of the few. How long will the many put up with this arrangement?

Of course if your 1% includes a bunch of multi-millionaires then the % of taxes they pay is likely to translate to way more money than the rest of America with incomes under the 45,000 median level. Duh.

However, the only thing we've ever been talking about are tax rates. According to the GAO for example, the effective tax rate on corporations (that means the average tax % corporations actually pay, not what's listed as the tax rate before exemptions) is 11.5% - That's lower than what many americans pay.

But hey, all you need to do to tell him to shut the fuck up, is post this article from the completely pro-rich, pro-business Forbes magazine:



Facts hurt.

But if you have problems, try taking the headline and putting it into google

When people say things like that, they are referencing federal income taxes.

What they neglect to mention is that federal income taxes only make up about 1/3 of the total taxes that people pay.

http://en.wikipedia.org/wiki/2010_United_States_federal_budget#Total_receipts

* $1.061 trillion – Individual income taxes
* $940 billion – Social Security and other payroll tax
* $222 billion – Corporation income taxes
* $77 billion – Excise taxes
* $23 billion – Customs duties
* $20 billion – Estate and gift taxes
* $22 billion – Deposits of earnings
* $16 billion – Other


People pay other federal taxes, and they also pay state/local taxes.

It is a very misleading statistic based on cherry picked evidence so that useful idiots will continue to vote against their own interests because the wealthy/powerful who truly run the GOP need an army of misinformed, frightened people to vote to give them even more money and power.

You can do the reverse with social security taxes since they are regressive. If you ignore all taxes but that one, the tax code seems extremely regressive.

I've always thought those should be taxed at a HIGHER rate than earned income....

why they believe that the LESS one works for income, the LESS in taxes they should pay? I.e. why someone who works 60 hours a week for $100,000 should pay a 30% marginal rate, where a person who gets $100,000 in capital gains just by doing nothing more than selling something pays only 15%, and someone who gets $100,000 from their rich uncle's estate pays nothing in taxes.

Not sure that's the reining definition of "Republican" or not.

However, while the question's snarkily simple, the answer isn't. Or perhaps I just can't be concise.

In the last decade government jobs have increased. So have private sector jobs. However, in the private sector most job growth has come from start-ups, not GM and such firms. Most of those are either mom-and-pop companies that might hire another person but usually stop there unless the businesses are wildly successful; or, if they immediately start with 10 or more employees either get a lot of government help or -- ta-da! -- investment capital. Moreover, the more manufacturing/high-tech the firm, the more essential investment capital is.

Of course, far more start-ups failed than succeeded. Since investors aren't all that altruistic--they're not likely to want to lose a lot of money on failed businesses than they make on winning businesses, in this they're like you or I would be--they expect those that succeed to not only reimburse them for the lost gambles but provide a bit of change in addition. Most of that change comes in the form of capital gains.

Now let's play a game. Imagine a 100% capital gains tax. There'd be only charity as capital investment. You'd have no reason apart from altruism to invest your savings, because the most you'd get back is what you put in (minus inflation), and the greater the risk of the business the less likely it is you'd see your money again. Now imagine a zero capital gains rate. If 1 out of 10 business you invest in fail, then the 1 business has to reimburse you for the 9 failed businesses plus a little. Over some period of time--not at once, of course. That rate of return might not be all that incredibly high, so a lot of risky businesses would be attempted and a lot fail. Now imagine a 50% capital gains tax. It's in-between, isn't it? The rate of return would have to double, more or less. Some of the riskier business simply couldn't provide that much of a return and so they wouldn't get funding; even safe businesses would have to double their rate of return. It reduces investment, it reduces the number of startups to just those that are safest, and it reduces job creation and economic innovation. The goal is to find a balance.

Now remember that most of the private sector jobs in the last decade come from start-ups, and those either employed few people, got government funding, or were started with private capital. Less investment --> less private capital --> fewer start-ups --> less innovation. Unless the government steps in, but then the problem is that government is partisan and has blinders on.

So either get used to having investment tied to the capital gains tax *or* get used to government starting up a lot of businesses, of which most fail. Then either government has to expect to be reimbursed at rates not dissimilar to what private investors wanted (state capitalism, sort of) or we expect the businesses to be owned and run by the state (socialism)--and the government will take a bath on failed business OR keep inefficient, sluggish, unprofitable businesses around because it needs voter support. Of course, if the companies are owned by the state then the state will almost certainly defend them, since corporate interests would then not only identical to but would actually be the state's interests; eventually the companies will be run politically.

Now, my argument doesn't always follow in every circumstance. A lot of capital gains are from speculation, not investment (even vicariously and distantly) in start-ups. But I don't know how to distinguish them legally. Consider the housing bubble--how much appreciation of a house should be taxed when you sell it? (Is the depreciation reimbursed?) They're the same problem because there the capital gains isn't because of economic activity done by the participants; the owners are merely by-standers.

