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Archive for Wednesday, October 22, 2008

US already spreads wealth

October 22, 2008

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Election 2008

In-depth coverage of the candidates and the issues, all leading up to the Aug. 5 primary and the Nov. 4 general election.

— John McCain is pouncing on Barack Obama's call for shifting more wealth from richer Americans to poorer ones, likening it to socialism. His remarks win applause at campaign events. But they ignore the nation's long tradition of redistributing huge amounts of wealth through tax-and-spending policies.

Placing a heavier burden on the wealthy has been a cornerstone of the federal income tax since its inception in 1913. Under its "progressive" formula, in which the wealthy pay higher tax rates, the richest 5 percent of Americans now pay well over half of all federal income taxes.

Forty percent of Americans pay no federal income tax at all, although it is the government's largest revenue source. Meanwhile, they benefit from various social programs aimed at low-income households, another feature of a system that redistributes money.

Conservatives, citing such statistics, say the country needs no more top-to-bottom shifts of wealth.

McCain, the Republican presidential nominee, has hammered the issue since Obama, talking to an Ohio plumber, said he would raise taxes on the wealthy and cut them for lower-wage workers, adding: "I think when you spread the wealth around, it's good for everybody."

Many Americans think that sounds "a lot like socialism," McCain said in a radio address Saturday. "Barack Obama's tax plan would convert the IRS into a giant welfare agency," he said, "redistributing massive amounts of wealth at the direction of politicians in Washington."

McCain accused Obama of "class warfare." But McCain is the perpetrator, argue Democrats, who contend he is trying to fuel middle-class resentment toward poorer people with inflammatory words like "socialism" and phrases reminiscent of Ronald Reagan's attacks on "welfare queens."

In fact, Obama supporters note, the gap between rich and poor Americans has grown markedly in recent years as middle-class wages remained largely stagnant while corporate profits and high-earners' salaries soared. The nation's income inequality now ranks among the world's largest, reports show. The richest 10 percent earn an average of $93,000 a year; the poorest 10 percent make $5,800 on average.

Various economic and regulatory factors have fed that gap. But tax policies play a role, too, because some major revenue sources are far less favorable to low-income people than the income tax is.

For most Americans, the biggest tax burden is the payroll tax that funds Social Security and Medicare. The tax rates are the same for everyone, and the Social Security levy does not apply to incomes above $102,000, a boon to the wealthy.

Moreover, Social Security benefits go to rich and poor retirees alike. That means low-income workers' payroll taxes are partly shifted to wealthier people, a reverse of the income tax's topdown construct.

Federal excise taxes on products including gasoline and cigarettes are more regressive still, as are sales taxes levied by many states.

Obama has proposed higher taxes on the wealthy, and tax cuts for most other households. He would end the Bush administration's tax cuts for people making more than $250,000 a year, he says.

Comments

just_another_bozo_on_this_bus 6 years, 2 months ago

"So, for example, if your businesses generates $500K, the top $250K would be taxed at a 3% higher rate."That's net income over $250K. So even if your business has $500K in gross income, if there are $250K's worth of business expenses, then there would be no increase in taxes.

SMe 6 years, 2 months ago

"Tax the rich to feed the poor until there are no rich no more."I really hate that concept but regrettably that's how America's worked for a good many years. Obama's a Socialist, Heck even Bush is a Socialist.Then I read some of the "the-poor-are-dumb-wasteful-low-lifes-who-make-themselves-poor" comments in this forum and I say - Tax them fools until they're broke and maybe, just maybe, they'd understand one thing in life.

jaywalker 6 years, 2 months ago

It has to be BS that the 'poorest 10% make $5800'. Noone that actually 'works' is making that little.

