Tax policy, by nature, redistributes wealth
The following is a counterpoint piece.
By Lisa Talley
There’s a lot of talk these days about our progressive individual income tax rate structure and how it relates to the redistribution of wealth. Let’s get some facts straight.
First of all, the idea that federal income tax rates go up as your income increases have been present since inception. Our current highest margin rate of 35 percent is one of lowest we’re ever had. Marginal rates have been as high as 90 percent during World War II and were 70 percent back in the 1980s. Marginal rate means that only your income above a certain level is taxed at the higher rate. Each taxpayer gets the benefit of lower rates at each bracket of income.
The income tax is higher for people with more income to partially offset the regressive nature of many other taxes, such as payroll taxes, sales and gas taxes, state and local income taxes and many hidden excise taxes. Our federal government currently uses payroll taxes paid on gross wages to cover general government spending. Therefore, discussing the progressive nature of income taxes in isolation from the complete tax burden as a socialist redistribution of wealth is inaccurate.
The federal government offers both direct spending on segments of society and tax relief through tax expenditures to other segments. Whether you receive government assistance or enjoy tax breaks on your income, you are participating in our system of social rewards and punishments.
According to the 2006 report by the Joint Committee on Taxation, our current federal income tax system offers breaks that favor those who can afford the following expenditures (in order of cost to our government): contributions to retirement plans; tax-free health care benefits; mortgage-interest deductions on two residences; lower rates on capital gains; charitable contributions; children under 17; earned-income credit; tax-free proceeds of life insurance and tax-free build-up of investment income inside insurance contracts; state and local income and property taxes; tax-free proceeds of gain on home sales; and many more.
So if you are experiencing the tax benefit of any of these tax shelters, you are getting the benefit of redistribution of wealth from someone whose wages are taxed in full without the benefit of an offset for these items. If we are going to discuss socialism, let’s be sure everyone affected by our social policies is included in the discussion.
The writer is a Certified Public Accountant who lives in Greensboro.
Comments (19)
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All I know right this very moment is that there are 53,722,162 racists in America and 59,852,995 socialists.
Posted on November 5, 2008 3:30 AM
...at least....
Posted on November 5, 2008 3:31 AM
Exactly why we need a different method to collect federal revenue.
Go to www.fairtax.org
Posted on November 5, 2008 5:46 AM
"Each taxpayer gets the benefit of lower rates at each bracket of income."
... a point missed by most.
==
" If we are going to discuss socialism, let’s be sure everyone affected by our social policies is included in the discussion."
WHAT .. you want reasoned and informed discussion? Jeeze what a concept.
Posted on November 5, 2008 6:35 AM
Lisa, it sounds like you, along with many other sheeple, believe the federal government has the right to confiscate property, and those on the receiving end of these 'benefits' you call 'tax breaks' should shut up and thank God the government has saw fit to toss them a few crumbs via the convoluted tax code that require a 'Certified Public Accountant' ("certified" by the government of course) to sift through the government morass known as the tax code and fill out the required 3 tons of paperwork that is necessary for the drone to receive his 'benefit'. (for a hefty fee, of course)
So the government stealing a bigger portion of someone else's earnings is a form of 'redistribution' to those who see a smaller portion of their property confiscated...
Gimme a bruckin' fake.
Praise be to Allah.
Posted on November 5, 2008 6:44 AM
rahrah, you said"All I know right this very moment is that there are 53,722,162 racists in America"
I would like to know how you obtained this fact?
Posted on November 5, 2008 10:00 AM
Obviously, ghost, at 3:30 am, that was the number of confirmed people who had voted for John McCain...and obviously they all hate black people because, I mean, why else wouldn't you have voted for Barack Obama.
Obviously.
Posted on November 5, 2008 11:51 AM
RahRah, those who voted for McCain think the last 8 years have just peachy keen I suppose. And they love Sarah, she is just one of us and so perky...lol
Posted on November 5, 2008 12:17 PM
Now that the subject of race was brought up on this thread, I would like to relate an incidence that happened to me yesterday while I was working at one of the voting precincts.
My job was to escort people to the voting machines and demonstrate the process to them. One elderly white woman I was helping, said to me in a voice I'm sure others around us could hear, and I quote, "I ain't never done this before, so I want you to push the president button, but not the one for the black man."
I did as she asked, but it set me back fifty years.
Posted on November 5, 2008 12:55 PM
I ain't never done...that should tell a lot. I am sure there were blacks who had never voted before who chose Obama because he is black. As I said before, hopefully (and it came to pass) these folks will wash each other out.
