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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Stop saying that corporations are being taxed at a 35% tax rate. The top 20% corporations pay no taxes whatever. How is that possible? The thing is there's no proof whatever that either lowering taxes on the top earning Americans (primarily earnings from investments) creates jobs in the United States. That is a Republican myth.
Why should income have anything to do with it? One person's income does not come at the expense of someone else's.
Income has increased, and the things you can purchase has decreased. Where did this additional wealth come from?
In 1965 I could buy a 19 inch color TV for about $2000 in today's dollars. In 2011 I could buy a 60 inch 3D LED television with surround sound, USB ports, wireless ethernet, and all kinds of bells and whistles.
Where did this come from?
Is wealth fixed or elastic?
if we have a variable tax rate for middle america, why can't we have a variable tax rate for people who earn a living from investments?
Now that Corporations are considered Persons, perhaps Persons should be able to get the same deductions as Corporations.
I'd support a 90% tax of whatever is left over after I've deducted:
-Rent
-Food
-Entertainment Expenses
-Transportation
-Training Expenses
-Etc...
What about a national sales tax, ie Value-added tax (VAT), which most western nations including Canada (5% VAT) and even China (15%) have implemented? This is a consumption tax on a national level which is slightly different from a retail sales tax which states collect today on RETAIL sales.
A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.
Value added taxes have been around a long time and were introduced in part because they create stronger incentives to collect than a sales tax does. Would it work here?
that does make sense.... Social Security and Medicare taxes can be left out of the IRS income though. Mortgage deduction should be for ONE home and no more.
I am currently retired after teaching elementary school for 30 years. My husband is still working- at least for a few more years. We're not what you'd call rich, but our tax rate has always been in the 30% range. I'd just like to say that I"ve never begrudged paying my fair share of taxes and neither has my husband, but tax time is always such a day of reckoning! While I was fully employed, the amount of taxes that we were expected to pay every year was just about exactly what I brought home as salary. Talk about wondering where my tax dollars went- my 10 month salary went to pay our taxes! Something really needs to be done- just wish I knew the solution!
The idea that a person can claim that they're paying a higher tax rate, since they own a corporation that pays the corporate taxes (that individuals don't) is inaccurate.
We ALL pay those taxes in income we get from investments in our 401K. Corporations are separate entities (legally persons) so no individual should be able to claim those taxes as being paid by them.
There's a lot of talk about our "high corporate tax rates", when the percent of revenue from corporate taxes (what's actually collected, rather than deducted, stashed in tax havens etc.) has been steadily declining for over a decade....
VAT is Regressive to a brutal degree. We don't have the Socialistic Saftey net that the other contries have.
That is not true at all. It is a lie and you are a liar.
You dishonestly leave non-profit corporations in that number who by definition don't pay taxes because they don't earn profits. And that's why you are a liar.
Two points:
1) One of the reasons the overall rate is lower for higher incomes is that the payroll tax cuts off at something just over $100k.
2) One of the problems with this whole conversation about the "millionaire's tax" or taxing the "super rich" is that it's a bait and switch. They say they want to tax "millionaires" or the "super rich"; but when it comes to the details they define "millionaires" or the "super rich" as incomes as low as (for example) $250k. People who make $250k/year are well-off, but they are NOT "super rich".
-apl
I don’t buy the argument that since corporations pay taxes, the recipients of their income should get a tax break. It is not logical. If I take my after tax income and spend it, say for instance I pay a professional who incurs a tax liability by accepting it (more taxable income) nobody proposes that my money moves along with a little note attached to it: “already taxed once, take a deduction for that.” Why should corporate money get this break attached to it? Especially now that corporations are deemed to be ‘people.’ Let them pay and let the recipients pay again, the same way that the recipients of my earnings ‘pay again.’
Walk down any neighborhood in Norfolk, Va., on a foggy, cool day, and you will see the heat pouring out of the chimney's of rental houses, so they pay more of their money on utilities because their facilities never get upgraded, like home owners get a write off for doing. And their rent keeps going up, and taxes are included in their rent. I know of no landlord that doesn't cover her or himself. So upgrade rental property, and document that they were actually accomplished, and you might be able to build fewer power plants.
Can someone explain why the following would not solve many of the issues?
* Lower the business taxes to keep US competitive with other countries tax rates. This should encourage business to remain in the US and also encourage them to invest in their businesses.
* Increase personal tax rates for people with high incomes. This will tax the people receiving such high bonuses and income from corporations.
* Change capital gains tax to be income based...perhaps same as personal income? This will tax the people with high incomes from investments. It will also keep the granny living off of her investments of $30,000 a year from paying a high tax rate.
* remove mortgage interest deduction on second homes. Most people can not afford second homes.
I'm with a small business and my experience is that entrepreneurs do not hire people because they have some money left over after tax. They hire because our staff cannot handle more customers coming in.
It is customer demand that creates jobs in my experience not extra after tax income.
If we have enough employees to handle the workload, businesses won't hire anyone else even if you put more money in their hands.
If you are going to include taxes on undistributed corporate taxes in the taxes of Buffet and Romney, should you not also include unrealized capital gains into their incomes to figure their actual tax rate? Birkshire Hathaway reported a PE ratio of 16.99 to one says that the tax rate on increases in capital value of the corporation is a maximum of 35% / 17 = 2.05%
to use Mr Romney as an example. The savings that he made by the lower tax rate. How much of that was re-invested into businesses that created jobs, or how many jobs did he personally create with the savings.
