WHY THE WEALTHY SHOULD WANT TO PAY MORE TAXES UNDER THIS FAIR SHARE TAX PROPOSAL

 

The Fair Share Tax Reform proposed here benefits the poor, the middle class and the wealthy. Clearly, the middle class and working poor would do better under a reformed, fair tax system that reduces their taxes. The unemployed poor, who now may pay little in taxes, would do better from a better economy and increased government funding of economic infrastructure, particularly education. How? They could find employment and then pay their fair share in taxes. What about the wealthy? In a fair tax system, they pay more taxes, so surely they would be worse off. If one group wins, the other has to lose. Right? ...  Wrong.


The Economy Flourishes. Taxation is not a zero-sum game. To recapitulate, under a fair tax system, the average citizen works more, spends more, saves and invests more, and can invest in education for themselves and their family. The government has more money to invest on economic infrastructure and “seed money” for research that would not be funded by the private sector (e.g. funding hi-risk basic energy research spawns new technology industries and averts climate-related human and economic catastrophe). The government borrows less, leaving more credit for the private sector. The economy is more stable with fewer and shallower recessions here and, given the growing interconnectedness of economies, abroad. These conditions would be a boon for the wealthy investor class. Over time, their investments are likely to increase much more than their taxes have. Thus, a fair system of taxes produces “a tide that raises all boats.” [Since taxes for the wealthy started being cut 30 years ago, average GDP growth has dropped 25% or more. Since tax rates on investment income was slashed to about half that paid by workers on wages, the return on the US stock market (1998-March 2012) dropped to about one-half of its prior historical returns.]


A more pleasant country to live in. What do are taxes buy for us? Less sitting in traffic jams, better educated fellow citizens, less pollution, cleaner water, more healthcare research, less communicable disease, longer lives, less crime, fewer potholes, more parks, better libraries, better public schools, on and on. These improve the lives of the wealthy - and everyone.


A stronger society with less suffering. Numerous academic studies have shown associations between economic inequality and poor health outcomes; such as higher infant mortality, worse general health, more psychiatric disease, more substance abuse, more homicides, and lower life expectancy. Economic inequality has also been associated teenage pregnancies, and low levels of trust and social cohesion. Among developed nations, these poor outcomes are tightly associated with increased economic inequality. Interestingly, the poor outcomes generally extend throughout a society. That is, they are not limited to the poorest segments of unequal societies, although they may be more pronounced among the poor. (link)


A better, more democratic government. Currently 66% of polled Americans say there is a "strong" or "very strong" conflict between the rich and poor. This is up from 47% two years ago and much higher than perceived conflict between black and white or young and old (Pew Research Center). This sort of perceived conflict can lead to political instability, which can in turn harm economic growth and the well-being of all. A fair tax system would reduce this class conflict and promote democracy. By reducing the concentration of wealth into very few families, it reduces their undue influence on our laws and government. Increased education opportunity for all increases the likelihood that future generations elect governments that are more likely to make further smart policy decisions.


A clear conscience. Under a fair system of taxes, the wealthy would benefit from the knowledge that they are giving back their fair share to the society. Past generations of workers, taxpayers, and soldiers have made the prosperity of today’s wealthy possible. Today’s wealthy should be willing to contribute their fair share to making the prosperity of future generations possible. More and more of the wealthy are coming to this realization and in the words of a real estate millionaire:  "Those of us who have the greatest ability to pay are not being asked to. I am not keen on being part of the freeloader class." Another millionaire said, ""It’s a sad state in this country when those of us who are so privileged fight for more rather than fight for those among us who have so little."


Little effect on purchasing power. Higher taxes on the wealthy affects all of of the wealthy. This holds down prices on luxury items. Therefore, the buying power of the wealthy remains largely unchanged if taxes on the wealthy are increased roughly equally. What improves for them - and everyone - are a result of the things that their taxes pay for, like less pollution, fewer potholes, etc. Cornell economics professor Robert H. Frank has written about this in the New York Times. (link)


The above is derived from the Fair Share Tax Essay.

 


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