Lets talk numbers ... from what I see, current federal income tax rates are (rounded):
| Marginal% | On Amounts |
| 10% | <$10k |
| 15% | $10k-$35k |
| 25% | $35k-$90k |
| 28% | $90k-$180k |
| 33% | $180k-$400k |
| 40% | >$400k |
Would you folks consider that Moderate or liberal?
C+ taxes could be the inverse of the above. Starting at 40% and dropping to 10%
C- taxes are flat, perhaps 20%?
L+ taxes need to be extreme, perhaps 0%, 20%, 40%, 60%, 80%, 95%?
I would note that the payroll tax (a federal tax used to fund Social Security and Medicare) is a regressive tax that hits the poor/lower middle class MUCH harder than the income tax. It is 6.2% of total wages up to $106,800 for Social Security plus 1.45% of total wages with no cap for Medicare. This means if you make hundreds of millions of dollars in earned wages, you'll only pay the Social Security payroll tax on the first $106,800 of your wages, and not pay any Social Security payroll tax on wages above that, so it will be a fraction of 1% for you, but you'll still pay 1.45% of total wages towards Medicare. In other words the payroll tax functions as a flat tax for people making below $106,800 but above that it is a very REGRESSIVE tax where the rich pay a much LOWER percentage of their income than the poor. Also, the payroll tax only applies to wages, i.e. income earned from doing work and paid in the form of a salary. So it does not apply to unearned income such as interest, dividends, capital gains from the stock market, etc., which don't get taxed at all by it. Since those forms of income (unearned) are a much higher proportion of income for most wealthy people than most poor people, the payroll tax is actually EXTREMELY regressive.
As for the taxes that ARE charged on unearned income such as interest, dividends, and capital gains, those are at a much lower rate than the federal income tax (and if you also take into account state income taxes, which generally just go after earned wages it becomes even worse). There are also estate and gift taxes that pertain to those types of unearned income and are at different rates than the capital gains tax... but generally speaking ALL unearned income is taxed at a much lower rate than income earned as wages from doing work. However, there are ways to get compensation from a job that takes advantage of this tax structure in order to get a lower tax rate, by instead of getting regular wages, getting stuff like stock options or whatnot, and executive compensation packages for CEOs and other top executives tend to be structured so only a small percentage of the compensation actually gets classified by the IRS as earned wages that are subject to the maximum tax rate of around 40%, and the vast majority of executive compensation is structured as unearned income so that it gets taxed at the lower 14% rate for capital gains.
That's not to say that ALL rich people are paying around 14%. People on Wall Street who are super-rich tend to pay around 14%. But famous Hollywood movie stars, directors, etc. tend to pay around the 40% rate that's much much higher. The rich people in Hollywood generally actually DO pay their fair share of taxes, unlike the folks on Wall Street, because in the movie/TV industry, actors and other such people are paid in the form of regular wages, just often in high amounts, plus there is a high rate of unionization with groups like the Screen Actors Guild, Writer's Guild of America, etc. This is because Hollywood is quite liberal in its culture and believes in paying its taxes, generally speaking. There are some conservatives in Hollywood who are upset about having to pay OVER half their income in taxes (because the 40% or so is just the federal income tax, and if you add on various other taxes people pay such as state and local taxes, property taxes, sales taxes, etc., especially in a place like California, many rich people there pay over half their income in total taxes to all levels of government combined).
Oh yeah, sales taxes... where I live in upstate New York the sales tax is 8% on everything. So that's a flat tax on all purchases. A fairly conservative idea which hits both rich and poor with the same exact percentage. But at least sales taxes aren't regressive, like the system of earned vs. unearned taxes and the payroll tax vs. the income tax.
I mean, right now the income tax rate is about 10% in the lowest tax bracket and if you add on a payroll tax of about 7 and a half percent, that's around 17 and a half percent for poor people. But for the super-rich on Wall Street who make the bulk of their money in stuff taxed at the capital gains rate, they pay around 14 percent... which is LOWER. And the middle class, of course, gets hit the hardest, since they can't take advantage of tax avoidance schemes like the wealthy can. My own parents, for instance, have paid massive amounts of their income in taxes over the years because they are middle class and don't have access to the various tax-avoidance schemes.
There are even ways the rich can pay 0% tax on things... many of them. Keeping the money offshore and outside U.S. jurisdiction is one technique (Cayman Island and Swiss bank accounts for instance). Another is municipal bonds... unearned income on municipal bonds is completely tax-free. You can also set up your own tax-exempt foundation and use it for tax avoidance (note how almost all super-wealthy people have their own foundations, this massively decreases their already-low percentagewise tax burdens). There are countless ways to do this. So many of the super-rich pay even LESS than 14% in taxes, and it's totally legal, of course.
