The Mitt-Lefty Paradox of taxation

Interesting article about how we tax in this country. Essentially, it talks about the downside of taxing work, rather than wealth or spending.

It's the story of two multimillionaires: Mitt Romney, who has an effective tax rate of 14% and who has to bump it up for public perception by not taking charitable deductions; and Phil Mickelson who earns his keep by golfing and thereby has to pay at a tax rate of 60-65%. Not that we are crying for Phil, but the article also talks about how this system keeps the working poor in poverty.

Consumption taxes are fine, but the author doesn't demonstrate a very good understanding of our tax system

There is a growing sentiment that the progressive tax rate is the largest single road block to building wealth and the largest boon to the current aristocracy that could be created. The idea is that the uber-rich don't have much income that gets taxed. They have appreciating assets which are only subject to taxes if sold, so they never sell. They receive dividends which are taxed at a low rate (and because most of us depend on dividends for retirement it needs to stay that way). Like anyone else they take advantage of whatever write offs are available. What they usually don't do is take a large salary that is subject to the high end of the tax tables.

For example, Warren Buffett, the poster boy for 'tax reform', takes a salary of $1 per year. He has that little $50B nest egg to fall back on if he needs to so has no need for a taxable salary so nothing in the progressive tables will hurt him even if the top rate goes to 99%. BTW, nobody ever paid 95% back when the rates went that high, but that's another thread.

Where it hurts is people on their way up. The business owners and executives who need income to build their assets. It's the only way they can get to a higher level. The progressive tax rate slows or stalls their climb every time. I won't go so far as saying the super rich are trying to lock the door to the clubhouse, but there is no incentive for them to want to change anything. I think Mr. Buffett's stand is pure show, a nice PR move. The current hikes on incomes that are no where near the top shelf will not result in enough income to make a dent, but it will work to slow down one class of folks that actually could make good things happen.

How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?

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Originally Posted by Alan

How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?

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It's not *your* wealth anyways, Alan, it's *society's* wealth, you are just its temporary steward.

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Originally Posted by bae

It's not *your* wealth anyways, Alan, it's *society's* wealth, you are just its temporary steward.

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Ahhh, now I get it.

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Originally Posted by Alan

How do you tax wealth? Would it be a one time thing or would you tax the same wealth each year until it was completely absorbed by the government?

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You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.

Pretending you don't know what people are talking about when they talk of fair taxation just makes a person look dense, and totally clueless. Kind of like Romney. who lost. Largely because of his cluelessness, and clumsiness in understanding how the world works.

Now Alan, do you really not understand this very basic, and incredibly simple principal? Really?

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Originally Posted by peggy

You tax income. Period. If that income comes from dividends, or from digging ditches, you tax it at the same rate. Period. Income is income.

Pretending you don't know what people are talking about when they talk of fair taxation just makes a person look dense, and totally clueless. Kind of like Romney. who lost. Largely because of his cluelessness, and clumsiness in understanding how the world works.

Now Alan, do you really not understand this very basic, and incredibly simple principal? Really?

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Hi Peggy, long time no see.

Did you read the OP? Did you see the part about "the downside of taxing work, rather than wealth or spending"? I know it might be asking a lot to expect everyone to follow the flow of a discussion, but I'll bet you could do it if you tried.

What are your thoughts on federal taxation? Should it be progressive or flat? How many times should the same dollar be subject to taxation? Is it a responsibility of all citizens or should the entire burden fall on specific groups?

Being dense (and apparently clueless), it would help if you spelled it out for me.

Well Alan, since you are clueless, I'll talk real slow for ya. Taxing someone who has to actually work for their income more than taxing someone who just sits back and lets it roll in (dividends) is not fair. If both examples, like the golfer and Mitt in the OP example, both make 1,000,000, why should the golfer have to pay a higher tax rate than Mitt, who doesn't have to swing a club, or shovel, or 'hash' to 'earn' his income?

Talking about 'double taxation' is a diversion. If they are taxed 'double' on the same dollar, then they are also profiting double on the same dollar. No one is filtering their money through a corporation just so they can pay MORE on tax. They do it to pay less, per Romney.... The end result is the story. Romney paid 13% tax on his income, only after he fiddled it to pay a higher rate, as it turns out, and the golfer paid more. Much more. I'm pretty sure if Romney were to release the past 10 years of tax returns we would see just how little he actually pays, (which, of course, is why he refused to release those forms)

The American people see through this BS, which is why Romney lost....but keep talking. Keep the 'faux outrage' going, here and on Fox/Limbaugh. I kind of like the democrats having the White House. All we really need to do now is stop the dishonest gerrymandering of districts and voter suppression (now they want to tinker with the electoral college). Desperate people doing desperate things!
Why it never occurs to the right to just craft an agenda that actually serves the people is beyond me...but hey, keep it up republicans.

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Originally Posted by peggy

If they are taxed 'double' on the same dollar, then they are also profiting double on the same dollar.

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Can you explain that? How does one profit double on the same dollar of income?