Mitt’s taxes part 2

Tax

Tax (Photo credit: 401(K) 2012)

If we ever learn about Mitt’s tax history, no one will care. I posted a blog post entitled Proposition 13 and tax reform in which I advocated the abolishing of the property tax and the sales tax, to be replaced by the graduated income tax and a wealth tax on net worth. Let us crunch a few numbers and see what Mitt’s taxes might have been if my proposals were adopted. In 2011, Mitt paid about $2 million in Federal income tax on $14 million, a rate of about 14%.

Say that Mitt made $14 million and paid a Federal rate of 30% or $4,200,000.
On an estimated wealth of $250 million, he would pay 1% or $2,500,000 annually, for a total $6,700,000.

If he lived in California for tax purposes and the state levied a state income tax of 40% of the Federal income tax and 20% of the Federal wealth tax, his state taxes would be:
40% of $4,200,000 or $1,680,000 and
20% of $2,500,000 or $500,000 for a total of $2,180,000 to the state of California.

On an income of $14 million, Mitt would pay Federal taxes of $6.7 million and California taxes of $2.18 million for a grand total of $8,880,000. That would be a combined rate of 63% leaving Mitt with only $5,120,000 after taxes to live on. That works out to nearly $100,000 after taxes every week of the year. I could happily live on just one of those weeks’ net income after taxes.

47%

Tax

Tax (Photo credit: 401(K) 2012)

If Mitt had been elected with GOP majorities in Congress, he could have had his tax plan passed into law, eliminating corporate income taxes, dividend taxes, capital gains taxes and the estate tax. Then Mitt could have paid no Federal income taxes at all, and he would have become a card-carrying member of the 47% who take no responsibility for their lives. Even though his income is north of $20 million per year, he would have been the recipient of government services like the rest of us for which he paid nothing. Instead of being part of the 47%, he remains the out-of-touch member of the 1% who received 47% of the vote.

Surtax

The Reagans meeting with then-President Richar...

The Reagans meeting with then-President Richard Nixon and First Lady Pat Nixon in July 1970 (Photo credit: Wikipedia)

Surtax: a temporary tax on top of another tax. If your effective tax rate is 10%, and a 10% surtax is added to it, your effective tax rate is really 11%. If your effective tax rate is 30% and a 10% surtax is added to it, your effective rate is really 33%.

To help pay for the Vietnam war, LBJ had a 10% surtax enacted in 1968 on top of the Federal income tax. Since it only applied to 9 months of 1968, the actual tax rate was 7.5%. Congress renewed the temporary surtax for 1969 and the first half of 1970 at the reduced rate of 5%, and then let it expire. During Ronald Reagan’s governorship, temporary increases to the sales tax were enacted to help pay for flood damage in Northern California. Some say that there is no such thing as a temporary tax, but both LBJ and Reagan promised that the taxes were only temporary and both kept their word.

My first ever letter to a president was sent to Richard Nixon favoring an additional surtax to combat inflation of 2% in 1971. Someone in the Treasury Department responded with the word that a different solution had been selected. Nixon announced a wage-price freeze that ultimately did not work. I supported the surtax to protect people on fixed incomes from inflation. Inflation is a tax that affects everyone, while a surtax only affects those paying an income tax.

Once the fiscal cliff is behind us and we have enacted tax reform, I think that we should keep an income tax surtax in reserve for future emergencies. In times of war, natural disasters like Katrina and Sandy, or recession, we could enact a temporary surtax to provide revenue to pay for unusual expenses.

Romney care

English: President signing the Medicare Bill a...

English: President signing the Medicare Bill at the in . Former President is seated at the table with President Johnson. The following are in the background (from left to right): Senator , an unidentified man, , Senator , Vice President , and . (Photo credit: Wikipedia)

I care
You care
He/she cares
We care
You care
They care

Mitt doesn’t care, and I don’t care about Mitt. I am a proud member of the 99% and the 47%. I began working at age 20 and I worked for 50 years until age 70. During those years I paid Federal income tax each and every year, and I probably paid that tax at a higher rate most years than Mitt paid in 2010. I paid Social Security tax to the maximum each year until the maximum was raised higher than my income and I paid Medicare every year that Medicare withholding was in force. Now I don’t pay Federal income tax because my wife and I are living on two very small pensions that are not indexed for inflation and Social Security which is not indexed adequately for inflation. I am part of the 47% and I will vote to re-elect President Obama because he is and will be the better President.

Morality of taxes

Death & Taxes (film)

Death & Taxes (film) (Photo credit: Wikipedia)

Are taxes moral? I was reading a blog post today that argued that taking someone else’s property is theft and therefore immoral. If you earn it, it is yours to keep. Other arguments against taxes include that the accumulation of wealth denotes God‘s approval. Taxing that wealth away is going against God’s wishes. Personally, I have considered all forms of taxation, and I believe that the graduated income tax is the fairest of them all.

If you believe in democracy, rather than plutocracy, the rule of money, you will support the graduated income tax at higher percentages than today’s rate to slow the accumulation of great wealth. In addition, you will join me in supporting the death tax, the estate tax, to prevent great wealth from being passed intact from one generation to another. We can argue the morality of taxes ad infinitum, but the reality is that our democracy requires a level playing field where talent, not inherited riches, determines outcomes. This position was enunciated by one of our greatest members of the US Supreme Court, Louis Brandeis, who sat on the Court from 1916 to 1939.

Please see Means and ends