THE BUFFETT RULE IS NECESSARY TO BREAK THE ICE ON TAX REFORM!!!
It may not accomplish much financially, but it changes the psychology of the American taxpayer in the required direction.
Please recognized that workers pay two income taxes -- one on their 1040s and one paid as social security tax.
For the last four years I have been spending a great deal of time with WWII Vets who are a mixture of retired GM , Teamster and Steel workers in several nursing homes. I ask lots of questions about lots of issues and they are often happy to answer. In regard to taxes and manufacturing they believe that the 1% abandoned the American worker and the United States of America long ago when they started shipping jobs over seas following the all mighty dollar. They call these individuals traitors. They also wonder when did it become patriotic to avoid paying your fair share in taxes?
It was commented earlier on the show that the fact that Buffett pays a lower tax rate than is secretary is a fallacy, because that doesn't count the corporate tax rates that Buffett pays as part of his ~30% ownership stake in the company.
Everytime you ask the Supreme Court, they reaffirm corporations are people.
If Buffett is a person, and then another 30% of a person through his corporation, which must be the case if we include his portion of the corporate tax rate, then that makes him 1 and 1/3rd of a person.
It's been about 150 years since we measured people in fractions. I don't think we should start doing so again.
Try adding up the percentage of income is left after paying utilities, rent, and food, and bus fare, and lost time with your children. Must have cell phone to be with your children between jobs. So there is nothing left over for sitting down and being with your children, a movie, a bicycle, let alone a day in the park. And we have not been getting powdered milk this year in the food distribution, nor cheese, like back in the day. No dairy. So we have to keep spending a lot of money on protien. What is left to pay cable, electricity and water and gas. Nothing. And still we are sneered on by the 'posh'
I wouldn't mind paying taxes if they were used correctly and not wasted on boondoggle projects.
And we need to support small businesses - think Shark Tank - we will never have a booming economy with lots of businesses producing things people want to buy! And if they need to be replaced often (think tissues and diapers) even better.
And...let local governments tax more, federal less because we can keep track of how local taxes are spent - we can't watch Washington
Why are we so concerned with the Apple's factory issues in China? What are the conditions of the Chinese factories owned by other major corporations? Because Apple became successful by offering great products and makes money the competition will try to use negative press to promote their own profits. Secondly, if we are trying to promote free enterprise in China, is it not their system that should address these issues? And as the Chinese economy grows won't normal business growth and wages and conditions improve as a natural progression?
Why are we so concerned with the Apple's factory issues in China? What are the conditions of the Chinese factories owned by other major corporations? Because Apple became successful by offering great products and makes money the competition will try to use negative press to promote their own profits. Secondly, if we are trying to promote free enterprise in China, is it not their system that should address these issues? And as the Chinese economy grows won't normal business growth and wages and conditions improve as a natural progression?
Solution. No-one uses that word now when it comes to the federal debt. Twelve years ago with the Clinton surpluses, talk of a time when the debt would be eliminated was realistic and foreseeable. Now, the best we get is, “Primary Balance”, “Sustainable debt”, and “Reductions in the expected increase in the debt.” What our children get is more debt.
I have developed a plan to eliminate the deficit and the debt – the Progressive, Self-Adjusting Flat Tax (PSAFT). Visit www.DaveLockwoodforCongress.com for the details.
The PSAFT has two main aspects – first reset tax rates and then keep the pressure on expenditure cuts. The reset of rates takes a KISS approach – the top rate is 40% for income over $250,000. All income is treated the same regardless of whether it comes from wages, capital gains, dividends, or bonuses. A dollar is a dollar is a dollar.
The key innovation of the PSAFT is a unique escalator clause that increases tax rates if large deficits continue, and lowers rates when surpluses are achieved. I don’t know the future, but I do know human nature. If faced with the prospect of several annual 1% tax increases because our legislators don’t get their act together, those legislators will experience the greatest increase in participatory democracy the U.S. has ever seen. Taxpayers, not just the rich, will make their voices and their spending priorities heard by their elected representatives.
Fiscal responsibility is a theme that resonates – with those who want to tax the rich, those who want to balance the budget, those who want a flat tax, those who want fair taxes, those who want lower taxes, those who want to keep the pressure on Congress to reduce government expenditures, those who want a better future America for our children and grandchildren, and those who see a firm financial foundation as key to the long term strength of the nation.
Fiscal Responsibility is OUR Responsibility. Now.
At higher income have tax advantages, ie interest deductions, company car.
Folks are looking at percentage. Look at real dollars.
An hourly person interest on car loan, credit cards are not tax deductable.
A high earner will use the auto as a business expence, taking loan out to buy groceries ,yeah right. there are many creative way a higher earner can use the tax code ot thier advantage.
One of the selling part of the home loan mess, the lower income folks were trying to make they credit card debt tax deductable
I have heard so many incorrect comments on the tax code. If you are going to talk about taxes you should have someone on who is versed in taxation and not people who just have an opinion,.
Why is there a Capital Gains Tax? Why isn't capital gains treated as income, which it is? If it comes in, it's income!