Great letter in the Wall Street Journal last week. Former Clinton Labor Secretary and Obama adviser wrote a column in the newspaper advocating much higher tax rates and saying 70% income tax rates weren't so bad. Well, a CPA from Maryland set him straight in a letter to the editor on a few things. Its become a mantra among liberals that the American economy did just fine when the top income tax rates were at 70% or more. Royal Dellinger, CPA writes:
"In his rebuttal (Letters, June 18) to Alan Reynolds's June 16 op-ed "Why 70% Tax Rates Won't Work," Robert Reich claims that Mr. Reynolds "distorts my proposal and ignores my argument." And, well he should, because it's impossible to address Mr. Reich's "proposal" because it is not based on historical fact and misrepresents today's reality.
For many of the glory years Mr. Reich celebrates, when tax rates ranged from 70% to 91%, there was no Alternative Minimum Tax and no limit on nearly all deductible expenses including the "three martini lunch." Consequently "tax shelters" were ubiquitous and used by even the least significant investor. Taxes paid, and even prepaid to state and local governments, were fully deductible along with installment interest on credit cards, personal borrowing and more, including nearly all medical expenses. Even when the AMT was introduced, it only captured a handful of the highest income producers. Today, the AMT has become so oppressive that each year Congress exempts millions of middle-class wage-earning taxpayers from its clutches. It does, however, capture vast sums from the evil "millionaires and billionaires" the left so despises—except when they fund left-wing fantasies.
Very simply, the effective tax rates when marginal rates were stratospheric were not dramatically higher than today.
Mr. Reich proposes further tax reduction for those earning less than $100,000. Today about 22% of those making between $50,000 and $75,000 have no federal income tax liability or "negative liability." As many as 9% of households with incomes between $75,000 and $100,000 are similarly exempt. His scheme would exempt much of the middle class, which is a disproportionate user of government, reducing its stake in the governance of America even further and making it more vulnerable to the volatility that has so damaged the economy during the Obama presidency.
Mr. Reich is simply proposing a vast expansion of government's reach into the economy and relies on the premise that high earners aren't paying their "fair share." That is flat out false—they pay the vast majority of the costs of government. Further, his proposal assumes that the earnings of despised "millionaires and billionaires" belongs to our government, which will pay us an allowance after its choices of where to spend are honored and the earners' choices of where not to spend are dismissed. Karl Marx lives.
Royal S. Dellinger, CPA "
5 comments:
What's never discussed is the percentage of taxes that corporations pay compared to individual income taxes.
The tax burden on individuals has become a greater portion of the federal revenue stream.
And, there's a bit of game playing when it comes to defining " wealthy".
It's true that those making $250000 and up pay more but when you look at the percentages of income actually paid in the $1 million and up, it's quite interesting. And, incredibly difficult to find.
Try.
Same song, different day. Nothing new here. Reich is a Keynsian academic, who has never held any appreciable private sector job nor been accountable for anything.
Leftists have a hard time understanding that nominal tax rates are the not the same as effective tax rates, and that those targeted by a tax are not always the ones that bear the cost of it.
There are 78,000 tax filers with incomes of $211,000 to $533,000 who will pay no federal income taxes this year.
Even more amazingly, there are 24,000 households with incomes of $533,000 to $2.2 million with zero income tax liability, and 3,000 tax filers with incomes above $2.2 million with the same federal income tax liability as most of those with incomes barely above the poverty level.
http://andrewsullivan.thedailybeast.com/2011/06/who-isnt-paying-any-federal-taxes.html
Anonymous @ June 27, 2011 7:43 AM, what you and other people don't get is that corporations ARE INDIVIDUALS...i.e. people who own the stock in the corporations and who pay taxes on their income from dividends and cap gains.
Please stop this "corporations aren't paying their fair share" crap. The reality is that INDIVIDUALS are essentially getting taxed twice on income of the corporations they hold stock in .
Post a Comment