Screaming Penguin

You know, it blows me away how many people think a 15% flat tax is "fair." Or even worse, how many people think at 15% sales tax is "fair." The GOP and the horribly misguided "Fair Tax Movement" have made people lose sight of why, since Lincoln, we have had a progressive tax system in the U.S. The fact is, there is a minimum cost of living like an "American." A chicken breast or a head of lettuce for a poor American costs the same as it does for a rich one. The reason taxes increase with income is because a person who makes $125k a year can simply afford to pay more of that income above poverty and live than someone who makes $25k a year. You are taxing what would be the luxury or disposable income higher and that makse sense. The "voluntary" consumption tax isn't that voluntary on the people that need the vast majority of their income to subsist while others, who represent the vast majority of "income", don't. Remember Jesus's parable about the poor woman who gave her only coin in offering while the wealthy were making a show of how much they paid? That's exactly what the GOP is doing to America: Making a show of how the rich pay, while taking away the money that would be spent on food, housing, childcare and other necessities as they tax the lower and middle classes, then saying that their contribution is more valuable. Now, I know people think their taxes are too high. Here is a little tip: Most "Liberals" would agree with you. The fact is, however, with Reagan, Bush 1 and Bush 2 (and the fact that Clinton didn't want to be accused of "raising taxes") the taxes on the Top 1% of income earners is lower now than it has been since before the Great Depression. The Republican spin is "The Top 1% pays about 40% of the taxes in this country," and that is true. What they fail to mention is that they GAIN OVER 75% of the INCOME. To paraphrase John Edwards, the GOP wants to tax work, and leave wealth alone. That is, with the repeal of the estate taxes, that only the very rich paid anyway -- and they weren't "taxed twice" since most two person estates over $7m never paid their capital gains taxes on their value anyway, and those were the only people that paid what the GOP spun as "the death tax" -- and the basic repeal of the capital gains and the dividend taxes, what we are really talking about is only taxing people that work for a living, and not those that own companies, have trust funds or play the stock market. You might be asking yourself, "Is this reduction so bad? We had great economic expansion and a budget surplus under Clinton." That is true, however, the "Economic Leadership" shifted where the money came from. The rich ran the Enron type affair, while many people were paying capital gains on their artificially inflated stocks. What really happened in California and nationally was the collapse of bonus and capital gains earning on stocks which represented about 30% of the revenue. Once those revenues fell, that money went away. Moreover, the "earning elite" increased the rich-poor gap by holding their money in stocks, then securities and not taking their profits until Bush came around. To top this off, their total earnings went from about 80 times that of their employees in the 70's to about 1500 times that of the employee in the 90's. The fact is, people that earn their income that way, while you might argue that they "create jobs" -- a misgnomer since their goals are to employ as few people as possible -- simply don't spend their money like those in the middle and lower classes do. It is those people who spend their money and create demand that drive the economy. Remember all those talks about how "consumer confidence" in the face of a downturn kept the economy from eating shit for a year even while the "Wall Street" people were pulling their money? That's those people buying cars, refridgerators and other big ticket items. However, all those corporate profits were not reinvested in jobs and paychecks because the big money decided the economy was on the way down so they moved it into bonds, gold and money markets where it was "protected." That's what people mean when they talk about "money on the sidelines." And, as I noted above, the Bush tax cuts have allowed the people who could afford to keep that "money on the sidelines" to liquidate it effectively tax free. The reason we haven't seen economic stimulus from tax cuts is the $325 the median American gets back -- notice I didn't say average, because average is deceptive in terms of the Bush tax cuts -- doesn't translate into the percentages that the Dick Cheneys who get $90k back do. If you give Dick $90k he won't run out and spend it. If you give 7 people who make less that $60k in their families of 3 $5k each, they will run out and spend a vast majority of it on goods an services, giving you more economic stimulus for half the lost revenue to the government. You need to look at the numbers. When the people who control 25% of the "income" in the U.S. -- not to mention NEEDING more of the income they earn to live -- are paying 60% of the taxes, you are getting swindled. The final point I want to make, is that your "income tax" is a relatively small percentage of what comes out of your check. The majority goes to "payroll tax" (Social Security and Medicare). Now, these taxes cut off after the first $82,700 of taxable income. That means a person with a paycheck of $300k a year pays less in real percentage of their check than a person who makes $40k a year in spite of the fact that the income tax percentage is lower for the person who makes $40k a year.. If we did away with this exemption, then yes, that person who makes $300k a year would be subsidising healthcare and retirement for those who make less. In real terms, though, does anyone want to argue that the solvency of our social safety net services aren't worth it? Those basic services to the society as a whole benefit everyone. While we need a better focus on preventive medicine and child care in these areas, as well as a retirement age scalar to live expectancy, not having a habitually impoverished underclass is what we were trying to avoid since FDR. In short, the reason we have a progressive tax is so we are taxing the people more who can actually afford to pay more. In light of the last 20 years, we have lost sight of this in a major way. By encouraging those people who have the "big money" to horde more of it in the lower taxed incomes, shelter and holding companies rather than the same "payroll" that most people have to pay, we have been left with a system where the higher incomes aren't even paying their "fair share." I know the idea of some simplistic flat tax is easy to understand, but that doesn't make it right. Until Americans stop listening to the catchphrases and start understanding the complexities of the real world -- be it tax policy or international affairs -- we are never going to get anywhere as a nation.