There is a reason that we tax capital gains lower than income taxes … that’s because 57% of all capital gains go to the 1% (source). There is a reason that there are loopholes like the “carried interest” rule that allow wealthy hedge fund managers to be taxed at capital gains rates even though they’re managing OTHER people’s money (source). There is a reason the payroll tax is applied to only the first $106,000 of income – it doesn’t affect the wealthy. And see if you can draw a correlation to those corrupt tax loopholes with the billions that America’s wealthiest have INVESTED into the political process over the years on behalf of their favorite politicians willing to legislate those terms on their behalf.
David Cay Johnston from Reuters brings us the info HERE:
Six American families paid no federal income taxes in 2009 while making something on the order of $200 million each.
In addition to the six who paid no tax, another 110 families paid 15 percent or less in federal income taxes. That’s the same federal tax rate as a single worker who made $61,500 in 2009.
But what most people don’t understand is that because the tax system is intentionally taxing the middle class more and the rich less … middle class workers are paying a LOT more in taxes than a person making $200 million. David Cay Johnston continues:
Let’s return for a moment to the single worker who made $61,500 in 2009 and paid 15 percent of his salary in federal income taxes. The top 400 made more every three hours than he did in a year, and yet many of them paid the same or a lower tax rate, according to the data in the report.
On top of his $9,225 federal income tax, he also paid $9,409 in payroll taxes, which include Social Security and Medicare taxes. Half of the payroll tax was deducted from his check. His employer paid the other half, which was really hidden wages taxed at a 100 percent tax rate.
His total federal tax burden was 30.3 percent, exactly 50 percent more than the 20.2 percent tax burden, measured the same way, on the 400 at the top.
You can find the IRS report HERE; under law – the IRS has to report on the top 400 wealthiest families.
Former economic adviser to President Reagan – Bruce Bartlett – points out the Republican party has is very interested in raising taxes … on the poor – article HERE.
Last year, Senator Orrin Hatch of Utah, the ranking Republican on the tax-writing Senate Finance Committee, declared that taxes on the rich should not be raised until the poor are taxed. “I think many taxpayers are skeptical that the answer to our fiscal problems is for them to sacrifice more, when almost half of all households are not paying any income taxes,” Mr. Hatch said.
In April, Representative Eric Cantor of Virginia, the House majority leader, said it was “unfair” that 45 percent of people don’t pay any federal income taxes. Asked if he wanted to increase taxes on these people, he replied, “You’ve got to discuss that issue.”
In May, Richard Mourdock, the Republican Senate nominee in Indiana, likened the current split between taxpayers and nontaxpayers to the pre-Civil War division of the nation between slave and free. Consciously using Abraham Lincoln’s famous “house divided” terminology from 1858, Mr. Mourdock said, “When 47 percent are paying no income taxes — they do pay Social Security, but they are not paying income taxes — and 53 percent are carrying the load, we are a house divided.”
Economist Joseph Stiglitz says the wealthy are gaining due to the gaming of the tax code and opportunism – article HERE.
It would be one thing if the high incomes of those at the top were the result of greater contributions to society, but the Great Recession showed otherwise: even bankers who had led the global economy, as well as their own firms, to the brink of ruin, received outsize bonuses.
A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights).
Likewise, part of the wealth of those in finance comes from exploiting the poor, through predatory lending and abusive credit-card practices. Those at the top, in such cases, are enriched at the direct expense of those at the bottom.
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