|
|
|
|
THE CURRENT TAX SYSTEM GIVES US THE FOLLOWING:
10 FACTS ABOUT OUR
CURRENT TAX SYSTEM
THE FOLLOWING SHOWS OUR TAX SYSTEM IS UNFAIR, RUINING OUR ECONOMY, THREATENING OUR
DEMOCRACY, TEARING APART OUR SOCIETY, OUTRAGEOUSLY COMPLEX, INEFFICIENT
AND WASTEFUL.
1. In a recent year, billionaire Warren Buffet paid total taxes amounting to 11% of his $8 billion investment income and gains. Mitt Romney paid 14% of his investment income and gains. In the same year, a typical, single minimum-wage worker paid a tax rate of 34% of her $14,500 wages (about 3-fold higher).1 (link)
2.
Mr. Buffett's and Mr. Romney's taxes totaled about 2% of their accumulated wealth (net
worth), while the minimum-wage worker pays about 500% of her net-worth (250-fold higher) Accumulated
wealth (net worth) is better measure than income of both 1) ability to
pay taxes and 2) the extent to which a household has profited from
government programs. Therefore, taxes should be based on both income and accumulated wealth.2 (link)3.
The top 400 income earners in the latest IRS report earned an average
$260 million and paid an average federal income tax rate of 17% of their incomes, down from 30% in the early 1990's (see graph below). Many in the top 400 pay no federal income tax, and nearly all make much more in investment gains that does not get counted as taxable income. They can avoid ever paying taxes on them by not cashing them in, borrowing against them, and then passing the gains to their kids, at which point the gains can be cashed in tax-free. The top 400 pay little or no payroll (Social Security) taxes. Meanwhile America's typical (median) worker made $26,000 and paid 23.4% (vs. the top 400's 17%) of it in federal income and payroll taxes (link, link, link)
4. State and local taxes shift even more of the tax burden on the working-poor and middle-class. A typical millionaire's "property tax" is 0.08% of his actual total property (his
net-worth), while is a middle-class family's "property tax" is often 10% of their net worth (125-fold higher). A
typical millionaire pays 0.7% of his income and investment gains in
sales taxes, while a middle class family pays 3.5% of their wages (5-fold higher).4
5.
Tax cuts for the wealthy investor class started 30 years ago under
President Reagan and were extended under the second President Bush. In
those 30 years, the richest 1% in the US have gone from
owning 22% to 40% of the nation's wealth, largely because of favored tax
rates for the wealthy. Meanwhile, the bottom HALF owns 1% of the
nation's wealth and one of every 5 children live in poverty.
6.
History shows that tax cuts for the wealthy have been a 30-year "failed
stimulus package," which racked up half our current national debt. (link) President
Reagan claimed cutting taxes for the wealthy,
would make the economy flourish. Since then the "job creators," the top
20%, have accumulated 87% of the nation's wealth, and yet our average
GDP growth
has dropped 25%, we have had the worst recession in 80 years, and now we have 9% unemployment. If 30 years of low taxes for the wealthy "job creators" hasn't trickled down yet, it's time we gave up on the idea.6
7. Far
from stimulating the economy the tax cuts for the wealthy have ruined
our economy. Our tax system rewards investment over work, and this leads
to recessions, unemployment, and poverty.7
8. Our
tax system's breaks for the wealthy and the wealth concentration it
produces has multiple deleterious social effects including erosion of
democracy and lower life expectancy for all.8
9. Our tax system is underfunding government. The recessions caused by our tax system and the multiple tax breaks for
for the wealthy lead to underfunding of important priorities like
education, basic research in future technologies, maintenance of our
economic infrastructure, environmental protection,
etc.; all critical to future economic growth. Chronic
underfunding of government leads to a ballooning national debt, now
about $15 trillion dollars ($50,000 per person), more tax revenue lost
to pay interest on
this debt, less credit available for the private sector, and enriching and empowering foreign nations that lend us money.
10. Our federal tax code alone consists of about 60,000 pages. It is so complex
and opaque that everyone suspects that there are, buried within it, special provisions
that benefit the powerful and well-connected. They are
right. Each year Americans spend an estimated 6 billion hours
deciphering our tax code at a cost of about 200 billion dollars.
Notes and details for the above tax facts:
1. Most
other "tax facts" you read base their figures on the progressive federal income
tax and conveniently ignore the other 70% of taxes paid in this country. Social
Security, real estate, sales and gas taxes shift the tax burden to the
poor and middle class. The above figures include taxes at all levels of
government (yes, including corporate and other indirect taxes).
2. Consider how much money that wealthy investors in
corporations could have accumulated if they had no educated employees
(public education), roads (to ship their products), cheap oil (subsidies, the
military), senior consumers (social security, medicare), financial bailouts, the internet, on and on.
4. This is because in the
US property taxes are levied only on real estate and on the total value of the
home, including the part effectively owned by the bank. The
above figures are based on a mill rate of 200, a young middle-class family, who just used
all their savings to make a 20% down payment on a $250,000 home, and a
millionaire in the same city with $50 million in investments, including a $2 million home. Sales tax calculations are
based on a 7% sales tax the middle class family spending half the
income on taxable goods and services and the millionaire earning $5
million in investment gains and spending $500,000 of it on taxable goods
and services.
6. Average
real GDP growth decreased 25% comparing the 30 years since Reagan to
the 30 years prior, when the top tax rates were much higher. The
best economy we ever had was during the brief period Clinton was able
to raise taxes on the wealthy investors and bring them close to the tax
rates workers pay (the GOP predicted that the tax increase would "kill
jobs" and ruin the economy). The worst economy we ever had was when when
the GOP
slashed taxes on wealthy investors, resulting in the last time the top
1% accumulated 40% of the wealth, followed by the Great Depression.
7. Mr.
Buffet, for example, pays a tax rate on his investment gains that is almost 4-fold
lower than a middle-class family pays on its wages. This distortion of
market forces and the resulting wealth concentration leads to too many
investment dollars chasing too few worthy investments. Supply exceeds
demand, investment prices climb, leading to an investment bubble. These market forces overwhelm any attempts to regulate the financial markets.
The investment bubble will inevitably burst (particularly with higher
tax rates on the vast middle class suppressing consumption). The burst
bubble in turn triggers or exacerbates a recession. Then all but the
very wealthiest are at risk for losing their jobs, their homes, their
kid's college funds, and their retirement savings.
8. Our tax system contributes to the vicious cycle of concentration of wealth and
political power in the very rich. It hampers social mobility, limiting
education opportunities for the poor and middle class, which means fewer
citizens realize their full potential, which in turns weakens our
nation's economy and its capacity to act as a force for good in the
world. Research shows that economic disparity in developed nations is
associated with the following at all levels of society: worse general health, lower life expectancy, teenage pregnancy, higher infant mortality, more psychiatric disease, more substance abuse, more homicides, low societal trust and cohesion.CLICK TO JOIN THE MOVEMENT AND HELP |
|
|