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Why the Rich Pay HALF the taxes you and I pay…

May 10, 2011

http://www.newsweek.com/2011/05/01/an-empty-offer-from-the-super-rich.html

This is a topic that continually nags at me.  You have a certain portion of our population (politically) who is constantly crying “class-warfare” because of public sector pensions, but they are always conveniently silent when it comes to the uber-wealthy paying far less in taxes that you and I do.  Not only is this unfair to the populace in general, it is a slap in the face to middle class workers who understand what is happening to them when they get less and less out of their paychecks.  Here are some key points from the Newsweek article:

“Many of the super-rich see virtually all their income as capital gains, and capital gains are taxed at a much lower rate—15 percent—than ordinary income. When Warren Buffett talks about paying a lower tax rate than his secretary, that’s because she sees most of her pay through a paycheck, while the bulk of his compensation comes in the form of capital gains and dividends. In 2006, for instance, Buffett paid 17.7 percent in taxes on the $46 million he booked that year, while his secretary lost 30 percent of her $60,000 salary to the government.”

““It’s easy to say ‘Raise taxes’ when you know you’re not going to have to pay those taxes,” Bartlett says. “What I don’t hear is ‘Let’s raise the capital-gains tax.’” Instead the focus has been on the federal tax rate paid by those with an annual income of $250,000 or more—the top 3 percent of earners. Bartlett argues that while raising taxes on the country’s richest individuals would go a long way in easing the debt crisis, it makes no sense to treat the professional making a few hundred thousand dollars a year the same as the Richie Rich set. Maybe it’s hard to muster sympathy for an executive pulling down $1 million a year. But ours is a tax system where a person in the top tax bracket (those earning more than $374,000 in 2010) pays a tax rate of 35 percent on the upper portions of his or her income (37.9 percent if you include Medicare), whereas a hedge-fund manager or mogul earning 10 or 100 times that amount pays less than half that tax rate.

“America has two tax systems. Separate and unequal,” says David Cay Johnston, a bestselling author and columnist for Tax Notes, who has spent much of the past decade exposing ways the tax system favors the wealthy.”

It is dismaying to read articles like this not just because it is true, but because to me it is just one more sign that our politicians (the majority of whom are millionaires) have written the tax laws to benefit themselves.  The middle class has no true and effective voice in the halls of Congress any longer.  Public sector unions are the middle class’s last hope and hence we are seeing a full court press going on right now to destroy unions…makes sense if you look at it via the lens of articles like this one.

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