1) I would argue that most wealthy people inherit their wealth. Some might start off poor and work their way up, but I doubt that's the norm. Money makes money, plain and simple. If I had a couple million to invest, I could live off the interest and then some. I wouldn't ever have to work again. On top of that, many high-paying positions consist of basically sitting in meetings all day. I think some of the hardest working people are those in the food service industry.

Nailing down a specific percentage is not something I have the knowledge to do. But you won't see me sympathizing with the wealthy when it comes to being 'burdened' with taxes.

2) I just had this conversation with my neighbor. How do you define wearlthy? I am not being argumentative-I really don't know. I think the consumption tax is an interesting way to look at it-I don't know the pros and cons. Why is it fair to tax someone just because they have more money? I personally worked hard to put myself through school and then later to work to help my kids. My father was a school teacher and worked 3 jobs to raise 5 of us. One thing I think we should all consider is that who ever is president-they won't be doing it all by themselves-there is Congress.

3) I am one of the biggest supporters of government letting the people spend their own money. If the tax rates ever reached 50% I would take some real action. Individuals work for their money, Uncle Sam may need some for infrastructure and other services that the individual cannot afford for themselves, but beyond that it is the individual's money. I think 36% is a fair rate for the highest brackets. Maybe instead of increasing the percentage the government should look into limiting deductions. If you could only deduct things that gave back to the community or saved the government money, I think we would have a system that makes more sense. I had a boss once who would deduct everything and then take the gamble that he wouldn't be audited. As long as I knew him he never was. What kind of enforcement is that?

4) Wealthy, to me, means you don't have kids.

5) I guess I just moved into a new tax bracket--I've never been called wealthy before!! :)

6) I agree with Dave about wealth being born from wealth. I think a consumption tax is brilliant and the only way to fairly tax individuals. I think property tax in general is a fair principle, although it's not necessarily enforced fairly all of the time. All luxury items(anything but food and medicine) should be taxed out the wazoo, including gas, which will directly affect peoples spending habits, but leave more in their pockets to allow them to choose what to spend on. There should be tolls on every road, and low mpg vehicles should have an insanely high sales tax.

Trickle down economics hasn't worked so well for us, and I don't see any reason why it would in the future, so I'm all for raising taxes on the rich assuming we'll never have a consumption based tax policy.

7) Maybe wealth is born from wealth in some cases, but not all. There are still people who have worked their asses off, starting at the bottom and working their way up to the top.

And Brian, I totally agree with you on the fair tax plan. Makes a whole lot of sense to me.

8) Yeah, there are some people who have done that. My guess is that they understand what true poverty is and would be happy to shell out a small fraction of their fortune to give others the opportunity they had(or didn't have) to reach such success.
It's more about greed than equality in my opinion.

9) I'm just going to quote William Gale here. He can say it far better than I:
"In the real world, every consumption tax out there is going to hit low and middle income households to a greater extent than the income tax does.
For two reasons: One is that, well, the main reason is that low and middle income households consume more of their income than high income households do. Another way of saying that is high income households save more of their income than low income households do.
So if you move the tax from income to consumption, you're raising the relative burden on low savers, which are low and moderate income households, so almost any revenue neutral shift from the income tax to a consumption tax will be regressive in that manner.
A family of four doesn't pay any federal income tax until their income is in the 20s or 30s, something like that. If you go to a national sales tax or value added tax, they'd be paying that tax on the very first dollar that they buy.
Now, again, there's a way to insulate them from that by giving each household cash payments, but no country in the world actually does that. So in the real world, consumption taxes end up being more regressive than income taxes."
I would not support a consumption tax.

10) I am all for Fair Tax, too. If you haven't seen their website, you may want to check it out. http://www.fairtax.org/

11) Because I don't know that we'll ever be a fair-tax nation, I tend to agree with Joe. The problem isn't that the wealthy isn't taxed enough, it's that they are given deductions out the wazoo. Why not give those to the people who genuinely need them?
This is a small potatoes example, but I know as a teacher, I'm limited on the amount of deductions I can make on things I buy for my classroom. I'm not making a ton of money; however, I spend quite a bit of money. On the other hand, doctors, who make significantly more than I do, can deduct whatever they can justify. I don't see how that makes any sense whatsoever.
This seems to be par for the course when it comes to deductions. Those in the highest tax bracket get all the breaks, while those in the lowest are given none. It seems it should be the other way around.
Disclaimer: I'm no economics genius, so if anything I've said is wrong, please correct me. I'm just using common sense.

12) This class envy is cracking me up. I think everyone needs to be taxed the same. I know several people who started with nothing and made it big. Guess what, they created jobs for thousands of people. So, no they just dont sit around in meetings all day. They are the movers and the shakers. How much does the ditch digger contribute to society vs. the person with the idea?