All in all, the progressive taxation of the federal income tax is completely undermined by the fact that it only applies that way to a specific type of earned income, namely wages, and the overall tax system is structured regressively. As for the small percentage of rich folk who actually do pay their taxes, like out in Hollywood, well this leads some of them to eschew liberalism and become born-again conservatives... that's what happened to Ronald Reagan, former Hollywood actor. Luckily for American liberals, there ARE still plenty of rich folks in places like Hollywood who are liberal and donate to liberal political campaigns... but alas, this gives them an outsized voice in the political culture, so Democratic politicians can sometimes end up being more concerned about things like people downloading pirated movies off BitTorrent and hurting the incomes of their biggest contributors than things that actually concern the liberal base of the Democratic Party, such as the current social/political/economic structure where there is high income inequality and the rich people tend to dominate things (and dominate both major political parties, just look at the speaking fees that Bill Clinton amassed from speaking to gatherings of rich folk after leaving office and how that got the Clintons to be quite wealthy themselves). I personally witnessed a part of this, as when I graduated college, my college commencement speaker was Bill Clinton, who got paid a million dollars by the university I went to for giving that commencement address. Back when I graduated high school, I had to give the commencement address myself, and nobody paid me any million dollars, I didn't get a penny. Point is, that's an example of income inequality, which is tied to the regressive tax structure, because rich people pay for the campaigns of the candidates who get elected to office, who write the tax laws, and make the tax laws regressive. So income inequality and the tax structure are also closely tied to campaign finance reform... the current system of income inequality relies on a tax structure full of loopholes and regressive ways for rich people to avoid taxes, and a legal structure around campaign finance, post-Citizens United, that allows unlimited spending by rich people on political campaigns.
There was only a very brief period when the McCain-Feingold campaign finance reform was in effect and Citizens United hadn't happened, but even then, there were loads of loopholes not addressed by the campaign finance law that allowed people to still spend unlimited amounts of money on campaigns, such as "bundling" of contributions, 501(c)3s and 501(c)4s, being able to donate the maximum amount to large numbers of candidates, being able to fund "grassroots" organizing efforts like the various groups funded by people like the Koch brothers on the right or George Soros on the left, etc. And those groups that could take unlimited contributions, even with campaign finance laws in effect, they could still run "issue ads" that didn't concern any candidates, and they could run get-out-the-vote efforts, voter registration drives, direct mail, calling people on the phone with fake surveys to find out who is a reliable voter on your side, robocalls, and other organizing activities. I have done some political volunteering myself, and mostly found myself being assigned to call people on the phone to do those fake surveys to see who is a reliable voter for my side. Those surveys weren't exactly scientific, they had some politically biased language in them, plus people could see who was calling them on the caller ID... the caller ID would say "Democratic Party Headquarters" making it pretty obvious who was calling. I did the most political volunteering back around 2004, I haven't been very politically active in recent years... and the local political parties and such are quite disorganized and don't know how to run proper campaigns anymore. Plus currently, hardly anyone wants to run for office and a lot of people around here run unopposed, even folks who aren't very popular. I would run for office myself, but to be honest I wouldn't like the publicity and I don't WANT to be a politician... not to mention that I'm unqualified for almost everything and don't think I'd be able to do a good job anyway, and have various skeletons in my closet I wouldn't want the media exposing. My Congressman Richard Hanna is running unopposed in the general election and I thought about running against him but realized it would be ridiculous for someone like me to run for Congress as a write-in candidate. Still, I think I'll vote for myself as a write-in candidate this November, something I often do when I find someone distasteful running unopposed. I wonder if anyone else here does that, votes for themselves as a write-in candidate from time to time? Or I could write in something silly on the ballot... I could do something ridiculous like write in Mickey Mouse or Joe Stalin or "Bob" Dobbs or Joseph Kony or whatever. Maybe this time I'll write in Joe Stalin just for fun.
Anyway back to the main point, our tax system right now in the U.S. is pretty regressive and it's kept that way through income inequality and a very lax campaign finance system that allows the ultra-wealthy to dominate both parties and the bought-and-paid-for politicians who write the tax laws write them in such a way that rich people get to keep all their favorite tax breaks and the tax burden mostly falls on the middle class. This could change though... if just 1 of the 5 conservative-leaning judges on the Supreme Court died and were replaced by President Obama or some future Democratic Party president with a liberal-leaning judge, well then it'd be possible to do campaign finance reform and not have the Supreme Court strike it down... the biggest barrier then would be getting Congress to approve of campaign finance reform. As for changes to the tax structure to make it progressive instead of regressive, well that would only be possible AFTER all that, because otherwise, rich people would still control the political process so they would be able to stop it from happening by pointing out to members of Congress who it is who finances their campaigns and what might happen if they had less disposable income to throw around on stuff like political campaigns, and members of Congress in both parties would put their own re-election ahead of any principles they might still have. Either that or, convince rich people that they ought to pay more in taxes, and get them to advocate for that cause themselves... kinda a tough sell... I know that billionaire Warren Buffett is one of a few billionaires who advocates taxing rich people more heavily, and George Soros also advocates this, but they are way in the minority among billionaires.
Author
Topic: Unliberal Tax Evasion (Read 3616 times)