Robert Reich, Why The Superrich Should Pay Their Bill

[Elphaba]

Robert Reich, the former secretary of labor and author of "Supercapitalism, responds to previous comments made in The Economist:

LET ME respond, first, to those who say it's unfair that they pay 40% of their incomes in taxes while the very rich pay a smaller portion. You're right to be upset. Hedge-fund and private-equity managers, for example, pay at a rate of 15%—although they're the richest of the rich. According to a study by University of Chicago professors Steven Kaplan and Joshua Rauh, more than twice as many Wall Street financiers are in the top half of 1% of earners as are CEOs. The 25 highest paid hedge fund managers are earning more than the CEOs of the largest 500 companies in the Standard and Poor's 500 combined. CEO pay is outrageous; hedge-fund and private-equity pay is way beyond outrageous. Several of these fund managers are taking home more than a billion dollars a year.

You might think that Democrats would do something about the anomaly in the tax code that treats the earnings of private-equity and hedge-fund managers as capital gains rather than ordinary income, and thereby taxes them at 15%—lower than the tax rate faced by many middle-class Americans. But Senate Democrats recently backed off a proposal to do just that. Why? It turns out that Dems are getting more campaign contributions these days from hedge-fund and private-equity partners than Republicans are getting. They don't want to bite the hands that feed.

<snip>

If the rich and super-rich don't pay their fair share of this tab, the middle class will get socked with the bill. But the middle class can't possibly pay it. America's middle class is under intense financial pressure. Median wages and benefits, adjusted for inflation, have been going nowhere for 30 years; health costs are soaring (employers are quickly shifting co-payments, deductibles, and premiums to their employees), fuel costs are out of sight, the prices of the houses occupied by the middle-class are in the doldrums.

<snip>

Robert Reich Super Rich Should Pay Bill

What do you guys think?

Elphaba

[john doe]

I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair. Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings. Taxing somebody on their earnings is counter-productive, in my view. It would be more effective to tax people on their spending.

[Alaskagain]

I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair. Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings. Taxing somebody on their earnings is counter-productive, in my view. It would be more effective to tax people on their spending.

I agree.

[FrankJL]

Reich is a neo-socialist idiot....hows that for a response.

Or would you prefer a more elaborate economic breakdown?

[Elphaba]

Reich is a neo-socialist idiot....hows that for a response.

Or would you prefer a more elaborate economic breakdown?

I knew this would bring you out of the woodwork!

Elphaba

[FrankJL]

I shall explain the short poignant post as follows..

Why day is day, night night, and time is time,

Were nothing but to waste night, day and time.

Therefore, since brevity is the soul of wit,

And tediousness the limbs and outward flourishes

[Palerider]

always been for a flat tax.......

[pam]

<div class='quotemain'>

I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair. Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings. Taxing somebody on their earnings is counter-productive, in my view. It would be more effective to tax people on their spending.

I agree.

Ditto

[Elphaba]

I shall explain the short poignant post as follows..

Why day is day, night night, and time is time,

Were nothing but to waste night, day and time.

Therefore, since brevity is the soul of wit,

And tediousness the limbs and outward flourishes

I will be brief: your noble son is mad:

Mad call I it; for, to define true madness,

What is't but to be nothing else but mad?

But let that go.

You weren't thinking of yourself when you chose that, were you Hamlet?

Elphie

[Elphaba]

I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair.

Here's the problem I have with that. Let's say the flat tax is ten percent. A family of four with an income of $30,000 is going to feel the $3,000 hit a lot harder than a family of four making $300,000 is going to feel the $30,000 hit. Obviously this is a simplistic example and there are going to be times when the $300,000 family will struggle with it as well. But the poorer family will ALWAYS feel it.

However, I have heard that flat tax proponents have some adjustment in mind for the lower incomes. Does anybody know about this?

Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

This makes sense.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings.

What about essential goods like food and clothing? I have a hard time taxing a family for these items.

Elphaba

[Palerider]

I thought it was Steve Forbes who had a better idea of a Flat Tax compared to what others offered.

[Elphaba]

I thought it was Steve Forbes who had a better idea of a Flat Tax compared to what others offered.

I did a Google search and think I found it:

"Start by scrapping the tax code. Don't fiddle with it. Junk it. Throw it out. Bury it. Replace it with a pro-growth, pro-family tax cut that lowers tax rates to 17% across the board and expands exemptions for individuals and children so that a family of four would pay no taxes on the first $36,000 of income.

Not one cent to the IRS on the first $36,000. Anything over that would be taxed at a flat, fair 17%.

The flat tax would be simple. You could fill it out on a postcard. It would be honest. It would eliminate the principal source of political corruption in Washington. It would be fair. Millions of people would be off the federal income tax rolls":

Summary of Steve Forbes' Tax Plan

Elphie

[Palerider]

I was thinking it was him.....cause I do believe his idea made more sense than what others had suggested

[Alaskagain]

I was thinking it was him.....cause I do believe his idea made more sense than what others had suggested

The simpler the better, in my opinion. It is one of my peeves that in order to fill out a government required form, most people have to hire someone else to do it for them.

A flat tax would be better than all the rules and regs we have now - but it is still based on income.

[Palerider]

<div class='quotemain'>

I was thinking it was him.....cause I do believe his idea made more sense than what others had suggested

The simpler the better, in my opinion. It is one of my peeves that in order to fill out a government required form, most people have to hire someone else to do it for them.

A flat tax would be better than all the rules and regs we have now - but it is still based on income.

anytime the gov't gets involved...hide your money......LOL!!!!

[FrankJL]

Forbes' idea is good, but not really practical.

