Social Question

jca's avatar

Does it bother you that the tax laws are set up so that the very rich (i.e. Mitt Romney) pay a smaller percentage of taxes than you probably do?

Asked by jca (35969points) February 1st, 2012

I just looked at the letter that my CPA accompanies my tax returns with, and it says at the bottom “Your marginal federal tax rate (“tax bracket”) for 2010 was 25%.” If I’m not mistaken, what we learned about Romney’s was that his was about 17%. I know this is not Romney’s personal doing, so it’s not a rant against Romney. However, it spells out in black and white the disparity between the breaks given to the rich and the lack of breaks given to the poor and middle class (the class I’m in, middle class).

Didn’t Warren Buffett point out recently that his secretary pays more in taxes than he does?

Does it bother you that the tax laws are set up so that the very rich, like Romney and Buffett, pay a smaller percentage of taxes than you probably do?

Observing members: 0 Composing members: 0

37 Answers

janbb's avatar

Sure: I think it bothers most of the 99%.

nikipedia's avatar

I think his was even lower; I seem to recall 13.9%.

And yes, I think this is profoundly fucked up. You know what’s even more fucked up? How he made his money. On The Daily Show, Jon Stewart unpacked exactly how Bain Capital got rich:

Dade International . . . went bankrupt after Bain bought it out—and Bain still made $345 million dollars.

“They get it anyway?” Stewart said, confused, as he tried to understand and explain leveraged buyouts—you know, that thing where you buy a company with borrowed money and then use the company’s assets as collateral to pay yourself back (more than you owe) and sacrifice the company to the lenders.

Amazing. Presidential. A true hero of the working class. This guy’s gonna solve all our problems.

thorninmud's avatar

Not in a personal way, no. I feel obliged to make that distinction because many try to paint this as an “envy” issue—“Why do I have to pay a higher rate than him??”—but it’s not that. It just seems like a seriously messed up way to do things. So it bothers me on a rational level. And it bothers me that those with a vested interest in keeping it that way have a disproportional say in the matter.

Facade's avatar

Yes. It’s absolutely disgusting how selfish and greedy people can be, especially when they claim to have such high values and ethics. There is such a thing as having enough money despite what capitalism may promote.

dappled_leaves's avatar

There is good reason to blame Romney personally (at least in part) for his own tax rate, given that it is the result of lobbying by Bain! He is on record as saying that he thinks his tax rate is appropriate (or at least should not be changed). Voting for Romney and expecting more fairness in the tax code would be a little crazy.

wundayatta's avatar

Yes. It does not appeal to my notion of fairness. I believe that the more you make, the larger the share of your earnings should go to support the commonweal.

But others believe the flat tax is fair. We all should pay exactly the same portion of our income. I have to say that since Romney pays a lot less, the flat tax looks more progressive than a tax system that treats different forms of income differently. Who cares about a progressive tax, if you can separate out different kinds of income and get rich people income taxed at the lowest rate.

I say if you can’t beat ‘em, join ‘em. Let’s figure out ways to turn income into capital gains. Like when we are hired, we own a share of whoever we work for, and we are paid a share each month, which the employer buys back (if we want to sell it) and then we pay capital gains tax. Maybe non-profits and government entities could set up some equivalent of ownership that would allow them to take advantage of the same scheme.

Of course, it would be easier to get rid of the advantage the cap gains tax has. If possible. Not that a Republican Congress would ever go for that.

But you can be sure the rich are one step ahead of us. Maybe the cap gains tax will get moved back to being equal with earned income, but they already have five other schemes to protect their earnings from taxes.

CWOTUS's avatar

How many who are responding with disdain, disgust and displeasure are aware of why Romney’s marginal rate is lower?

The fact is that “the idle rich” make their money primarily through capital gains. That is, they risk capital in various investments in order to make more capital. The investments don’t always pan out. But you don’t hear so much about the years when they lose money, because 1) they don’t want to brag about losing money (obviously!) and 2) it’s not of interest to the media in general, because that’s not a “man bites dog” story.

In any case, I don’t blame “vulture capitalists” (though the turn of phrase has to be admired) for finally putting down under-performing assets, breaking up and selling the parts and letting others have a go at making those parts productive in other ways. What Schumpeter called capitalism’s “creative destruction” is, in fact, one of its best assets.

But I don’t expect many here to get that, and I certainly don’t expect lurve for this response.

dappled_leaves's avatar

@wundayatta I’m not a big fan of the “if you can’t beat ‘em, join ‘em” philosophy. I’d rather aim higher than lower.