How many poor guys have given you jobs?

13) FROM PASTAFARIAN (and I quote): The rich only pay that 36% on their WAGES; if they have dividends, they only pay 15%. Also, there's a "hidden tax" on people who make under $90K in social security. Anything over $90K isn't taxed there, so again the rich get out of approximately 15% for everything they make over $90K.

Warren Buffet, currently (I think) the richest man in the world, said last year he paid, I believe, 18% overall in taxes on his income. His secretary paid almost twice that, percentage-wise, so this 36% BS is just typical 'Limbaugh Lies' (TM) to fool people who don't know any better. Smarter folks know better.

FROM ME:
I AM the "poor guy" Rick, and no one has ever given me anything, unlike Paris Hilton who hasn't done a damn thing for her millions. So frankly, she CAN pay more taxes than me, and I won't feel sorry for her one bit. Oh, and I don't envy her life in the least - I'll take brains over beauty any day!

14) girlcarew- You, or William Gale, don't understand the FairTax, then. It comes with a prebate check for each taxpayer that for low income folks, basically pays their taxes for them. I think my family would have gotten a $600/month check in prebate. Mike Huckabee did a weak job in emphasizing this in his campaign; he sounded just like a standard flat-tax guy.

The major downside I see of the FairTax is the potential explosion of the black market for goods, and also, a decrease in economic activity. Who is going to rush out there to spend if the sales tax is 23%? I do think Americans as a whole would benefit from spending less money, but I know that means fewer jobs (or maybe, fewer jobs for Chinese in China). Still, I say give it a try.

And I really like the idea about limiting the kinds of deductions. The problem is, all of those were ratified to score points with this or that special interest group. I don't see it happening.

Let me also go on record in saying it is refreshing to agree with Dave and Matt on something politically!

15) Rastaguy, and Angi

Why should investment income be taxed at all? The government doesnt share in the risk, only in the reward.

And I guarantee you that Warren Buffet paid more in taxes than his secretary. Who are you kidding.

16) ^^^ yup.

17) Hmmmmm. I still can't help but think of this scenario: Let's say we have a flat tax rate of 30% for everyone. We have a 2 individuals, both with a spouse and 2 kids. One individual makes 15K per year and the other makes 500K per year. 15K individual pays $4500 per year in taxes leaving them with a take home figure of $10500. 500K individual pays $150000 per year in taxes leaving them with a take home figure of $350000 for the year. I can't say that I'm weeping for the $500K individual. I don't have a problem with them paying more in taxes. I do agree with a lot of the previous people when the say that the deductions really need to be clamped down on. Some of things people are allowed to deduct is just ridiculous.

18) To Rick & Jules: My husband (Pastafarian) didn't say that Warren Buffet paid less in taxes than his secretary, so as I would say to my English literature students, "Re-read that, please and thank you."

19) Sorry Angi, I was "yupping" to Rick's comment that investment income should not be taxed. Should have clarified that better.

20) soundchick,

How about this scenario:

Lets assume you find a way to make lemonade for almost zero cost. And you are the best lemonade salesperson ever. You can sell twice as much as anyone else.

You start a lemonade stand, work it yourself, and make $500 profit one summer (summer 1). You take that $500 and open up another stand during summer 2 and hire 2 people to run it for you. You pay them each $250. That new stand makes you $500 profit after paying your 2 employees. So summer 2 you make $1,000 profit ($500 at your stand and $500 at stand 2).

Summer 3 you hire 2 people to work stand 1 at $250/employee, keep stand 2 as is and open up 1 more stand. So now you own 3 stands, employ 6 people, and are making a profit of $1,500 while paying $1500in payroll. And you get to stay home and watch reruns of Obama on Oprah all day long.

1. Are you now one of those rich guys who doesnt do anything? After all you are not out there on the street sweating and selling lemonade.

2. Or would you rather have the govt tax you at 40% so that they can put city seals on the road and you are not able to expand and add employees?

3. I would suggest the smartest guy and largest contributor to society would be the guy who sits around watching Oprah collecting his $1500 in profits while employing 6 people.

4. If the govt would have taxed you at 40% in year 1,they would have taken $200 of your $500 profit and would have only been able to hire 1 person at stand 2. So your profits at stand 2 would have been only $250. So even if you wanted to expand the following year, your growth rate would have been slower and more people would have been out of work.

5. Or would you have the government take your secret lemonade recipe, which costs almost zero to make, and allow them to give that secret to everyone else so that they could make their own lemonade?

So you see, this is why it is a bad idea for everyone to overtax rich people. Rich people make the world go around.

