Saturday, October 22, 2011

Americans love the millionaire tax

68% to 27% is pretty darn popular! But is it popular enough to get timid Democrats to fight for it? Is it popular enough to keep Republicans from filibustering it? Is it popular enough to get Barack Obama to stand up and lead on this issue?

I guess we'll see, huh?


Jim Harris said...

Bill, I wish you could find some figures on what kind of taxes the rich really do pay, versus what the other tax brackets pay. Susan and I usually take the standard deduction. How often do the rich do that? Do they really have enough other kinds of deductions not to pay the same percentage of taxes as normal people?

WCG said...

Jim, probably the biggest difference is that the rich get the overwhelming majority of capital gains in America. Capital gains - and even qualified income distributions - are taxed at a maximum rate of 15%. I repeat, that's the maximum rate!*

Note that the top 1% of Americans own 42% of the financial wealth in America, while the top 5% own nearly 70%. I own stocks myself, but all of us in the bottom 80% combined own only 7% of our nation's financial wealth. (And stocks and mutual funds owned in IRAs and other pension plans don't get the advantage of capital gains rates.) So these tax rates overwhelmingly benefit the wealthy.

If they were making their money from wages, from earned income, they'd be paying a far higher rate of income tax. (Of course, they'd still get a break on payroll taxes, since high-earners stop paying into Social Security and Medicare on all earnings over $107,000.)

Well, this is usually the case. Note that hedge fund managers get a special break. Their earnings are taxed at that capital gains rate despite the fact that it's not in any way actually capital gains. That's just a flat-out giveaway to billionaires.

And there are lots of other deductions and tax loopholes, of course. Interest from municipal bonds, for example, is tax-free at the federal level. Again, the overwhelming majority of those are owned by the wealthy.

The rich do pay a lot of taxes, but that's because they have all the money. These days, they pay far less than they used to, and that's been the result of tax policies which deliberately favor the wealthy.

Corporations pay less than they used to, as well. And as you know, they're both owned and controlled by the wealthy.

As far as the exact figures, I've seen them, but I don't have time for an internet search right now. Keep in mind that these are usually rates on taxable income, and there are all sorts of ways the wealthy can keep their income from being taxable at all.

*PS. It used to be that capital gains were taxed at one-half your usual rate. That was still a giveaway to the rich, but apparently it was too fair to those who weren't immensely wealthy. So now, if you're in the 25% bracket, you pay the same 15% rate on capital gains as multi-billionaires. Nice, huh?