Mitt Romney, former governor of Massachusetts, 2008 US presidential candidate. (Photo credit: Wikipedia)
Beware of Greeks bearing gifts; beware of politicians quoting percentages. The use of percentages is a good way to conceal something that someone does not want to reveal. Case in point is Mitt Romney‘s use of percentages to obfuscate his intent on taxes. Only he and Paul Ryan and a few billionaire supporters probably know his true intent on Federal taxes, but let me give an example of what he may really mean. I am going to assume a few round numbers to make my point. I will use averages of real numbers, not percentages. Whenever a politician uses percentages, you should ask for real numbers of dollars or other real things.
For want of better numbers from Mitt, I am going to assume a $100 billion tax decrease shared among 100 million taxpayers. That is an average tax savings of $1000 per taxpayer. However, as Mitt pointed out last night, the top 5% pay 60+% of the taxes. If the top 5% share 60% of the tax reduction, they will each average a tax savings of $12,000 while the remaining 95% of tax payers will each share a tax reduction of $420. Of course, these are only averages, but they are real numbers and real dollars. Mitt’s numbers would be different, but the results would be similar. If Mitt neither raises nor lowers rates for the wealthy, their share of the taxes and the tax savings would remain the same on a percentage basis, but would change when stated in real numbers.
And we may be missing the real point. Mitt may be focusing our attention on tax rates to distract us from his real mission, eliminating taxes on capital gains and the estate tax which affects only a few very wealthy people. If Mitt is successful in eliminating the capital gains tax and the estate tax both, then his taxes will fall to nearly zero and he will be able to pass his wealth intact to his heirs. It is my understanding that currently Mitt has used tax gimmicks in the current law to design his estate to pass most of his wealth to his heirs tax-free. If the estate tax is abolished, he will not need to rely on those gimmicks any longer
taxes (Photo credit: 401K)
Tax reform will be enacted someday. At this point, I would like to submit a modest proposal. I believe that great concentrations of wealth are destructive to democracy and that the progressive income tax is the fairest tax of them all. Therefore I oppose a flat tax and the elimination of the inheritance (death) tax. However, I am willing to compromise if the GOP will settle for either the flat tax or the retention of the inheritance tax, but not both the flat tax and the elimination of the inheritance tax.
If GOP lawmakers insist on a flat tax, then I propose that the inheritance tax be set at 100% above $1 million. We support a level playing field and this would ensure one, by eliminating inherited wealth. The $1 million could be split among the heirs any way the deceased chose. There would be no escaping the inheritance by setting up charitable foundations. So either a progressive income tax to fund government or a confiscation of wealth upon death to eliminate great concentrations of wealth and preserve our democracy. We must have one or the other tax. Let the GOP choose which they prefer.
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Yesterday evening I was clicking around the dial looking for baseball when I happened upon the Mike Huckabee show where he was talking to Herman Cain about his 999 tax proposal. I stopped to watch and learn. I like Mike, but I disagree with much of what he says.
Herman Cain explained that the 999 tax plan is composed of a 9% tax on corporate profits, a 9% tax on individual incomes, and a 9% VAT, Value Added Tax, a national sales tax, which is severely regressive. Payroll taxes would be eliminated, no Social Security or Medicare taxes. No taxes equals no programs, I guess. Herman may intend that Social Security and Medicare be privatized, but that is the same thing as no programs. Herman also told Mike that the 999 tax plan is a pathway to the FAIR tax which I also oppose.
In addition, the 999 tax proposal would eliminate the progressive income tax, the fairest tax I believe, and the capital gains tax, and the inheritance tax, the so-called death tax. I oppose the elimination of the capital gains tax and the inheritance tax and here is why.
The wealthy receive most of their income from capital gains and making capital gains tax free would mean that the wealthy would pay little or no taxes. Secondly, eliminating the inheritance tax would allow the wealthy to pass their wealth from one generation to the next untaxed and undiminished. That would create wealthy dynasties in the US that would allow the wealthy to purchase influence in Washington from whomever we elect forever. As it stands now, only the wealthy pay inheritance taxes; it is not a tax that faces the 99%, just the top 1%.
Louis Brandeis was an Associate Justice of the US Supreme Court from 1916 to 1939. He argued that you could have great concentrations of wealth or democracy, but not both at the same time. I agree, and I favor democracy, not great concentrations of wealth, either in private hands or corporate coffers.
Please see Herman Cain | FAIR tax not fair | I am weary