A Call for Fairness in the Tax Code
http://thedianerehmshow.org/shows/2012-01-30/call-fairness-tax-code
Last week in his State of the Union address President Obama called for tax reform to ensure fair play. He proposed what he called a Buffett Rule: a minimum federal income tax of 30% for people making over $1 million. Republicans say he’s pushing class warfare and stifling economic growth in a period of weak growth. GOP presidential hopeful Mitt Romney is facing criticism for both how he made his enormous fortune and for his seemingly low tax rate, but, as many analysts point out, most households pay at an even lower rate. Please join us to discuss the tax rates and he economy.
Guests
Alice Rivlin
senior fellow, Brookings Institution, vice chair, Board of Governors, Federal Reserve System (1996-99); director, White House Office of Management and Budget (1994-96); and founding director, Congressional Budget Office (1975-83).
Stephen Moore
member of the Wall Street Journal's editorial board.
Jared Bernstein
senior fellow, Center on Budget and Policy Priorities; former chief economist and economic policy adviser for Vice President Biden.
David Leonhardt
Washington bureau chief, The New York Times.
Comments
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We need a flat tax.
True, everyone needs to have a forced interest in the joke of federal government excesses for any tax code fairness agenda to be called fair, a flat tax would see too it.
I assume D. Wasserman is referring to the excesses of "War on terrorism" and govmint deregulation that directly lead to financial crisis.
What is certain is corporate tax rates should be lowered further. Corporations need certainty before they will begin hiring more. Their tax rates are highest in world. How can they compete globally? The purpose of our government is to help ensure their profits so more will trickle on down & economy and employment improves for all.
And Corporations are philanthropic. Surely they know what’s best for Americans.
Less revenue- less tax. Let markets rule. That’s what capitalism and Free Market and American Way is all about. There will always be winners and losers. Let the market sort it out.
Drew Kelly wrote that, "What is certain is corporate tax rates should be lowered further. Corporations need certainty before they will begin hiring more."
While it is true that uncertainty can discourage hiring, it's not uncertainty about taxes that is the problem. It's uncertainty about demand for the products or services a business offers. Businesses want to be certain that hiring will positively impact the bottom line.
If a business thinks it can hire an employee profitably (that is, the additional cost of the employee is less than the additional revenue that employee will generate), it will hire the employee. No business will deliberately seek lower profits because those profits will be taxed ... even if the business is uncertain what the exact tax rate will be. (Would you turn down a pay raise because you weren't sure at what rate the additional income would be taxed?)
As a single person who rents my apartment, I’ve always had to take the “standard deduction”. I make around $50K so I’ve figured that I pay an income tax rate of about 23% (applying the marginal rates for the first 3 tax brackets). It really irritates me to hear about people who pay no taxes or much less than me because they have a lot of deductions. Particularly the deduction for mortgage interest – tell me please, why should I be subsidizing somebody’s house payment? Why don’t I have a deduction for my rent?
Ever since Diane had Larwrence Lessig on the show, I've been very intrigued with the idea of consumption/expenditure taxes. His idea of a 2 year phase in causing a flood of spending to avoid the upcoming taxes would makes sense to me to jump start the economy. Any chance the panel could comment on its real viability? Would something like this help to curtail the massive spendings of the Super PACs if donors are getting hit on the back end?
For starters:
Carried interest and other means of characterizing compensation for services as capital gains should be eliminated.
The lower capital gains rates should be limited to the first $100,000 of capital gains.
Social security and medicare taxes paid by individuals should be allowed as CREDITS for determining income tax. This would preserve the separate income stream for these programs while eliminating the unfairness inherent in apply this tax mainly on lower income persons.
The mortgage interest deduction should be limited to mortgages not larger than some value such as 200% of the median home value in the state.
Maybe the panel can discuss this question:
If a robot is taking my job, why isn't it paying my taxes?
The current tax code is outdated. it belongs to the last century.
After 9/11 the government (administration) disbursed $1 billion to the heirs of the roughly 3000 victims. The distribution was made not by dividing the total amount by the number of the victims BUT IN PROPORTION TO HIS/HER EXPECTED INCOME OVER THEIR LIFETIME!!. It seems only fair to me that when the government collects from the people it should do it the same way!
We have progressive taxation not because we want to "steal" money from those that make a lot, but simply because the benefits we receive as citizens from the government are generally conferred in proportion to our wealth rather than income (e.g. our soldiers put their life in danger to protect the properties, of Bill Gates, Warren Buffet and Wall St. magnates etc. as well as a person that makes 50k a year; If each pays the same percentage of their income, say 10%, the little guy loses big because he pays 5k to insure essentially nothing; Warren Buffet with taxable income of 10M will pay 1M to insure 50 billion! he is kind enough to note this thing but others are not so).
A private entity (an insurance company) that would provide a similar services would likely collect fees in proportion to property than income. Anyone who lives in a condominium knows that he pays fees in proportion to his apartment's area and not to his income. By the same token, these services continue to be provided after the owner passes away. It is then only fair that the heirs do pay for these services, hence the estate tax.
directed to Drew Kelly:
That only works until you are among the losers. Then what?
