Are LOW Tax Rates Killing America?
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Are LOW Tax Rates Killing America?
The Republicans and Tea Party are screaming that taxes are too high and must be cut. They hate paying any taxes for anything but war and killing – more military spending is fine, but no money for schools.
There is real objective evidence that low tax rates on the wealthy actually hurt America. The tax rates today on the rich as lower than at any time in my lifetime, and I am an old guy.
IRS figures show the top 1% made an average of $8.4 million in income in 2009 and paid a 22% tax rate. I know the top rate is 35%, but almost no high income earner pays anywhere close to that rate. A fireman married to a nurse pays the 35% but even Warren Buffett, second richest man in America with a personal net worth of over $40 billion pays only a 17% income tax rate. In fact he brags about how little he and the rich pay in taxes and about the class war going on in America.
What happens when we give huge tax breaks to the rich? Do they go out and buy more cars, more shoes, food or more anything? No! They put the money to use building more wealth for themselves and their family. Do they hire more people? No! They put the money in a hedge fund that speculates in the markets and makes money on their money trading stocks, commodities, and currencies. None of this helps America. It doesn’t create jobs, it doesn’t help the consumer market and it doesn’t help support the government functions like schools, roads and yes war.
In fact the economy grows slower because the money is taken out of the economy. How much money – hundreds of billions that could help provide jobs and improve the economy.
Recent figures show the following:
"During the period 1951-63, when marginal rates were at their peak — 91 percent or 92 percent — the American economy boomed, growing at an average annual rate of 3.71 percent," he wrote in February. "The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm — just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent."
Why is this so? When tax rates on the rich are high the federal government gets more money in taxes and funds things that help the economy. They take from the rich (who hoard their wealth) and give to the rest of us by funding schools, road construction and local and state government projects through federal grants for improvements and this all means more jobs.
These jobs are both in the private sector and the public sector. All these employees pay taxes and buy good and services driving more employment and helping the economy grow.
For the past 30 years the Republicans have told us this is evil. All taxes are bad and all government is bad. We must cut government back to just fighting wars and occupying third world countries.
A recent study showed that the over $675 billion paid out in social security had a positive effect on the overall economy. Most of these people spend the money on necessities, a few put the money into hedge funds. Just kidding, no one gets enough from Social Security to speculate in the markets.
Most non-military government spending helps the economy, but greedy Republicans don’t care they get their money from the rich so they vote to help the rich.
We are all in this together and we all should pay taxes. Tens of thousands of Americans make billions and pay no federal income taxes. They pay just 15% of their earnings through capital gains tax preferences given most to the rich.
We need to raise the top income tax rates to 50% for every dollar over $150,000 in earnings. We also need to look at a tax on net wealth to help pay for the over $1 trillion in military spending each year.
The facts are clear – low tax rates are killing America.
Matthew 22:39-40
39"The second is like it, YOU SHALL LOVE YOUR NEIGHBOR AS YOURSELF.'
40" On these two commandments depend the whole Law and the Prophets."
Matthew 7:12 GOLDEN RULE -
12 “Therefore all things whatsoever ye would that men should do to you, do ye even so to them: for this is the law and the prophets.”
John 14:15 “If ye love me keep my commandments.”
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"they use the money to build more wealth" hahahah news flash! When the rich build wealth it is in the form of investing and creating business. This my friend creates jobs. Where do YOU think jobs come from? And check your IRS records again, Right after Reagan had the lowest tax rates in years more money came into the IRS than at any other time! Facts are facts! We are all willing to have healthy debate but not with rhetoric and propaganda.
FCE,
The government is currently running a huge deficit. This is caused by both too much spending and too little revenue in taxes. Cutting the tax rates further makes it worse. We currently have the lowest tax rates in modern times. Average federal taxes paid 12.6%, top 1% who made an average of $8.4 million paid just a 22% tax rate.
Those low tax rates haven’t produced what we need.
There is no logic in your position.
Thanks for reading and for your comments...
AR(like the rifle)
Here we go again. That model no longer exists in the USA. People with money do not start businesses and hire Americans. Those who do start businesses put all production overseas.
Most of the rich have their money in hedge funds that make money by trading commodities, derivatives, currencies and other non-job producing endeavors.
Low tax rates on the rich takes money out of the general economy and puts it into private investments that don’t help the economy.
One billion into the hands of Bill Gates produces more personal wealth. That same one billion would create 25,000 - $40,000 per year jobs and that would be spent in the economy. That is 25,000 loaves of bread every week, etc.
Bill doesn’t eat bread, just little children. Just kidding, but you get my point. The more money that is spread across the economy, to more people, the more we all benefit.
Thanks for reading and for your comments…
"People with money do not start businesses and hire Americans."