Unix_Admin 6 years, 2 months ago

Hey Tom, ellipsis or ellipse (plurals pses), the omission from a sentence of a word or words that would be required for complete clarity but which can usually be understood from the context. A common form of compression both in everyday speech and in poetry (e.g. Shakespeare, 'I will [go] to Ireland'), it is used with notable frequency by T. S. Eliot and other poets of modernism. The sequence of three dots (:) employed to indicate the omission of some matter in a text is also known as an ellipsis.

just_another_bozo_on_this_bus 6 years, 2 months ago

"It has to be BS that the 'poorest 10% make $5800'. Noone that actually 'works' is making that little."Well, you busted them, jaywalker. They really only work 3 months of the year, and spend the rest of the year at their Swiss Chalet.

jmadison 6 years, 2 months ago

The 40 per cent of Americans that don't pay any tax should pay at least something to support the government's tax and spend policies.

llama726 6 years, 2 months ago

Tom Shewmon:"They pay more because they always have:..always making poor decisions. That's why they're poor. Wealthy people, whether it be just comfortable and modest wealth, have not made many or too many stupid decisions in their lives."Proof? Evidence? Don't need it! Remarkable, though, how you characterize people you do not know based upon their income level to determine they are either perfect or completely stupid.

Keith 6 years, 2 months ago

They do, they pay sales tax, payroll tax, property tax, excise tax. Nobody escapes the tax man.

bad_dog 6 years, 2 months ago

"Well, I'm still waiting for this Republican theory of "trickle-down" or as McCain puts it "the wealthy are the ones providing the jobs to the middle class" to take effect."-logicLogic, also don't forget that the very folks that purportedly create and giveth the jobs also taketh them away when sending them overseas. We don't seem to have a problem improving the lives of foreign citizens to the detriment of U.S. citizens in order to enhance the bottom line and spread the resultant wealth in the form of executive bonuses and shareholder dividends.While I recognize corporate boards have a responsibility to their owners to run their businesses competetively, efficiently and profitably, I don't believe this should occur to the detriment of the employees, many of whom were responsible for the success of the company.

bad_dog 6 years, 2 months ago

"And that's the problem with Obama and Democrats. They consider $250k a year rich? Hardly."Given the article indicates "The richest 10 percent earn an average of $93,000 a year; the poorest 10 percent make $5,800 on average." $250K per year sounds fairly good, albeit not independently wealthy.

Mkh 6 years, 2 months ago

Overall I agree with most of the article. However there is one glaring mistake that I think is important to correct. The federal income tax does NOT go to pay for government programs, services, or departments. It is mostly used to pay interest on the debt to the Federal Reserve for the issuance of our fiat currency.

craigers 6 years, 2 months ago

I think we all understand that it happens right now, but the question is do we want to do more of it?

jafs 6 years, 2 months ago

The proposed increase in the bracket for above $250K is 3%, and it only applies to the income above $250K.Also, all small businesses will be eligible for a 50% tax cut/credit on all employee health benefits they pay.Given that only about 2-5% of small businesses even generate $250K, and including the tax cut for health benefits, I really think this is a non-issue for virtually all small businesses.And, why shouldn't income over $102K be taxed for Social Security?

jafs 6 years, 2 months ago

So, for example, if your businesses generates $500K, the top $250K would be taxed at a 3% higher rate.That would generate $7500 in higher taxes.At the same time, you'd get a credit/cut (I'm not sure which) for 1/2 the health benefits you're paying your employees.Assume $400/month in benefits x 20 employees:You get a credit for $2400/employee = $48,000.You do the math.

bad_dog 6 years, 2 months ago

It's obvious Tom just doesn't want to "get it". I think he's bright enough to "get it" but prefers to keep yammering away with dogmatic and polemic hyperbole.

just_another_bozo_on_this_bus 6 years, 2 months ago

The poor are also subject to what can only be called "poor" taxes. Nearly everything they use comes with a higher price than wealthier people pay.

just_another_bozo_on_this_bus 6 years, 2 months ago

" but wonder what the wealthy purchase tax free that poor pay taxes on."It's not the taxes, it's the prices paid for things. If you're fairly well-to-do, you can buy in bulk, and you also have the option of shopping around. Poor people have to buy from whatever is available nearby, and in urban areas, that's often a quicktrip, where prices are much higher, and selection much lower.There's also the fact of late fees. If you're constantly juggling finances just to keep the basic utilities and rent paid, invariably, you'll be frequently late on some of them, and you're tagged with late and reconnect fees that represent a sizable percentage of your income, often much higher than sales taxes. Poor people often can't afford or are denied bank accounts, too, and are forced to use check-cashing services and buy money orders whose fees are extremely high. It's all just part of the vicious circle that contributes to keeping poor people poor.

just_another_bozo_on_this_bus 6 years, 2 months ago

If only the world were as simple as your beliefs and thought processes, Tom.