21) Frankly, I'd like to meet this guy who can sit around and watch Oprah all day, all year, on only $1500 in profits per summer! Now, that's genius!!

22) Oh, and Jules, I did agree with Rick on not taxing investment income, especially since it's already been taxed before. Did I just say I agreed with RickMonday??!! I must be tired...' night HumzOo!

23) Angi,

I know what you your husband meant. I wrote my initial response as a sort of "who cares about the difference in the rates between Buffet and his secretary". What was the point in writing that in the first place?

The difference in the rates is that (I have to assume) Buffet pays himself a salary of $1.00. He has already paid his income tax on his initial investment capital. The moral of the story here is to save your money and invest it.

24) Rick, that's a very good and valid argument about the lemonade stand. As far as how it pertains to taxes and wages, let me take it a step farther.

FOR THE EMPLOYEE
I work at your stand one summer and am paid a gross of $250. Part of that goes to health insurance, say maybe $25. $5 goes to social security. $70 goes to income taxes. This leaves me with a paycheck of $150. Taxes and other standard deductions aside, I am netting about 60% of my gross pay.

FOR THE OPRAH-WATCHING OWNER
That same summer, while my employees grossed $250 each, I grossed $2000. Take off my $25 for insurance and $5 for social security (unless this is a percentage of income, which it may be, I don't know). That leaves me with $1970 of taxable income.

But wait! As the owner, now is when the deductions come into play. Building those stands wasn't cheap, so I'll deduct the $1000 cost to build them. I'll also deduct office supplies, lemons, cups, square footage of my house that I use "for business," my wife's computer, my kid's bookbag, etc. Total that up to a conservative $800.

Taking the $1800 off of my previous $1970 taxable income leaves me with a taxable income of $170. Taxes on that income might be about $50.


Now, you might say "but you can't deduct all that stuff!" Yes, maybe not. But you know people do, in a big way. The employee though is not in a place where they can play the same kind of deduction games, so they end up actually paying 30% taxes on their $250.

You as the store owner only end up paying about 2.5% taxes.

There isn't an easy solution to this discrepancy, as the "little guys" don't have much to play with. But that's how I picture business in a nutshell.

Now excuse me while I go find some McDonalds receipts to file away for next year's freelance web design business deductions...

EDIT I see that you changed your figures in your example, so don't mind the discrepancy in my response. It's all highly speculative of course, but the point still stands to some degree.

25) Rick: "Rich people make the world go around."

So do the middle class and lower class people that buy the lemonade. Without them, the opportunity for the owner would not exist.

26) Rick, my point is that the guy making (in your example) 1500 a year is still way better off than his employees. Why shouldn't they have to pay a little more? Just because they found a better lemonade recipe they're somehow now entitled to keeping the same or more? Do you think that the people who make millions upon millions per year are going to decide that since they're taxed at a higher rate on wages that they're not going to try and make as much money?

27) Soundchick and Dave,

Thanks for playing along.

True the guy sitting at home is better off, but it was his idea and he is employing people.

Having said that, I am not opposed to having the first $100-$300 being tax-exempt. So now the employees dont have to pay taxes on a certain portion of their income (nor does the owner). So, the employees can now afford their basics and still have a little left over. The owner can go buy his boats and planes. I dont think this is unfair for he is the one who came up with the idea and put it into action. (by the way, when the owner does buy his plane, he is putting plane builders to work, so here you see the trickle down effect)

Regarding the wages that the employer pays the people, I suggest that he is only paying market rates. Why should he pay more. After all, anyone can sell lemonade, very few know how to make it at low cost and thus this is the contribution to society that the owner makes. His lemonade is cheaper. Without this guy, those people would not be employed.

Dave, regarding "rich people make the world go around". You make a good point that the employer has to have good employees. If he found one that can make him more than $500/profit per stand, he would pay him more, for that person stood out. That special employee would probably be more educated than the avg. employee and would probably work harder.

I am trying to make this example mimic real life. My point is without the guy with the idea and the risk that he took in investing in his first stand, society would not have been able to benefit. Furthermore, if the govt. had taxed him too much early on, he would not have been able to grow and hire more workers. So although he is just sitting at home watching Oprah, he has been a huge net plus to society and should not be viewed as evil

28) My point wasn't that the employer needed good employees. It was that the business needed customers. Without the demand, the supply is irrelevant.

I would like to see people pay the same tax percentage. The keyword is percentage. Of course that means rich people pay more, but I think it would be fair to keep the percentage point the same for everyone. That said, as I pointed out and have others, there are more opportunities for wealthy people to move their numbers around so that their taxable income is much lower than it probably should be. That's not the problem of uneven taxes, just loopholes and lax enforcement agencies.