Monday, February 23, 2009

Eat the rich

The left-wing Institute for Policy Studies gives their take on tax fairness:
The good news: Under Mr. Obama's new plan to cut the deficit in half, the very richest Americans will start paying something closer to their fair tax share.

It's been a while since they've done that. As recent IRS data show, these elites are paying less in taxes – much less – than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each.

...The current top tax rate on "ordinary" work income sits at 35 percent. But dividends and capital gains from the buying and selling of most assets face only a 15 percent top rate. That's why in 2006, America's top 400 paid just 17.2 percent of their $263 million average incomes in federal tax.

Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax. One particularly striking example from billionaire investor Warren Buffett: In 2006, he paid 17.7 percent of his income in total taxes. His secretary, who made $60,000, paid 30 percent of hers.
This is simply staggering. Let's do the math here: at an effective 17.2 percent tax rate those richest 400 Americans paid an average of $45,236,000 each. That's over $18 billion for all 400 of them. And yet that's not enough in their eyes!

It really and truly helps to think of the left as using government as legalized robbery after reading such nonsense. Basically, people engage in various enterprices and earn this money -- typically by having a product or service that improves people's lives and employing lots of other people to produce it -- and then the government forces tens of millions of dollars to be handed over. If you resist you are thrown in jail.

Adding insult to injury, the money is then handed over to politicians to play with, so that these non-contributing members of society can implement their utopian schemes that typically backfire.

It would be a lot easier to stomach this if we were actually all in this together, but that is a complete illusion. As of 2006 about one-third of all tax filers didn't pay any income tax after they took their credits and deductions. That means that these people contribute little to nothing in taxes -- aside from payroll taxes that fund medicare and social security -- while voting in politicians that extract huge amounts of money from a tiny percentage of the electorate to pay for programs that the rest of the people desire.

It's simply immoral.

The only argument I have any sympathy for is that some Americans pay a higher percentage of their income in tax than Warren Buffet. However, I have a solution. We simply implement a flat tax of 25 percent on all types of income. Eliminate all deductions and allow for a standard deduction of $5,000 and it becomes regressive. Yes, this would mean higher taxes for a lot of people, but if you want lots of government you have to pay for it. We should also implement a balanced budget amendment that would require a 2/3 vote of Congress to pass a budget with a deficit.

Then we do slash and burn on the federal budget, eliminating programs and cutting benefits until the deficit is eliminated. What's left over is a budget which is quite literally fair and balanced.

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