Tuesday, June 9, 2015

The Biggest Taxation Atrocity Of All: The Richer You Are The Lower Your Taxes!

One of the newest toys for the super- wealthy: A designer dining table with built-in waterfall for only $50 grand!

I  read it but could not believe my eyes: according to a Denver Post Report ('As The Rich Become Super Rich They Pay Lower Taxes',  p. 2C, June 6) data out this spring from the Internal Revenue Service show the rich are making out like even bigger bandits than first believed. While too many have bought the narrative that the richer you are, the higher your share of federal income taxes, the stats just don't support this.

The IRS data shows that when you get beyond the paltry 1 percent, to the top 0.01 percent and top 0.001 percent and beyond, that 'chestnut' no longer applies. These latter two categories - new to the IRS data collection stats (reflecting the public's greater interest in the ultra wealthy) are actually sitting pretty. To be specific the IRS found that as you go from merely the 1 percent to the super wealthy at 0.001 percent (i.e. taking in $62m or more a year) your average federal income tax rate actually goes down.

In other words, the assumed "progressivity" of the U.S. tax code begins to fall apart at the upper reaches of income distribution. So no wonder Sen. Bernie Sanders, now a presidential candidate, wants to bring back the top marginal tax rate of 91 percent that used to apply in the 1950s (when we beheld bank interest rates of 4 percent or more, and only one parent having to work)

Some of the statistics in the IRS report:

-The average tax paid across the top half of American earners was 14. 33 percent

- For the top one percent, the average tax rate increases to 22.83 percent

- When you reach the top 0.001 percent the average tax rate goes down to 17.60 percent

In other words, a person ensconced in the upper 0.001 percent bracket pays the same effective tax rate as the English professor at University of South Florida who makes $85,000 a year. Is this an abomination? Of course it is! Because that is emphatically not how federal income taxes have been designed to work.

How are the super rich maggots getting away with this? A number of ways, most of them padded into the tax code by their political whore supplicants, the Reepos - who'd rather take bread out of the mouths of 16 million kids on food stamps than close tax loopholes for the hyper wealthy. Such as, benefiting from a host of deductions including:

- the mortgage on their yachts (for which the hoi polloi can't qualify because well, they can't afford yachts!)

- the mortgage interest tax deduction  - which runs to $100b a year, $75b of which is creamed off by the wealthiest (for their 2nd homes)

- Vastly lower tax rates on investment income, e.g. capital gains. Since the super rich get most of their income from investments, they make out like bandidos compared to ordinary one percent wage earners who have to cough up a 39.6 percent rate. (For the year 2012 when the IRS data was compiled the capital gains rate was 15 percent)

Isn't time we get serious on the ultra -rich and take two major steps NOW?

- Raise the capital gains tax rate to at least 39.6 percent same as for upper income earners

- Remove the mortgage interest deduction for any person earning more than $150,000/ yr.

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