Wednesday, January 25, 2017

How is it fair if billionaires pay a smaller rate of taxes than you do?

April 9, 2014

[Including text, in case the Facebook post is lost.]

from Facebook post by Robert Reich:

It’s getting to be tax time again, when our minds turn toward paying the taxes we owe or possibly getting a tax refund. But what we don’t think about enough the unfairness of our tax system. The richest .1 percent of Americans is now getting the largest percent of total national income they've received in almost a century, so you might think they’d pay a much higher tax rate than everyone else. But you'd be wrong. Many pay a lower total tax rate than middle-class Americans.

How can this be? Five reasons: They (1) deduct from their taxable income such things as large interest payments on mortgages for huge homes, the costs of business entertainment and conferences (vacations at golf resorts), and gold-plated health care plans; (2) park their earnings in offshore tax havens; (3) treat other income as capital gains, subject to a much lower tax rate (if they happen to be hedge-fund or private-equity managers, the "carried interest" loophole is designed especially for them); (4) spend a tiny portion of their incomes on Social Security payroll taxes, which are capped this year at $117,000; and (5) pay a much smaller share of their incomes on state and local sales taxes than anyone else (the poorest fifth of Americans pay an average state and local tax rate of over 11 percent of their incomes, while the richest fifth pay only 5.6 percent of theirs).

Republicans want to cut taxes on the wealthy even more. Paul Ryan's new budget lowers the top federal tax rate to 25 percent. When the rich are let off the hook in all these ways, the rest of America has to pay more in taxes to make up the difference – or have services cut because government doesn’t have the funds. It's not fair. Make a ruckus.

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