However, there's still the working joe making $100k/year for his 60 hours of week. Let's assume he's just an employee. His risk is screwing up so badly that he's fired. It's not like he's hoping that the one job will cover the losses he's incurred working in 9 other jobs. However, similar to investors he expects his earnings to recoup at least some of his investments--his education and training, the cost of living and transportation. He expects profit from his investment of time and energy, and the greater the investment the greater his displeasure at receiving just enough money to survive. He's leveraged his capital and assets, but most the risk he could commit to was at the beginning of his career, in most cases; after that he relies on others to manage his risks, by and large. Moreover, his investment hasn't necessarily created a new job except to the extent his wages, when he spends them, increases demand--and if it did it's likely because he was assigned the project or his project was funded by his employer (making him a kind of startup and the employer the investor expecting capital gains). However, the same economic principles work: If his tax rate is suddenly 99%, the difference between being a corporate lawyer, microbiologist, and a backhoe operator suddenly becomes not worth it OR the rate of return has to zoom. (Of course, working conditions factor in more than it would if you're an investor.)

I like the idea of innovation and job creation, and think that having the government decide on what startups should be on its own stifles diversity and innovation. I may not like wealthy investors, but they provide a service, either directly or through banks. That you can make capital gains via speculation is equivalent to egregious things in the court system--the guilty go free because the civil liberties intended to protect the innocent provide enough cover and doubt. Speculation and letting the guilty go free are both bad things; but to sentence the innocent or stifle job creation are both bad things, as well.

If you include the payroll taxes for Medicaid and Social Security, the percent paid by the bottom percent increases. It is interesting that the health care bill, for the first time ever, will tax (for the very top bracket) income based on "capital" as well as wages, for this. That was a very progressive action - little noticed - and I think it appeared just in the reconciliation bill.

In addition, the argument implicitly assumes the logic of the "fair tax", which assumes everyone should pay the same percent. It is important to reject that - especially because it is dangerous to let it stand as an unspoken assumption of being what is "fair". It additionally assumes that "income", but financial wealth is a fair test of how much should be paid. In the US, taxes are on income, not wealth - other than the estate tax (which we know all about) - http://en.wikipedia.org/wiki/Distribution_of_wealth#In_the_United_States

It is startling when you look at the percent of financial wealth (wealth excluding the value of houses). The top 1% has 42% of the total and the top 10% have 93%. http://beforeitsnews.com/story/2307/Top_1_Percent_Control_42_Percent_of_Financial_Wealth_in_the_U.S._-_How_Average_Americans_are_Lured_into_Debt_Servitude_by_Promises_of_Mega_Wealth..html (I think the 60 or 70 percent numbers are too high, but even using this 42% argues the same thing. It is less intuitive because it means you need to defend a progressive tax as "fairer" than the flat tax. (If the person is middle class, ask if they think first subtracting their personal deductions is fair.) (Here's an earlier article posted because it has relevant background - and establishes who the author of the other article is - http://sociology.ucsc.edu/whorulesamerica/power/wealth.html )

Even just looking at income, the top 1% has greatly increased their share of pre-tax income. The pre-tax income for the top 5% has increased 81%, while the income for the bottom fifth has decreased by 1%. The charts here show that from 1949 - 1979, the country's income distribution moved towards equality. Since 1980, the share of the richest has become progressively and drastically more unequal. http://www.demos.org/inequality/numbers.cfm

.

And yep, it said top 5% has 60% of the wealth.
http://www.endgame.org/primer-wealth.html

And while everything you say is true, I think people who toss around that 40% tax number aren't going to care about all the rest of the taxes. I asked my sister where she thought the FICA surplus went and she said to welfare and medicaid, as she was using medicaid and food stamps. This is the sister in Utah, not Arkansas. I thought maybe since she'd found herself on hard times, she'd have a different outlook. Nope.

Did you see this article that 45% of world's wealth was destroyed in this financial collapse? That's pretty crazy and I guess good that didn't get repeated on cable news on a daily basis.
http://www.huffingtonpost.com/2009/03/11/stephen-schwarzman-45-per_n_173747.html

I guess it is back to the fact that a nuanced answer always loses to the simple RW line. So, I think that your answer - changed to use the 42%, which is still higher, might be the right answer. It is amazing that so many people, even when benefiting from social welfare programs STILL buy the idea that they are bad.

I hadn't seen that article. The scary thing is that in reality it means that close to half of what the world thought was their wealth was never real.

That is when I go ahead and add in all the other taxes, and bring up the FICA as well. I don't think there is one right or wrong answer, it just sort of depends who you're talking to I suppose.

But in the end, it just seems that they want to believe the lies and that is the hardest part to figure out. My sister in Utah, especially, is in no way a racist so I've just got no idea why she believes the Republican line. I think it is all she hears.

In the entire extended family, all raised Catholic Union Democrats, the cousins who are now Republican are the regular church-goers, particularly the ones that to to a non-Catholic church.

:puke: :puke: :puke:

has the rich individual created any jobs. If not tax the shit out of him/her

If yes, give tax breaks to create more jobs.

He's one of the richest men on earth, and he's on record saying that his secretary pays more taxes than he does. And that's from a rich guy who doesn't mind paying taxes. Many of his contemporaries pay even less, because they use every loophole their book keepers can find.