There is celebration in our house today, first time in 8 years, we had two winners, Obama and Hagan...too bad about McCrory, it was just a bad year to be a Republican.
Posted on November 5, 2008 1:09 PM
The Fair Tax ain't. It's a sneaky way for massive redistribution of wealth the top 1%.
Posted on November 5, 2008 1:48 PM
Carol...Perky??? What a sexist comment from one of the "chosen ones!" Maybe a little eyeglass envy?
Enjoy things at your house...while you have it. As you favor redistribution of wealth so much, I am sending two homeless people your way to share your spare bedroom. Throw in a couple of bucks, also, while you're at it.
Bet you "ain't never done that." What a class warfare comment. Maybe you should learn that being uneducated is not the same thing as being stupid.
Posted on November 5, 2008 3:01 PM
Comrade Cutawad,
We're getting a group together to sing Kumbaya later to celebrate the birth of our glorious socialist paradise. Can we count you in?
Posted on November 5, 2008 3:24 PM
Rufus, can I get a time slot in the group sing to recite an Ode to Marx?
Posted on November 5, 2008 4:24 PM
RahRah,
Groucho or Harpo (Most of us Freedonians are partial to Groucho)?
Posted on November 5, 2008 4:38 PM
all 4 of them.
Posted on November 5, 2008 6:16 PM
cutawad:
Your response to Carol illustrates “the problem”
You treat the “redistribution of wealth” as … “sending two homeless people your way ..” This overlooks the real “redistribution of wealth” which is evidenced by 1) corrupt or crony politicians redistributing to each other; 2) corrupt or crony business men redistributing to each other; 3) all combinations of 1) and 2).
Congress appropriates Billions to the Oil Companies .. and that is .. well you tell me.
Congress appropriates $100,000 deductions to businesses that want to drive SUV’s, consuming Oil Company Products .. and that is .. well you tell me.
Congress gives to private legal-estas the natural resources of the country (Land, Timber, Oil, Minerals, Water .. a near infinite list) .. and that is .. well you tell me.
Congress reduces the upper tax rate from 70% (or 90% - there for decades as the economy rolled along just fine thank you) – to an arbitrary tax rate around 35% .. and there is no real change in the economy EXCEPT the National Debt quadruples in 10 years from $1.1 Trillion (1982) to $4.4 Trillion (1992) .. and that is .. well you tell me.
Congress rolls away regulation after regulation in an attempt to outstrip the greed on wall street until the house of cards collapses, taking from almost every citizen decades of savings .. and that is .. well you tell me.
Congress then appropriates Trillions to the Finance Industries .. and that is .. well you tell me.
Adding insult to injury, Congress plans to appropriate more to the Auto Industries .. "keeping them competative" ... and that is .. well you tell me.
The National Debt is now in excess of $10 Trillion and they just predicted another $1.4 T will be needed just to get through this fiscal year .. and that is .. well you tell me.
Note the word “Congress”. That is Democrats, Republicans, and a few Independents who authorize the bills. I coulda and shoulda included the word “Administrations” who sign these bills, as well as the word “Courts” who more often than not, back up the actions of Congress.
Methinks you may want to adjust your definition of the “redistribution of wealth” … but you won’t ‘cause you know best! Go You!
Posted on November 5, 2008 7:07 PM
JDR-looks like you got the last word. I am only here to say "Well done" and Thank you". I have read your posts on other issues, I like the way you think....
Posted on November 6, 2008 10:49 AM
James D-A wonderful recitation of the already known by one and all. I, however, fit none of the categories you mentioned. I am a person who worked, planned, saved, invested, etc., to prepare for retirement. Now BHO wants to do all kinds of things to the pot I have accumulated for me and mine. Frankly, not withstanding your glorious wordsmithing, I don't believe neither he nor you have any right to any part of it.
Obviously, my comments re: redistribution were the extreme exaggeration but people like you are most eager to grab them as a cast in stone position by folks like me.
I'm neither rich nor plan to be at my age. However, I hope my kids will be rich beyond all imagination but doubt the policies being outlined will allow it to happen unless they turn into rock or movie stars.
Do I recall from years past that you are an engineer? If so, why didn't you mention that much engineering employment is the result of government regulation requiring the application of your seal to plans and documents? Well, you tell me.
If you aren't an engineer, I am getting on in years and I apologize.
Posted on November 6, 2008 2:48 PM