Thursday, January 26, 2012

Many Americans are confused about taxes

We are not surprised that so-called "Democrats" on a Fox News panel would buy into class warfare tax augments.

First of all, the idea of progressive income tax tables was advocated by Theodore Roosevelt, a progressive Republican.Most of the countries of the industrial world use such a tax system for income tax.

Second, most US taxes are flat or regressive. This includes both municipal and state property and sales taxes. Income tax is one of the few progressive taxes in the US.

Alf Franken said this about class warfare.

In her book A Distant Mirror: The Calamitous Fourteenth Century, Barbara Tuchman writes about a peasant revolt in 1358 that began in the village of St. Leu and spread throughout the Oise Valley. At one estate, the serfs sacked the manor house, killed the knight, and roasted him on a spit in front of his wife and kids. Then, after ten or twelve peasants violated the lady, with the children still watching, they forced her to eat the roasted flesh of her dead husband and then killed her.

That is class warfare.

Arguing over the optimum marginal tax rate for the top one percent is not.

In addition, Democratic tax plan will probably raise the marginal tax rate for Americans making more than $250,000 per year. These folks are not small business people. According to Chron:

Those with more than 10 years experience, on the other hand, earn upwards of $105,757 per year.

Likewise, the top marginal tax rate has become too low and it is probably the main reason that the US has the fifth most unequal income distribution in the world. We have a worse income distribution than Americans had in the Guilded age prior to the Great Depression.

After world War 2, the top tax rate was 90 per cent. JFK dropped the rate to 70 per cent. Ronald Reagan dropped the top rate to 50 per cent in 1981 and then 28 per cent in 1986. This created a huge revenue problem for the Reagan administration who had to raise taxes 11 times to counter the losses. 

It was also the beginning o the era of deficit politics and big increases to the national debt. 

Almost all of the GOP candidates have a tax plan such as the Herman Cain's 9-9-9 plan or Newt Gingrich's 15 per cent flat tax. 

The Romney tax plan would eliminate taxes on interest, dividends and capital gains for taxpayers who make less than $200,000. It also calls for the elimination of the estate tax, and a reduction in the tax rate paid by corporations from 35% to 25%. He also wants to flatten the income tax table. 

Obama wants to rescind the Bush tax cuts if reelected and raise the capital gains tax to 30 per cent. This tax is now 15 per cent which is the reason Mittens paid approximately 15 percent on his 2011 return and 13.9 per cent the previous year. 

The  .001 per centers like Mittens don't work. They clip coupons and mail them in for quarterly stock dividends  that are taxed at a paltry 15 per cent. 

If you want to make the argument that changing the tax tables or US taxation system is class warfare, the GOP are masters of it. The US now has one of the lowest income tax rates of the industrial nations.

However, these wayward tax changes have greatly increased the national debt and also fractured the middle calls which has been shrinking since the era of Reaganomics. 


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