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.

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Wealth tax

English: Mexican businessman Carlos Slim Helú....

English: Mexican businessman Carlos Slim Helú. Deutsch: Mexikanischer Unternehmer Carlos Slim Helú, u.a. Präsident von Grupo Carso. Español: El empresario mexicano Carlos Slim Helú. Português: O empresário mexicano Carlos Slim Helú, presidente do Grupo Carso, chega ao Palácio do Planalto para reunião com o presidente Luiz Inácio Lula da Silva. (Photo credit: Wikipedia)

The UN has proposed a wealth tax of 1% on the world’s billionaires to help poor nations. I think that it is a good idea, but I have a better idea. Some European nations already impose a wealth tax of a fraction of 1%. I would impose a wealth tax on the wealthy, not just billionaires, in every nation of the world. If a first world nation generated more revenue than it needed, it could increase its foreign aid to third world nations that need help.

For example, Mexico‘s Carlos Slim Helu is the world’s richest man. If Mexico would tax its wealthy fairly and then impose an added wealth tax, it could improve the lives of Mexico’s poor to such an extent, that the flow of undocumented workers to the US might slow or cease. In that case US employers would be forced to automate many low wage jobs in the US or pay US workers a better wage to do those jobs. Both US citizens and citizens of Mexico would benefit.

 

Federal taxes

, U.S. Senator from Pennsylvania.

Image via Wikipedia

Fifty plus years ago, corporations paid about 1/3 of Federal taxes and individuals 2/3. Now corporations pay about 10% forcing individuals to pay the remaining 90%. Rick Santorum wants to reduce Federal corporate taxes to ZERO. If corporations are people, they should pay the same rates as you and I.

Some countries in Europe assess an annual wealth tax, a fraction of 1%, on a person’s net wealth, similar in nature to a property tax. I would like to see a graduated wealth tax here in US with an exemption for taxpayers of little to moderate net wealth. The wealth tax could and should also apply to wealthy corporations.

Please see Santorum and Obamacare