Sunday, August 19, 2012

Rich Pays Far Less in Taxes than the Poor... a percent of their income.

Capital gains are taxed lower than regular wages and not taxed at all for Social Security & Medicare...and a greater percentage of discretionary spending by the poor is taxed, as well as their income for food, shelter, and energy.

In 1921 "realized capital gains" used to be taxed the very same as regular income and wages, when the top marginal income tax rate was once 73%.

Then the Republican Secretary of the Treasury (and banker) Andrew Mellon argued that significant tax reduction [for the rich] was necessary in order to "spur economic expansion and restore prosperity" (just like the Republicans had argued a decade ago with George W. Bush, and are again saying in 2012 after the rich "job creators" already had historically low tax rates that helped spur the Great Recession.

In 1976 the capital gains tax rate was as high as 39.9%. In 1987 the capital gains tax rate went down to 28%

President Ronald Reagan ended the oil windfall profits tax and in 1981 he reduced the maximum capital gains rate to only 20%—its lowest level since President Herbert Hoover's administration (then America had the Roaring Twenties, just before the Great Depression).

Ronald Reagan's tax cut mostly benefited the very wealthy and in 1986 President Reagan set tax rates on capital gains to the same level as the rates on ordinary income, like salaries and wages, with both topping out at 28 percent.

President Clinton kept the top capital gains tax rate at 28% until 1997, when he agreed to lower that tax rate to 20%. He later admitted on national TV in 2012 that he now regrets lowering the capital gains tax rate.

In 2003 President Bush lowered the capital gains tax rate even further, to 15% (where it now stands today) while starting two un-funded wars without raises taxes - the first time ever in U.S. history). (Historical Capital gains tax rates)

In 2012 President Obama suggested the "Warren Rule", which would raise the top tax rate to 30% for those earning over $1 million a year, which is STILL LOWER than the current top marginal rate of 35% for regular income and wages.

Starting next year, Mitt Romney and Paul Ryan would prefer that capital gains should not be taxed at all! Last year Mitt Romney earned $20 million in capital gains (not including all his unreported foreign investments); and Paul Ryan earned $50,000 in capital gains (and paid a penalty for dodging taxes).

For 2011 Paul Ryan paid a tax rate of 20% on his gross income, while Mitt Romney's estimated 2011 tax rate is only 15% (It was only 13.9% in 2010).

By comparison, middle-class wage earners (such as union workers in the public and private sectors) who earn $50,000 a year have a 25% tax rate. Meanwhile, the Social Security Administration reports that 50% of ALL Americans now only earn less than $26,500 a year.

Of the $5 trillion in U.S. wages for FY2010, $1 trillion in personal incomes for the top 1% was NOT TAXED AT ALL for Social Security and Medicare, and most of their earnings were taxed at only 15% for capital gains.

Let's put this in true perspective: As reported by the business channel CNBC, according to the Bureau of Labor Statistics (listed further below) the top 15 highest paid jobs (on average) doesn't even rank in the top marginal income tax bracket of 35% -- and 97% of "real" small business owners pay themselves a salary of LESS than $250,000 a year.

Most people in the very top marginal income bracket are people like movie stars and professional athletes -- and the CEOs of large corporations, big banks, and hedge fund mangers, those whose principle income is from capital gains, especially the richest of the rich, the billionaires on the Fortune 400 list.

The Top 15 Highest Paid Jobs (not including capital gains,  just regular wages)
  1. Doctors and Surgeons - Average annual salary: $168,650-$234,950 - Current employment: 618,000 plus - Anesthesiologists are the highest paid workers of 2011 at $234,950.
  2. Orthodontists and Dentists - Average annual salary: $161,750-$204,670 -Current employment: 101,400
  3. CEOs - Average annual BASE salary: $176,550 Current employment: 267,370 (doesn't include stock options,
    which can be in the millions of dollars, and is taxed as capital gains at 15%)
  4. Petroleum Engineers - Average annual salary: $138,980 - Current employment: 30,880
  5. Lawyers - Average annual salary: $130,490 - Current employment: 570,950. The top three highest paying industries for lawyers are petroleum and coal at around $215,760 per year.
  6. Architectural and Engineering Managers - Average annual salary: $129,350 - Current employment: 184,530
  7. Natural Science Managers - Average annual salary: $128,230 - Current employment: 47,510
  8. Marketing Managers - Average annual salary: $126,190 - Current employment: 168,410
  9. Computer and Information Systems Managers - Average annual salary: $125,660 - Current employment: 300,830
  10. Industrial-Organizational Psychologists - Average annual salary: $124,160 - Current employment: 1,230
  11. Financial Manager - Average annual salary: $120,450 - Current employment: 477,690
  12. Airline Pilots, Copilots and Flight Engineers - Average annual salary: $118,070 - Current employment: 68,350
  13. Sales Managers - Average annual salary: $116,860 - Current employment: 328,230
  14. Air Traffic Controller - Average annual salary: $114,460 - Current employment: 23,580
  15. Pharmacist Average Salary: $112,160 - Current Employment: 272,320

Two earlier Congressional Budget Office studies in 2006 and 2002 showed that capital gains revenues fluctuate wildly without regard to the tax rate or who is president,

The CBO concluded in the 2006 study that about half of the 2004 surge in capital gains realizations remained unexplained. And the CBO concluded in the 2002 study that "the relationship of realizations and receipts to gains tax rates is neither predictable or

In other words, no matter what the tax rate is on capital gains, people are still going to do whatever they can to make money, and no matter what the tax rate is, it doesn't have an affect on GNP. The middle-class thrived and the rich got rich in the 1950's when taxes were once very high on individuals and corporations.

So we should tax capital gains as REGULAR WAGES, close the deficit gap, and stop the Republican strategy of "STARVE THE BEAST".

We should also remove the $110,000 CAP on wages for Social Security taxes and tax capital gains as "regular wages" and tax them for Social Security and Medicare like we do for "regular wages".

Mitt Romney was "a pioneer of outsourcing" when President Obama was still in school. Romney either laid off people and rehired them back at half their previous wages, or sent the better paying jobs to places like China.

Now Romney is blaming Obama for all the low-paying jobs at Staples and Dominos pizza, or those low-paying jobs provided by our 2nd and 3rd largest employers (Wal-Mart and McDonalds), corporations that usually provide part-time jobs averaging $8 an hour and offer no healthcare benefits or pension plans.

The Republicans want to starve government revenues by further reducing taxes on the top 1% and forcing cuts in programs like Social Security and Medicare...and keep capital gains from ever being taxed for Social Security and Medicare.

Tell me, just exactly when in U.S. history did America's super-rich ever make their "shared sacrifice"? They paid lower tax rates, dodged the taxes they did owe, and the dodged the military draft that protected their financial assets.

* For more details, GOOGLE:

  • Bud Meyers SWAG investments
  • Bud Meyers tax evasion
  • Bud Meyers corporate taxes
  • Bud Meyers capital gains
  • Bud Meyers Mitt Romney
  • Bud Meyers taxes

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