The solution is simple: stop taxing corporations and replace it with taxes on capital gains/etc. (Also, while we are at it, equalize the taxation of cap gains, dividends and interest.)
The GE type corporations effectively pay very little tax in the present system. They also have the right to spend an unlimited amount of money on election campaigns. In the U.S. system corporations are treated as persons. If a person makes an income (profit) they get taxed.
What we presently have is a broken system in my opinion. The very rich earn their money through capital gains and the capital gains tax is very, very low. The very wealthy in the U.S. do not pay a fair share of the tax burden or for the cost of government. Perhaps eliminating corporate taxes while simultaneously greatly increasing capital gains taxes would be good. There could also be some bad consequences to eliminating corporate taxes altogether.
They don't?? The top 1% of taxpayers paid 36.7% of all income taxes in 2009[1] (yes, that includes capital gains). The top 10% paid 70%!
well, i think we all should be grateful for the %10, we are basically funded by them. Thank you rich folks!
The poor spend all of their income on necessities: food, rent, utilities, clothing. They effectively do not have income after deducting their necessary expenses; many do not have sufficient income before deducting their necessary expenses. The wealthy spend comparatively little of their income on necessities; their income is increasingly used on luxuries. They can afford to do this because of the services provided by the government. The wealthy receive disproportionately more value from the government, yet the only pay 10% more than the rest of us.
In the US the very wealthy pay a disproportionate fraction of taxes, relative to the income they earn.
http://taxfoundation.org/article/new-data-top-1-pay-greater-...
http://i.imgur.com/wa8uu.png (A graph of the data)
The US actually has a more progressive tax system than any other OECD nation - only Ireland and Australia even come close.
http://taxfoundation.org/blog/no-country-leans-upper-income-...
Given that the poor and middle class consume disproportionate amounts of government services (primarily redistribution), while the wealthy pay a disproportionate amount of taxes, it's an untenable position that the wealthy don't pay their fair share.
What matters is not the percentage of all taxes they pay but what percentage of wealth they control and how much they can pay. I agree with Christ in this matter. To whom much is given much is expected.
The US is already more progressive than the rest of the world - how much more progressive do you believe it needs to become?
The focus on income taxes is a red herring. The poor pay a disproportionate amount in regressive taxes such as sales tax. One must look at overall burdens and overall ability to pay. Proportionately the more one has the more one should pay.
If you read the article, you'd know that capital gains are included (since cap gains are included on federal income tax returns).
The poor pay a disproportionate amount in regressive taxes such as sales tax. One must look at overall burdens and overall ability to pay.
Yes, the poor consume disproportionately, and pay a disproportionate amount of consumption taxes. All that says is the rich consume far less than they could, and are much less of a drain on society than the poor.
One must look at all tax receipts and not concentrate on income taxes. The very wealthy are not paying enough to sustain the system that they benefit from.
I did read the article. It wasn't clear if capital gains taxes were included. Capital gains are not income as far I know. I mentioned my ignorance on this point. Clearly I indicated reading the article. Nitpicking on this is also a red herring. The point remains that total tax receipts is the relevant statistic in comparison to total wealth. The top 20% of the U.S. control 93% of the financial wealth in the country. I don't think they are paying 93% of the total tax burden. Taxes are also at a 50 year low and so it's clear that the very wealthy can pay more and should.
On the other hand, yequalsx, your characterization of the poor as a "drain on society" speaks volumes of how little you understand income disparity.
There are values other than pure economic utility, but from a pure economic utility function, a poor person consuming medical services doesn't help the economy. The money paid (via taxes to doctors, equipment vendors, etc.) would be more efficiently used for another purpose -- it's the broken window fallacy.
It would be interesting to figure out where the net consumers stop and net producers begin, and maybe graph that over time and culture.
There are a lot of good reasons to favor an economy which is slightly less productive than optimum, but where a larger percentage of people are net-contributors; redistributing income or wealth from the positive outliers to invest in making more people net-contributors, vs. trying to maximize the total contribution, is probably a good social choice. But it's not the purely efficient choice.
My favored solution is having two taxes: a heavily progressive consumption tax, and a flat capital gains/etc. tax. Because what people usually are bothered by are the Paris Hiltons of the world, not the humble billionaire featured in the article.
I don't believe they should be used for revenues, because once you do that, it misplaces the incentive: now the government makes more revenue per unit externality. So I favor a flat rebate for all externality taxes.
The reasons capital gains taxes are lower than income seem sound to me. You want capital formation and savings.
There's only a problem because the government inflates the currency and manipulates interest rates down. This subsidizes speculation. The solution is just higher interest rates.
Higher interest rates will help increase savings, but it will do little to address the incentivization of speculative markets caused by the tax rate differential. The solution is to increase interest rates and reduce the tax rate differential (either by increasing capital gains taxes or lowering income taxes).