Larry Bauerle 6 years, 2 months ago

I've often heard of the concept of the "poor tax," but wonder what the wealthy purchase tax free that poor pay taxes on. What do they use that they pay more for?

Confrontation 6 years, 2 months ago

Tom just continues to show his ignorance. Palin already has poster children for teen pregnancy, stupid names, etc. Tom can be her poster child for Narcissistic Personality Disorder, Arrested Development (at age 4), Paranoid Personality Disorder, and White Hood Brother.

bad_dog 6 years, 2 months ago

"What is poverty? Is an intelligent good looking 23 year old from a good family that just graduated from college with 250,000 in debt poor? By definition he/she is poorer that a homeless person as he/she has a negative net worth."-invictusAny person that just graduated from college with $250K of debt either has a lot of student loans or lived an extravagant lifestyle on credit cards. If it is the former, I suggest this person will have a highly skilled professional occupation; very likely a physician. As such their remuneration will be quite high and no, they won't be poor by any measure, although they will have student loan debt to service.If it is the latter example, perhaps their genetics weren't "quality"? They will be on the road to "poor" quickly enough. Poverty is the state or condition of having little or no money, goods or means of support. The other attributes you cite are conditions often associated with poverty, they are not a prerequisite. Many good, intelligent, healthy intellectuals have risen from poverty to achieve excellence, wealth and fame or at least substantially improved their lives. Likewise, many privileged individuals have squandered their health, money and privileged backgrounds only to wind up in relative squalor. Despite those facts, I wouldn't necessarily claim either segment would return to their origins were the situations reversed and the poor person were given opportunity and the rich became the despised, sickly beggar.

bb837988 6 years, 2 months ago

It's not that the wealthy buy things tax free, it's that the wealthy needs a smaller portion of their income to buy essential items. A low income family living from check to check spends a larger percent of their income on things with excise and sales tax. They may spend 40% of a paycheck at Dillons while a wealthy family would spend a smaller percentage of a paycheck. The entry level admin person working at KU with the same number of miles in a daily commute to work as a Dean of a school, will spend a higher percentage of his/her salary on gasoline than the Dean.And families with a higher income have more choices than poorer families. They can adjust their buying habits if needed. Poor families are already buying store brands and wait for the video instead of going to the movie.

Cait McKnelly 6 years, 2 months ago

"Like I've stated before, we are already supporting probably 5-6 single, UE, crackhead mothers. How many more do we need to support to make The Gang Of Three happy?"How much you want to bet that Tom is also anti-abortion?

oldvet 6 years, 2 months ago

"Pro-choice is about providing a medical option to women"Pro-choice is about murdering children... that is the only choice they want people to make...

Logan5 6 years, 2 months ago

"the richest 5 percent of Americans now pay well over half of all federal income taxes."What percentage of total income do the richest 5% make? According to the 2007 census, the top 6.37% earned a third of all income."Forty percent of Americans pay no federal income tax at all. . ."Who are these Americans? The must include children, spouses, and the elderly. A better question is: what percentage of families or households pay no federal income tax? Only 28% of households earned $25,000 or less in 2007, which does not necessarily preclude them from paying income taxes.These are bogus statistics quoted by conservatives to sway their small minded constituents.

dandelion 6 years, 2 months ago

Poor, rich. Why don't we try talking about the middle class? The last almost 8 years, as the rich people have let the trickle down, trickle out of the country, the middle class has become poorer. You used to be able to count on being middle class by getting a good job in a factory, but greed has destroyed the American dream. If they don't want the wealth redistributed, then bring back the jobs.

sdinges 6 years, 2 months ago

Instead of talking about taxes, we should be talking about irresponsible government spending.I could dream my whole life about a Fair Tax system, but the truth is, the maze that is our current tax code is where politicians hide the bonuses for their friends and supporters. Both parties are guilty, and therefore will never support a revamp of the tax system. There's definitely wealth distribution happening - from taxpayers to big campaign donors.I will also keep dreaming about bills with no pork in them. And I will imagine a country where politicians lose elections for corruption and frivolous spending.What some of you don't seem to get is that we're already paying the taxes. The money is there, you just aren't holding your elected officials to a standard where they handle it responsibly.

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