Sunday, July 31, 2011

"Raising Taxes On High Net Worth Individuals"

Liberals love to brand conservatives as voters who despise the poor and support the rich.  That's about as inaccurate as saying all Democrats are big spending liberals.  What concerns conservatives about raising taxes is that, when the government gets their hands on more money, they want to create another give away program. 

I would like to propose a compromise between the two diverse positions.  Since Bill Gates and Warren Buffett bemoan the fact that government doesn't tax them enough, let's by all means raise their tax rates.  However, let's make sure we're taxing the truly rich; Obama's proposal to raise taxes on anyone who makes more than $200,000 dollars for an individual and $250,000 for couples is ridiculous.  It simply does not take into account the cost of living variances in different parts of the country.  For example, since New York City residents pay exorbitant city, state and federal taxes someone living in New York and other high costs cities have far less net take home pay than someone with that same income in Iowa or Phoenix.  A couple making $250k in New York city is not rich! 

Instead, if we are not going to do away with the IRS and implement a VAT only tax (see my blog from yesterday), then at least raise the parameters of salaries to a more reasonable $500k per year and raise the taxes for those folks accordingly. 

It should be noted that the top 20 percent of high wage earners pay 70 percent of all taxes today and only the top 50 percent of earners pay all of the income taxes taken in by the government!  I've seen thousands of posts on message boards that scream "tax the rich!".  Those posters are more than likely, not only not paying any taxes, but are in fact, getting all of their payroll taxes back plus very generous Child Tax Credit checks which rewards "breeders".   Don't believe it?  Just google "Tax Revenue By Income Bracket".  

While raising the taxes on the truly rich, let's also move to lower the corporate tax from the current 35% to 25%.  Our corporate taxes are the highest of any major economy and is the reason why many companies are leaving the U.S.  Yes, I've heard the news on the General Electric tax story but, if one truly understands financial accounting, they would know that General Electric's business sucked badly since 2008.  Most corporations indeed do pay 35% on their revenue and it is creating conditions for corporate migration away from the U.S.  That costs jobs, folks, and we don't need to be losing any more jobs.  Keep in mind that the workers on those jobs pay taxes!  By reducing the corporate tax rates you create jobs and actually boost tax revenue!  One caveat:  I do agree with Democrats that we need to get rid of some really stupid business tax loopholes and put everyone in business on a level playing field!

Finally, you know that tax on the rich I just suggested?   Put a condition on approval of any tax hike; that condition would be that all revenue from these tax hikes go to pay down the deficit!  None of that tax money could be used to support any other program except paying off the national debt! 

As I related in my blog yesterday, if the U.S. were to downsize the IRS and simply implement a VAT only tax the government could capture all of the funds now being hidden from view by tax cheats.  It would also force tax cheaters to contribute some measure of support to government programs.  It would also make better citizens of folks so accustomed to gaming the system.

Now, get back to that 1040 and get your checkbook out.


Just Bob said...

Everyone makes choices in their life. Because someone chooses to live in NY and pay higher state and local taxes, I must pay higher federal taxes?

A Modest Scribler said...

My point Bob, is that $200,000 per indidivual is too low a threshold. Very easy for a small business to have that kind of income bracket; doesn't mean they "net" that much. Obama's plan will continue to hamper small business because they perceive him as an enemy. Also, in this economy, folks are under water on their homes...or don't have job security so it's not like you can move out of a high cost state. $500,000 is a reasonable threshold in my opinion. Finally, (and this is going to piss alot of people off) I would like to see that "other half" of America who pay no taxes, at least pay something, even if it's only 5 percent. They actually take more back from government than any other group, but currently pay nothing.

Just Bob said...

The problem is not revenue, the government will collect 2 TRILLION in taxes this year.

The problem is spending, stay focused on that and we have a chance.

Government can not and will not solve the social issues of our times by throwing money at them.
Time and again they have tried, time and again they have failed.

Get back to the basic responsibility of Federal Government and let the States and local governments deal with more issues.
Citizens have better voices at local level and can generally produce tanglable results.

Just Bob said...

The only fair and equatible tax policy will be a flat tax.

Flat income tax on Federal Level and you VAT on state and local.

Couple that with balance budget admendment on Federal level. States can not print their own money so is not necessary at State level, yet.

Eliminate all corporate taxes, those are simply the greatest political fraud of all time.

They are the root cause of inflation.

But the easiest sell for the politicians.

A Modest Scribler said...

You're preaching to the choir, Bob. You've read my other blogs so you know that. Appreciate your insight and comments.

Just Bob said...

Indeed, but it was looking like you needed a K.I.S.S.

Keep It Simple Stupid

Not saying your stupid.

It is just too easy to get lost in all the rhetoric.

Anonymous said...

Is this all it takes to publish a blog; a bunch of opinions that are void of supporting reference? Sure, 50% don't pay taxes, because they are LOW INCOME, by IRS rule.

VAT can't substitute for income tax. However, it can conjunction with.

Lower corporate tax cause "that's why they left?" One of numerous reasons, actually not the major one. For some, it's been reported that they don't pay taxes at all.

Credit where credit due, you are probably right about income vs costs of living. Of course, if you raise the income level for all, it would still bring inequality.

A Modest Scribler said...

Re, your question, "is this all it takes to publish a blog?". The answer is yes...of course if you want anyone to read it, it might help if one can put two literate sentences together....hmmm. Thanks for your comments.

Anonymous said...

JCS, you totally get it! I'm so tired of trying to explain to liberals what happens to the economy when they pursue their tax and spend big government policies! Thanks for another intelligent well-written post! jo

A Modest Scribler said...

jo, I'm getting spoiled from all this praise. I'm used to getting a poundng from the liberals; keeps me tough! LOL.

Anonymous said...

Just a question for you,....
Are we talking about a flat tax on income? What about those that have huge amounts of money in real estate, have beach houses in diferent parts of the world, and so on. Shouldent the Flat-Tax be on Net Worth, and not income?

A Modest Scribler said...

Anon, we already pay taxes on real estate; it's called property taxes. For god's sake, don't give big government another inroad to you...are you serious?...a tax on your net worth? Again, my preference is a VAT tax; you catch all the tax cheaters because they are taxed on their consumption, not what they "say" they are making. And, no, not as an addition to income tax, "instead of".