Tuesday, November 16, 2010

The Case For Tax Reform

In the New York Times today, there appeared an editorial describing possible tax reform. This publication stands firmly behind true tax reform. However, this liberal stands firmly behind the rich paying their share. A few (including Mr. Hubbard, author of said article), have made the argument that the Rich pay too much in taxes, and that it is mere correlation, not causation that the rich tend to be taxed at the highest rates during  times of great prosperity. Simple logic shows that this cannot be the case. The poor and middle class spend far greater proportions of their incomes on basic, and not so basic, needs. Once a few goals are achieved, though, these people being to save. Warren Buffet, Bill Gates and The Koch Brothers could not spend all their money if they tried (although the Kochs seem to be doing their level best in terms of campaign spending). Wealth redistribution is a four letter word in American politics today, but taxing the rich at rates that do not impoverish them, but still allows the government the revenue it needs is pure economic sense. However liberal he may be, this columnist still stands for lowering the taxes of businesses and corporations within the United States. Between state and federal taxes, American companies spend far more to the government than even countries with far sounder fiscal stati, like Germany.
            Taxing the people who make exorbitant amounts of money from large corporations, rather than the corporations themselves, is far less likely to hurt the country economically. GM and GE both can (and have) moved jobs overseas. Other corporations have also moved their headquarters overseas. The interesting thing is that these corporations almost always keep their functional heads in the United States. This is because the leaders of these companies would rather not move. Thus, lowering taxes on corporations but raising them on heads would encourage companies to create jobs in the United States, spurring domestic spending, and hopefully dragging the economy, kicking and screaming, out of the recession, allowing tax revenues to rise even further, and hopefully financing the federal government without bankrupting its citizens, which is the primary goal of any tax policy.

 -G. Ferrante


  1. Consider this:
    The greater one's total revenues, earned income, unearned income, gains, dividends, interest, royalties ... the greater it's debt to the system by which it thrives ... therefore the greater its tax liability. Since corporations legitimately spend only what their boards of directors and officers direct, their tax load should be 100% of revenues after distribution of dividends. Dividends may be distributed only after bills are all paid, depreciation is banked and what ever expenses of expansion are paid.

    Individual tax rates are capped at 50% of last $. The tax rates are graduated from 1% of the first 1000 in reasonable ranges to about 15% of final dollar at $50,000 - for every one. Use the basic computational methods in force today with a couple of changes. Only the basic central worship facility and physically attached school would be exempt. All income above $200,000 not diverted to increasing employment is taxed at the maximum rate - 50%. Between 50,000 and 200,000 we graduate from 15% on last dollar to 49%.

    If you desire a discussion on the issue. I'm game, my values are fluid, but the concept of a graduated table weighted to reward those who participate, even unsuccessfully, in expansion of the work force is firm.

    We improve our culture by either creating new jobs or bringing them home to where they used to be. History has demonstrated that the tax system is the only effective way of manageing the private sector to behave in a socially responsible manner. Ultimately, consider the effect of the table not on you, but on your unknown neighbor who is the one that's the miscreant.

  2. It makes sense. Hiring occurs in the framework of a business, not wealthy indidividuals -- illegal househelp not withstanding. Low marginal rates leads companies to enrich certain individuals, such CEO's and other executives/managers. The same goes for "small businesses": raising marginal rates creates an incentive to invest into your business instead of milking every cent for profit. After all, we subsidize investment through business deductions.