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Taxing Times
Really, we aren’t doing enough to support the wealthy
© Bryan Zepp Jamieson
4/17/07
http://www.mytown.ca/zepp
As I was driving home and reflecting on how proud and privileged I am to have
the right to pay $3.40 a gallon for gas, the local NPR station was talking about
the effect of taxes on income groups here in California.
It seems that folks in the bottom 20% of wage earners average $11,000 per year,
and of that, 12% goes to state and local taxes. That would be $1,320 dollars,
which is a pretty hefty sum of money when you’re looking at bread for a $1.25 a
loaf and milk at $1.50 a gallon, which is what Guilliani thinks those lucky
ducky minimum wage earners have to pay.
The top 1%, on the other hand, average $1.6 million income. They pay 7% of that
in state and local taxes. Now, that’s a fair chunk of change, running about
$102,000 a year.
The folks at the Wall Street Journal will huff that this just goes to show how
the system favors the lucky duckies in the bottom 20% over the top 1%. Why, one
of those top wage earners is paying EIGHT TIMES as much in state and local taxes
as the lucky guys in the bottom 20%. Sure, you can say that the bottom 20% pay
more total taxes than the top 1%, but do the math: they outnumber the top 1% by
20-to-1!
But I gotta say that the fellow making $11K a year probably notices that missing
$1,320 a lot more than the guy making $1.6 million misses that $102,000. After
all, he’s still got $1,498,000 to play with, while the bottom wage earner is
left with just $9,680. And he only has to pay the same $3.40 a gallon for gas
that the poor guy pays. And even if you factor in federal taxes, the rich guy
still isn’t going to miss any meals, whereas the poor guy is, along with decent
medical care, decent housing, or the chance to influence who becomes his
representative in the next election.
Of course, some of the Republican candidates are muttering about a flat tax.
They like to talk about how simple it is, although most, of not all such
proposals will come with a bewildering array of tax writeoffs and exemptions to
ease the pain of the 20% tax. (That’s the currently popular number for federal
taxes).
Of course, it’s not really a flat tax. They want to keep their exemptions for
things like investments and stock purchases. Guys making $11,000 a year really
stand to benefit from that, you bet.
Even the relative handful of GOP types who don’t try to front-load their
proposals with exemptions that help out the groaning downtrodden rich know that
a flat tax will shift the tax burden further downward, since the lucky duckies
who make minimum wage pay hardly anything in income taxes. It’s just so UNFAIR
that someone who has $9,680 gets to keep all of it, while the poor schmuck with
$1,498,000 could lose up to a third of it to income tax if it wasn’t for tax
shelters covering investment and tax free havens in the Carribean.
You have to admit, it does explain why, every day, hundreds of people making
$1.6 million a year or more toss it in and go to work at a garment factory at
minimum wage, just so they can escape that crushing tax burden and live a happy
and carefree life in a world where milk is $1.50 a gallon and bread is $1.25 a
loaf. You can get a nice three bedroom apartment just off Central Park for about
$500 a month, too. Wouldn’t you get a minimum wage job just so you could get
away from all those cares and concerns that the upper class selflessly take on
for our behalf?
Another wrinkle is a national sales tax instead of an income tax. That would be
even FLATTER, since it’s a consumption tax. The rich man and the poor man alike
would pay the same tax on that loaf of bread, although in reality, the rich man
would probably be eating $5 loaves of bread and so paying a higher tax.
Maybe what the American rich really want is a head tax. Every man, woman and
child pays $15,000 a year to stay alive and those that can’t get turned into
slaves. Now, THAT’S fair. I bet that’s exactly what Jefferson and Madison and
all those guys had in mind!
I would love to see one of the Democratic candidates propose a flat tax. I have
long advocated one that would handily meet the Heritage Foundation’s dream that
a tax return could be filled out on a piece of paper the size of a postcard.
Of course, where I differ from libertarians and GOP greedheads is that I believe
that such a tax should remain progressive. Obviously, I’m so full of class
hatred that I don’t just believe someone who makes $1.6 million a year can pay
more taxes than someone who makes $11,000, but that he SHOULD pay more. After
all, it’s not like he lives in a vacuum; he lives in a society of laws and rules
that allowed him to amass such a privileged position, and he depends more on the
society he’s in to keep his wealth than does someone who doesn’t have any
wealth. Fairly or unfairly, he benefitted, and fairly, he should pay.
Last year, for the first time in American history, income was less than half of
production. That means that working people produced two dollars for every dollar
they got paid. (Historically, they usually produced about $1.40 for each dollar
they got paid). That even includes the days of slavery. Slaves didn’t get wages,
but they did (usually) get food and shelter, and that represented labor costs
similar to what we see today.
So: a flat tax is in order. Call it, oh, I don’t know. Thirty percent of income.
Only one deduction and that would be a personal deduction. No other deductions
what so ever. If you make $1.6 million a year, a 30% tax bite isn’t enough to
stop you from investing, or growing your business.
The one personal deduction? $50,000 per year. Each and every wage earner could
make that much in a calendar year before taxes kicked in. If you make $11,000 a
year, you pay no taxes. If you make $50,000 a year, you pay no taxes. If you
make $50,001.00 in a year, you pay thirty cents in taxes. If you make 1,600,000
a year, you pay (roughly) $475,000 in taxes. You still have well over a million
to play with.
It’s easy, it’s fair, and the extra money among average and below-average wage
earners would cause an economic boom because they would be taking the money they
aren’t being taxed and spending it on stuff like shoes and clothes and $5 loaves
of bread.
Investment income? No deduction. What for? It’s not like anyone really did
anything to earn it. But since you don’t want to destroy all incentives for
investment, you tax it at 20% instead of 30%.
Fair. Fiscally sound. And you can do a tax return on a post card.