FairTaxMan
The problem with your solution is your 401K and retirement savings are going to be gone before you ever see them, and do you tax wealth yearly? This is double, triple, quadruple... taxation. You should not be eternally taxed on what you save or your incentized to not save. That would do nothing but turn us into even more of a socialist state as people will need even more from an already bloated government as they have not saved for their retirement.
Fairness implies equality. Expecting one segment of society to pay a different rate from another is not equal or fair. The way fairness is being portrayed today it is more closely related to retaliation than equality. People have an emotional need to retaliate against those who have been successful as the cause for their own lack of success.
The simple fact that we accept that income taxes are fair shows a distinct lack of understanding of both America and fairness.
Please discuss how the 15% tax on capital gains came to be. I know that under President Clinton those taxes on money making money were reduced from 28% to 20%. Then reduced again under President Bush from 20% to 15%. Please cover the history of these reductions. Our Representatives who voted for those reductions and how they personally may have benefitted based on their own investments.
I also find it interesting that the President has raised the tax bar from 250k to 1 mil.
Warren Buffet said it best when he said "We [Americans] can rise to any challenge but not if people feel we're in a plutocracy. We have to get serious about shared sacrifice."
Why are conservatives so afraid of this approach, which Buffet, a billionaire, suggests? What is wrong with shared sacrifice? Our leaders, including conservative ones, claim we can do anything as a nation as long as we come together and focus on the problems at hand. Let's ALL share and sacrifice in solving the problems of the economy.
Many of the super wealthy, including politicians, built or increased their wealth thanks to a set of US tax rules rigged to favor those with earnings from capital, ie capital gains, which is much lower taxed than ordinary income. That's simply wrong, in my opinion.
Jeff, Bethesda MD
I think when speaking of taxes, we need to use the methods many stores now use on their register receipts. "You have saved $XX" and use Color names like they did for Homeland Security. Blue Taxes would be payroll tax. Red Tax would be capitol gains. Yellow Taxes would be exemptions before taxes. People would understand much better what the issues are. Romney paid no blue taxes. Red taxes were blah Blah, and He saved $xxx on the following exemptions. It would be easy to show a colored diagram and get these issues across to the votors.
Can we please loose the word "fairness". I suggest we replace it with "effective". In today's economy with high end pay, and low end job availabilty being what it is, the wealthy just need to pay more. What I want is a tax rate that doesn't require that I live in a gated community with guards.
The argument that those who argue against these tax increases are job creators will stop creating jobs..which we know is an argument without facts to back that often repeated claim up.
The other argument I have been hearing is that those who collect huge profits off of capital gains have all ready paid a tax based on the corporate taxes that they have all ready paid. Not sure that I have the language correct but hope you get the picture.
If a corp. is a person legally then they should pay tax's just like a person.
What does that have to do with the profits if I pay someone to work on my house I first pay tax's on my income.
Why are they different ?
Can we please loose the word "fairness". I suggest we replace it with "effective". In today's economy with high end pay, and low end job availabilty being what it is, the wealthy just need to pay more. What I want is a tax rate that doesn't require that I live in a gated community with gua...
I always get a little nervous when someone says we need to do what's "fair". Fairness is relative to the persons idea of "fairness" and can change with any political wind. Also haven't millionaires who are receiving income from investments already paid an income tax upon first receiving those funds and then investing them?
I have just retired and I do receive a pension. I have a substantial 403B . Am I correct in my understanding that when I withdraw from my 403B IRA it will be taxed as regular income and NOT the lower rate of 15% If that is true why are my investments being treat differently?????
We all pay multiple layers of tax. Our income and investment earnings are used to pay property and sales taxes as well as fees.
Flat tax, flat tax, flat tax. Income tax is not needed in this country to begin with. If we didn't spend 1.2 billion per week on intelligence gathering and another huge amount empire building outside this country we would never need a personal or employee income tax.
when it comes to the impact of tax increases you have to have a world view. If you raise taxes where does that place the US in comparison to other countries that we are competing with?
Cut Government Spending First!
Also, explain that tax and estate lawyer fees, as well as accounting fees are tax deductible. These are the 'job creators' main employees, and is all deductible. Call them paid for by 'patriotic americans.' Plus all their friends and families are in 'marketing' or printing and advertising, which they get a write-off for as well. We are being 'marketed to death' while they insure that their 'daughters' get a pay check for their 'consulting services.'
Having been up close to the medicare/medicaid system over the last four years dealing with aging and ailing parents and being in many nursing homes etc.... I can see how government spending really needs to be examined and reduced....but How in the hell..o can Republicans expect to improve the economy without raising revenue too?
Their persistent resistance to raising revenue by demanding that those on the top of the ladder pay their fair share reinforces that they are only interested in protecting the 1% which more than likely includes their investments too.
We could keep low taxes if we had a separate war tax. Everyone should pay it and it should be clearly listed. This tax would be outside of regular taxes.