Your Opinion: Wealthy promote unfair tax system
Tuesday, August 30, 2011
If you are on a payroll the tax system is disadvantaging you relative to the wealthy.
Payroll employees pay taxes on their earned income at rates ranging from 10 to 35 percent depending on marital status and the amount earned. They also pay payroll taxes of 4.2 percent (which the Republicans want to raise to 6.2 percent).
The wealthy get most of their income from capital gains and dividends, both of which are taxed at 15 percent, and on this income they pay no, repeat no, payroll taxes.
This tax system is one of the reasons why Warren Buffett “wins” his office survey every year. He surveys the employees in his office as to the percentage rate they pay in taxes. Every year he pays a lower percentage in taxes than any of his employees.
Last year Buffett had income of $40 million and he paid 17 percent in taxes, the lowest rate in the office. The other 20 employees in his office averaged a 36 percent tax rate. The difference was that most of Buffett’s income was capital gains and dividends. His employees paid ordinary tax rates. (http://www.nytimes. com/2011/08/15/opinion/stop-coddling-the-super-rich.html)
The tax system clearly favors the rich. This is resulting in increasing income inequality in America. From 2002 to 2007, the period known as the Bush expansion, the incomes of the top 1 percent grew by 10.1 percent. In that time period the incomes of the bottom 99 percent grew by 1.3 percent. (Data come from a paper, “Striking it Richer,” by Emmanuel Saez, an economist at the University of California, available via Google.)
The rich are getting richer very fast, and everyone else is staying about the same unless they have lost their jobs and then they are even worse off.
Now the Republicans, the party that fights the tax battles for the rich, are fighting to preserve the Bush tax cuts and let payroll taxes rise to 6.2 percent from 4.2 percent.
Beyond this the super-wealthy in Missouri, led by St. Louis billionaire Rex Sinquefield, are fighting to eliminate Missouri income taxes and replace them with a huge sales tax, the most regressive tax of all.
Isn’t it about time the Republicans and their rich backers say “Enough, we’ve got enough. Let’s support a fairer tax system”?