JC,
Last time I checked, the majority of businesses in the U.S. fell into the category of "small business" and most of them hire locally -- within their same community.
Anyway, it's nice that we can disagree without drama and name calling. Thoughtful discourse is always a pleasure.
FCE,
You are correct that most jobs are created by small business.
My focus is the obscenely wealthy – the top 1%. In fact the income and wealth gap is now so large it is a threat to the middle class.
Twenty years ago the top 1% took 10% of all US income. In 2007 the top 1% took 23% of all income. This takes valuable income out the economy that can be used to buy goods and services. Providing one man with a billion more doesn’t increase his spending.
If we take one billion in taxes to create 25,000 - $40,000/yr jobs, it means 25,000 people buying goods and services every day. The rich can afford to pay the additional taxes.
Thanks for reading and for your comments…
NOW we have something we can agree upon!
Increase taxes on the ULTRA rich. I'm not sure they pay any taxes anyway!
Something else we agree on: the middle class is getting squeezed harder and harder every year. How do I define the middle class? It's the people who work for a living and have to pay income tax. The very rich and the very poor pay no taxes. So, it's those of us in the middle that are paying taxes and well, you know, blah, blah, blah.
Maybe Huey P. Long was right! LOL
FCE,
In times past I remember the top income tax rate of yes 90%. No one actually paid this but they paid more than the average for the top 1% now - 22%.
America can no longer sipport the rich and greedy, they need to pay their own way.
Thanks for reading and for your comments...
I'm no sure where you got or get your information but it is a proven fact when taxes go up people don't spend and when they go down people open their wallets my friend.
Kennedy said "the prudence and physical responsibility calls for a tax reduction to increase revenues" and there was not a "crisis" as we are having now back in 1962. How many of the rich do you want to run out of the country. We have already lost most of our industry now. Are you happy yet? No farmers, no industry, no financial system, no textiles and no workers. They get unemployment and welfare and don't have to work.
America can no longer to run the Rich and Greedy out of the country. OBAMA, QUIT SPENDING!!!! Our government has the most debt.in the history of the world...200 trillion pledged! It's got to stop somewhere.
Here's something you're overlooking: IT'S THEIR MONEY!!!
Is it wrong to be successful?? A capitalist society depends on rich people, without them we'd all be on welfare, but where would that come from??
CB,
75% of all rich people inherited their money and they don't have businesses. They have their money in the financial markets and this creates no jobs.
Bill Gates worked for his money, but his wife and three kids are billionaires, Warren Buffett worked for his money, but his wife and four kids are billionaires. That’s two out of 11 and the 9 free loaders don’t create any jobs.
The four Wal-Mart heirs are worth $90 billion. None of them worked to get the billions and none create any jobs.
The rich don't create jobs. 80% of all new jobs are created by small business and the owners are not rich.
Rich isn’t being worth a million dollars. It is being worth $20 million, $50 million, $100 million and more. This group pays very low tax rates. Under Reagan their rates were 50% today they are 22%.
You can't have it both ways. With no tax revenue the US can't spend $1 trillion a year on the military, 1,000 foreign military bases in 100 countries, wars and occupations.
Thanks for reading and for your comments…
I think it would be safe to say that tax cuts haven't created any net jobs over the last decade.
When adjusted for inflation, median income has fallen over the last decade. Everything else has increased.
The problem with the tax cut theory is that is presupposes that the federal government is in the black.
The concept of cutting tax rates in 2001 based on projected surpluses was irresponsible due to the fact that the debt wasn't fully paid down at that point.
Deficit financed tax cuts are never a winning proposition long term. Since 1980 all tax cuts have added to the deficit. The only time in the past 30 years that the federal government took in more revenue than it paid out was under Clinton, who raised taxes.
The solution? Tax rates go back to Clinton era levels until the debt is paid off. At that point they revert to Bush levels, but only so long as the government doesn't run a deficit. Whenever outlays outpace revenue, rates automatically revert back to Clinton levels.
But that will never happen.
tt,
You are correct that taxes should go back to the levels of Clinton, but we must cut military spending that is now three times what it was under Clinton. We can't continue to support 500,000 US troops in foreign countries and two full time useless wars.
The war in Iraq costs us $3 trillion. Our national debt is $14 trillion. We must stop fighting wars in third world countries that are not an immediate threat to the USA.
Thanks for reading and for your comments...
FCEtier 22 months ago
It's been years since I followed politics but looking at the numbers, JFK set an interesting example in the early 60's. He lowered the tax rate, and tax REVENUE went UP!
It's a common situation in retail sales, as an analogy. Lower prices and sales go up.
So, lower tax rates, and tax proceeds go up. It's good for the economy!