A Liberal Explains Tax Burdens

I have a friend who happens to be conservative who posted this article by the Wall Street Journal:

http://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384

With this posting came his question, “For my liberal friends who think bernie is right that the rich need to pay more taxes. Explain this.”

He also stated that he believed the higher tax rate on the rich amounted to discrimination.

Below is my response.

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It’s a good question so I’ll give you an honest answer. If I could, I’d have everyone pay more in taxes so we wouldn’t pass on so much debt, except, the way things are set up now, that means some people don’t eat or have a place to live, which isn’t useful even to those of us who aren’t dealing with it directly. It costs everyone money.

It’s not like we don’t pay for things we don’t want to pay for through a budget. We usually pay more if we don’t budget for it somehow. I think there should be a floor, a basic income, because it actually sucks more resources away if people have nothing, because now you’re dealing with crime. Or you’re paying top dollar for their health care since the emergency room is the only option. Perhaps you are putting them in jail which is like a premium welfare system — all expenses paid for years on end.

We decide what kind of country we want via our representatives, we send them to DC, we hope they do what we ask. But then we have to pay for it. I’d welcome more parties and a more parliamentary way of splitting up the spoils of elections, to help make sure more people are represented in any given election than currently are here in the USA where it’s generally winner take all. Terrible idea in my mind. But once we figure out what kind of country we want, we need to budget to pay for it. And, try to pay for it all now if possible, to avoid building the national debt.

We can blame it all on whatever part of the budget we want, and most people fixate on one segment — say, social services, or the military — and blame all the budget problems on them. But the fact remains that we end up with a budget that needs to be paid for.

I think it’s fair to up the tax on higher earnings because they don’t create a humanitarian crisis. And it’s not discrimination simply because anyone can earn that amount, and pay the same rate. If it affects everyone under the same circumstances, it’s not discrimination, simple as that. No one held a gun to their head and said “you must earn more so we can take more.” It’s not an unchangeable circumstance, such as being a particular race.

Since tax rates change only on money made over a certain level (in other words, you pay the lower tax rate on let’s say the first 250,000, and the higher rate on the earnings made *after* that), you don’t have to worry about getting whacked with a bigger bill than you’ve planned for if you just barely breach the next level, so it’s reasonable. After that, you get hit harder when it’s not going to hurt as much — perhaps it hits your kid’s inheritance, or your second yacht.

The rate doesn’t get that much higher until you’ve made $2 million, and a lot higher after $10 million. To most people, that’s a lifetime of earnings. And, it’s been mostly made using the US economy, the same people that are also in the system, and their resources, and taking advantage of the fact they have money in their pocket, also put there mostly by the same economy. It’s all related.

Anyway, that’s my general take.

(There was a followup question about using a flat tax...answer below.)

Because of the ratio of earnings vs mandatory spending to survive, which is 100 percent or more for the poor, and as low as under 10 percent for the extremely wealthy, a flat tax is really just giving the wealthy a nice hidden tax break at everyone else’s expense. All that said, the proposed top taxes do seem a little high to me, and I don’t see why we little guys couldn’t help them out and up our own tax base a little more.

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As an addendum, I just want to point out that the WSJ headline does not bear any resemblance to the proposed taxes of a Sanders presidency, which tops out at 52 percent, not the 90 percent some people believe. So, the WSJ headline is written to induce some panic among conservatives.

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