Most people will balk at the flat tax proposals when they figure out they can't get whatever kind of deductions (home mortgage interest being the big one) they are getting now. They want to reform taxes but at the same time want to protect their own little ways of "cheating the system"... Kinda a financial version of NIBY.

[Moksha]

I thought it was Steve Forbes who had a better idea of a Flat Tax compared to what others offered.

You would probably love Utah's regressive State income tax: The rich pay a lower percentage of tax than the working poor.

Also, the yearly assessment tax on a limo is the same as an econo-box.

[john doe]

<div class='quotemain'>I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair.

Here's the problem I have with that. Let's say the flat tax is ten percent. A family of four with an income of $30,000 is going to feel the $3,000 hit a lot harder than a family of four making $300,000 is going to feel the $30,000 hit. Obviously this is a simplistic example and there are going to be times when the $300,000 family will struggle with it as well. But the poorer family will ALWAYS feel it.

However, I have heard that flat tax proponents have some adjustment in mind for the lower incomes. Does anybody know about this?

Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

This makes sense.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings.

What about essential goods like food and clothing? I have a hard time taxing a family for these items.

Elphaba

Your concerns can all be worked out. I don't believe that just because someone makes less income they shouldn't be responsible for helping fund the workings of government, even in some small way. Everyone should pay something for the privilege of living in a free country, even if it's a pittance. To misquote and twist an old phrase, freedom shouldn't be free.

[FrankJL]

You would probably love Utah's regressive State income tax: The rich pay a lower percentage of tax than the working poor.

I don't see how that is economicly or mathmaticly possilbe...please explain more?

[Elphaba]

Your concerns can all be worked out. I don't believe that just because someone makes less income they shouldn't be responsible for helping fund the workings of government, even in some small way. Everyone should pay something for the privilege of living in a free country, even if it's a pittance. To misquote and twist an old phrase, freedom shouldn't be free.

I never said they shouldn't pay anything. But I don't think the working poor should have to take a harder hit, relatively, than anyone else. That's all.

Elphaba

[FrankJL]

<div class='quotemain'>Your concerns can all be worked out. I don't believe that just because someone makes less income they shouldn't be responsible for helping fund the workings of government, even in some small way. Everyone should pay something for the privilege of living in a free country, even if it's a pittance. To misquote and twist an old phrase, freedom shouldn't be free.

I never said they shouldn't pay anything. But I don't think the working poor should have to take a harder hit, relatively, than anyone else. That's all.

Elphaba

When have they ever?

For what very little taxes the poor do pay they get it back nearly 100 fold in welfare and other state and federal entitlement programs. They even get welfare payouts (EITC is welfare) added to their taxes if they have children.

[prisonchaplain]

<div class='quotemain'>I think some version of a small base flat tax plus a national excise or sales tax with no or few exceptions would be fair.

Here's the problem I have with that. Let's say the flat tax is ten percent. A family of four with an income of $30,000 is going to feel the $3,000 hit a lot harder than a family of four making $300,000 is going to feel the $30,000 hit. Obviously this is a simplistic example and there are going to be times when the $300,000 family will struggle with it as well. But the poorer family will ALWAYS feel it.

However, I have heard that flat tax proponents have some adjustment in mind for the lower incomes. Does anybody know about this?

Rich people would pay more as a result of their larger purchases, and poor people would pay less as a result of their smaller purchases.

This makes sense.

I think that the majority of taxes should be based on the consumption of goods or services, thus encouraging conservation and savings.

What about essential goods like food and clothing? I have a hard time taxing a family for these items.

Elphaba

There are practical versions of the flat tax that would keep the personal exemption. For example, a family of four with a total income of $30,000 might only pay taxes on $10K ($20K = personal exemptions), and thus, would pay $1000 in taxes. The family bringing in $300K, would pay $28,000.

No matter what, the lower middle class is going to feel it the hardest, but do we really want to go back to a society where the rich were paying 90% of their income in taxes? You can't lift up the poor by tearing down the rich.

[Elphaba]

There are practical versions of the flat tax that would keep the personal exemption. For example, a family of four with a total income of $30,000 might only pay taxes on $10K ($20K = personal exemptions), and thus, would pay $1000 in taxes. The family bringing in $300K, would pay $28,000.

Sounds good to me!

No matter what, the lower middle class is going to feel it the hardest, but do we really want to go back to a society where the rich were paying 90% of their income in taxes?

When was this? As far as I am aware, the rich always found ways to not pay taxes.

I don't define rich as six figures. I'm not sure what defines "rich." Can anyone give me a figure?

Elphaba

[prisonchaplain]

When was this? As far as I am aware, the rich always found ways to not pay taxes.

I don't define rich as six figures. I'm not sure what defines "rich." Can anyone give me a figure?

Elphaba

As late as the 1950s the top rate was 90%, I believe. The rate stayed up into the 70s until Reagan slashed the top rates. http://www.truthandpolitics.org/top-rates.php

To be overly simplistic, "rich" = a net worth of $2.5 million and annual income of $200K or more. http://www.investmentu.com/IUEL/2007/20070607.html

[Moksha]

You would probably love Utah's regressive State income tax: The rich pay a lower percentage of tax than the working poor.

I don't see how that is economically or mathematically possible...please explain more?

Say for instance, higher income groups pay 7.4% and lower income groups pay 8%. Those who make the laws would argue that this is fair because the rich still pay more due to their higher incomes. Politically this is possible because Utah is a one party state.

Having a $500,000 dollar Italian sports car charged the same assessment as a similar year lowest end model of Subaru is politically possible due to the desirability choice Utah Jazz seating with those nice lobbyists.