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Comment by yequalsx | Hacker News Reader

It's a simple sounding solution but I'm skeptical of the issue being that simple. There's a world of difference between GE style corporation and an S-corp owned by a single person.

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.

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GE in particular paid very little tax in one particular year because they a) took a massive loss in the previous year and b) harvested a huge amount of tax subsidies, mostly relating to green energy.

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.

It's a bad point of view to look at government services consumed. The very rich live in a system that allows them to have gotten their wealth. They benefit greatly from living in our society. They should pay to maintain it.

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.

As the numbers I provided demonstrate, the rich do pay to maintain it. It's the poor who mostly don't pay.

The US is already more progressive than the rest of the world - how much more progressive do you believe it needs to become?

Does income tax include capital gains in the article? I think not but am not sure on this. One must look at the ratio of wealth controlled to the ratio of total expenditures of government. For the very wealthy that ratio should be higher than it is for any other group. That's the idea behind a progressive system.

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.

Does income tax include capital gains in the article?

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.

Your disdain for poor people is shocking. People need to eat to live and in most places in the U.S. food is taxed in a regressive way. The proportion of tax poorer people pay for food is much higher than for the very wealthy.

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.

Their would be no wealthy without the poor consuming their food, living in their buildings, or paying for the utilities they provide. This is not a "drain" on society; it is on of the vital mechanisms which allows the wealthy to have their wealth in the first place.

On the other hand, yequalsx, your characterization of the poor as a "drain on society" speaks volumes of how little you understand income disparity.

I didn't refer to the poor as a drain on society. Yummyfajitas did. Perhaps you meant to critique some other aspect of what I wrote?

rprasad was responding to yummyfajitas https://news.ycombinator.com/item?id=4182231, and misread the byline

Yep, sorry. Ever since the crazy mods took over I've been having issues with reply links disappearing or linking to the wrong comments.

There is some subset of the world's population who are a net negative in wealth creation, especially those living in expensive markets. (The very ill, mentally ill or drug addicted homeless people, most of the elderly.) Children also count if you're looking on a short time horizon, but you could do discounted future incomes to account for that.

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.

The very wealthy in the U.S. do not pay a fair share of the tax burden or for the cost of government.

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%!

[1] http://ntu.org/tax-basics/who-pays-income-taxes.html

One needs to look at overall tax receipts. Not just income taxes. The very wealthy primarily pay capital gains taxes and not income taxes. Also, the 36.7% figure is not meaningful without knowing the percentage of wealth the very rich control.

so actually Top 10% pays more than 70% of the taxes when we also consider capital gains (because they are the ones who play with the capital)

well, i think we all should be grateful for the %10, we are basically funded by them. Thank you rich folks!

The top 20% of the U.S. control 93% of the financial wealth of the country. I don't believe they pay 93% of the total tax burden.

The top 10% also earned 60% of all income earned in the U.S. in 2009. Thus, the differential is only 10%. (Source: http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521..., 2009 statistics).

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.

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