OK, so I exaggerate, but here’s the image:
- If virtually half of Americans pay no income taxes, then it is impossible for them to “receive the gains” from any income tax reductions. And when we have a progressive tax system, it is virtually impossible for reductions in taxes to be progressive, they have to be regressive.
Of course, charts like this are particularly nauseating because the implication is that the greedy folks at the bottom appear to be taking what is not theirs – and taking it out of the mouths of some other more deserving group. - So what’s it gonna be Mr. Progressive, are US taxes progressive or not? If they are not progressive (enough) like many Progressives have argued, then you wouldn’t observe this pattern of gains from income tax changes (well, that’s not entirely true).
- It’s high time someone stands up to defend the rich. I am nowhere near the rich. Our family is in the group where the 1.9% “gain” would come from. Maybe one day we’ll be higher, maybe not. But unless you wish to spend a few paragraphs showing me how all of the wealth of the rich is ill-gotten, I refuse to take seriously the implication that there is some sort of injustice being imposed here. This is money that was taken from them in the first place, and isn’t is just so wonderfully nice of some young ideologues in DC to suggest what the right amount for them to keep is. Of course, at least this chart isn’t linking to the recent thought experiment that the rich are no happier than the rest of us and so therefore the morally appropriate tax rate on them should be 70%. But it’s a pretty short step from here to there.
So here goes, the way to get oneself uninvited from one last dinner party: I support tax cuts for the rich. So while that will make for a nice campaign slogan, I think the right ought to embrace it. And remind folks that there are as many people on the left with high incomes as the right.
I find the federal income tax to be doubly-progressive. A non-progressive tax, imho, would be a flat fee. For example, everyone pays $1000.
We could make it progressive by changing this to a percentage. For example, everyone pays 30% of their income. This way, those with higher incomes (note, not necessarily the rich) will always pay more. But everyone pays the same percentage. We could call this a flat tax, but even in this scenario high earners pay more.
In my opinion, making high earners (again, not necessarily the rich) pay an even higher percentage makes the tax system doubly-progressive.
Suppose you are rich, meaning that you are married filing jointly making $250,000. How about this: for every additional dollar you make, your tax rate goes down by ten percent? So if your federal rate is a generous 40% (generous because they do not take a Jimmy Carter 70% slice), your rate for the marginal dollar is 36%.
If you are a lawyer billing by the hour at $500, an extra week of work grosses $20,000, which means you have to pay the Feds $800 less, which is like only working for free for less time it takes for the commute from home and back. The Feds get another $7200, their rightful piece of your pie.
But, you say, what about my expenses? The rent, my secretary, the phone, and the law books for the library?
Well, since you are making too much, you cannot use these loopholes, unless you get approval from the state that you qualify. Do the worksheet on page 46 of the instructions for form 1065, and if you do qualify, complete form 1157G for Qualifying Credits for Lawyers. If you are an oil company lawyer STOP! Enter the larger of $270,000 or $300,000 on line 39. Use the Buffet tables on page 74 of the instructions for form 1040, or if you wish, the IRS will calculate your tax for you.
Don’t forget the EITC; some of us get paid to not earn much.
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