According to a new report from the Institute on Taxation and Economic Policy, in nearly every state, low- and middle-income families pay a bigger share of their income in state and local taxes than wealthy families. Patricia Cohen wrote in her very detailed and comprehensive article at the New York Times: "When it comes to the taxes closest to home, the less you earn, the harder you’re hit."
According to the study, in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent.
In Bill Gate's great State of Washington, the tax system is the most regressive — where the bottom 20 percent of taxpayers pay 16.8 percent of their income in taxes, while the top 1 percent pay just 2.4 percent.
* Not to mention, when it comes to federal income tax, Bill Gate's capital gains are taxed at a lower rate than regular wages for people earning over $36,000 a year. Add to that, those wage earners also pay Social Security taxes on 100% of their earnings up to $118,500 (and 95% of all wage earners make less than this) — whereas, there is no Social Security taxes for billionaires, whose only income is usually from capital gains. And finally: billionaires pay cash for homes and other big-ticket items, so they don't have to pay annual interest on 30-year mortgages and 5-year auto loans.
So yes, the rich pay more in taxes (because they earn so much more) — but they don't usually pay more as a percentage of their incomes.
A number of states, including Kansas, have made the situation worse in recent years by cutting income taxes, the only major state revenue source typically based on ability to pay. Income tax cuts thus tend to push more of the cost of paying for schools and other public services to the middle class and poor — exactly the opposite of what is needed. (And what's with all those subsidized sports stadiums?)
Think Progress: "To pay for his failed experiment with trickle-down economics, Kansas Governor could raid the school budget."
The billionaire brothers Charles and David Koch recently presented a policy wish-list at a press conference:
1) A balanced budget (which of course would mean, cutting the safety net for working Americans — but not raising taxes on billionaires.)
2) Repealing the inheritance tax (they call it a "death tax", although, dead people don't pay taxes — "only the little people pay taxes.")
3) Allow the tax-free repatriation of trillions of dollars in U.S. profits earned overseas (made from offshoring U.S. jobs to foreign low-wage countries.)
Most American voters (from liberals to conservatives) want a fairer tax code, but neither the trolling Democrats nor the cruel Republicans will ever do anything to change it. Our tax code has been rigged for the very rich ever since the first Gilded Age.
While Obama had the White House, the Democrats controlled both the House and the Senate for two years in 2009 and 2010, but they did NOTHING to reform the tax code or to shore up Social Security. Obamacare was two little, too late — when what we really needed was something similar to a "single-payer" healthcare system. A new study has put a price tag on how much more the United States pays in health care costs because it has chosen not to adopt a single-payer system: $375 billion annually.
But ever since the Occupy Wall Street movement, on many issues that the Progressives always advocated, the Moderate / Blue Dog / Third Way Democrats have only been “talking the talk, but not walking the walk.”
Now that the GOP controls both the House and Senate, many Democrats can now pretend they care about the American working-class, and then blame the GOP for all their short-comings. And of course, we still have those 29 Dems who just voted to gut Dodd-Frank — and then there were those 6 Dems who also voted against raising the minimum wage.
As usual, the rich will get richer as the poor get poorer. Nothing will ever change, no matter who is in charge.
Obama To Propose Tax Hikes On Wealthy, Breaks For Middle Class --- "Under the plan, the capital gains tax would be raised from its current level of 23.8 percent up to 28. The plan would also strip a tax break, known as a "step-up," that allows heirs to avoid capital gains taxes on large inheritances. In addition, the plan would institute a new tax on the biggest financial institutions, basing the fee on liabilities in order to discourage risky borrowing. The administration says the fee would hit the roughly 100 banks that have assets of $50 billion or more. The president's plan would use revenues from those tax code changes to finance credits aimed at the middle class, officials said. That includes extending the earned income tax credits to families without children, which would benefit an estimated 13 million low-income workers, while also tripling the maximum tax credits for child care in low- and middle-income homes."
ReplyDeletehttp://www.huffingtonpost.com/2015/01/17/obama-sotu-taxes_n_6493144.html
* There is no way the GOP Congress would pass a law like this, so Obama and the Democrats are talking shit. This article at the Nation about "trolling Democrats" explains why:
"The Democrats are seizing on the opportunity to be progressive at a moment when it’s cheap and easy; being out of power (or in Obama’s case, term-limited) they won’t have to pay the price in campaign dollars or blowback that would come from pursuing these policies in an environment in which they could actually become law. After all, when Democrats controlled all of Congress and the presidency, it’s not like they made a move on paid sick leave or a financial transactions tax or any of a host of other ideas that would have helped out the middle class ... Now they can stoke the fire and garner the goodwill of the left, without having to deal with the downside."
http://www.thenation.com/blog/195225/perhaps-most-important-question-about-democratic-party-right-now
LA Times: "The capital gains preference is gold, pure gold."
ReplyDeleteThe capital gains preference is uncapped. The larger the gain one reports, the greater the tax break — that differential between the 23.8% top cap gains rate and the 39.6% top marginal rate is gold, pure gold.
There's another aspect that makes the capital gains preference entirely too profitable. Taxpayers can defer it indefinitely simply by deferring the sale of taxable assets [and] put off your capital gains liability for your entire life.
Then comes the biggest loophole of all, the so-called trust fund loophole. This allows capital assets to be passed on to one's heirs at their appreciated value [and] the accumulated capital gains tax liability is utterly extinguished. Hundreds of billions of dollars escape capital gains taxation each year because of the 'stepped-up' basis loophole that lets the wealthy pass appreciated assets onto [job creators, such as Paris Hilton and Kim kardashian.]
Sen. Orrin Hatch (R-Utah) claimed eliminating these all tax loopholes would hurt small businesses.
But the Treasury estimates that 99% of the revenue raised by boosting the capital gains tax rate and closing the inheritance loophole would be paid by the top 1% — and four-fifths of it would come from the richest tenth of 1%.
http://www.latimes.com/business/hiltzik/la-fi-mh-capital-gains-20150119-column.html