@CWOTUS I’m sorry, but that’s a crap argument. We know from experience that the wealthy do not respond to incentives by putting more money into the American economy. They take it and run, always. Do you really want us to cry for the venture capitalists who lose money in some years? Why is this different from some guy who has a job for 20 years, then is unemployed for 2 years, then gets another job? He pays income tax in the years in which he is employed, and not in the years when he’s unemployed. He doesn’t get to live tax free (or taxed at an extra low rate) for his whole life because he’s unemployed in some years. When he has the money to pay taxes, he pays taxes.

Facade's avatar

@CWOTUS Sorry, but I truly don’t care if a multi millionaire loses-some money, because in the end, they’re still rich. I “get” what you’re saying, but it doesn’t make it right.

wundayatta's avatar

@dappled_leaves I hear you. But what if you aim higher and you can’t get rid of the special tax rate for capital gains?

Now that I’ve thought of the idea, I’m wondering why people don’t do it. There must be a lot of law I don’t understand. But it seems to me it wouldn’t be that hard to pay with shares or stock options rather than cash. I guess that’s the deal with short term cap gains vs long term. You’d have to hold onto your pay for a year if you want to sell at the 15% rate. But still, it seems to me you could get around that by offering a loan program to allow your employees to hold their “cap gains” for a year before cashing in.

Imagine. Then again, perhaps this is the same rate the lowest earning tax payers pay, so it would help them. Only those in the middle income ranges.

CWOTUS's avatar

To anyone who would like to argue with me on the topic:

It’s not my system. I didn’t design it (I wouldn’t have any tax on income at all), but that’s what we have and why we have it. If we didn’t have capitalists to make initial investments then we would not be as collectively rich as we are. And despite how individuals may feel who think they don’t have their share of the pie, we are – all of us – fabulously wealthy in this country compared to most of the rest of the world (even now) and all of the rest of human history. That’s not because of 9-to-5 day workers, but because of capitalists, whether you like that or agree with it or not.

You may also be displeased that the planet rotates toward the East continuously, but if I tell you “the planet rotates toward the East continuously”, please don’t argue with me about it or tell me what a bad idea that is.

Specifically, @dappled_leaves, no one cares on an individual basis whether “the rich” respond to incentives by investing in the American economy. If you have a job, then that’s evidence right there that someone has made the capital investment to provide you with a place to work, a production system of whatever kind to produce whatever you do and utilize it or sell it – at some risk, whether you perceive it or not. Someone who “loses a job” has an inconvenience in looking for a new one; agreed. Those who invest in production facilities of various kinds normally do not make quick returns, so the tax rate has been deliberately lessened for those who make those investments.

Incidentally, if you have a 401(k) or a pension plan, then you are part of “the idle rich”.

Zaku's avatar

Yes, it’s a disgustingly corrupt system which should be overturned.

dappled_leaves's avatar

@Zaku And can be overturned. The current system is not as inevitable as the rotation of the earth, as @CWOTUS implies. It will take conviction and hard work, but it can be done.

basstrom188's avatar

This is a phenomena all too common in the English Speaking world its the same in the UK. Rich people in Germany and Sweden for example, where the tax rates are much higher, seem to be more willing to pay their taxes in full.

CWOTUS's avatar

@dappled_leaves we’re not going to get along very well if you misrepresent things that I say, or imply that I have said things that I haven’t. I said “this is the way things are”, and that’s true. I never said “it has to be this way”. Obviously, property and investment is handled in other ways in some parts of the world. You may not have noted that most places in the world that don’t have a high regard for “private property” and which tax “investment income” higher than we do are mostly poorer than we are, too. I’ve been to some of those places, and I sure have noticed.

The rotation of the Earth in its current manner is probably also not inevitable, but that’s a discussion for another thread. All that I said above is “that’s the way it is”. That’s the way it is.

I strive for clarity in what I say; it’s unwise to read in to what I say much more than I have written.

flutherother's avatar

It troubles me that the poor have to work longer and harder for less and less while the rich become absurdly rich helped by an unfair system of taxation. It troubles me even more that these extremes are becoming more extreme and the middle class is diminishing. It isn’t healthy, it isn’t democratic and if unchecked will destabilise society.

dappled_leaves's avatar

@CWOTUS Ok, I will take you at your word that you were not saying the system must be as it is.

However, to tell me “please don’t argue with me about it or tell me what a bad idea that is” means (please correct me if I’m wrong) to shut down the discussion entirely – how can change occur if we all accept what is, without examining why it is the way it is, or how it can be made better? I don’t accept that.

CWOTUS's avatar

By all means when I say how I think it should be feel free to argue with me. I was telling you about the is-ness of what we have and – as much as can be determined through listening to and reading analyses of our system – “why it is this way”.

If one doesn’t know why it is “just so” and one proposes, for example, “confiscatory taxes on all incomes greater than $1,000,000 per year, because no human needs so much money!” then one might not understand how this country could be turned into Haiti in short order.

Feel free to argue with this:

I believe there should be zero taxes on personal or business income. Legal income of all sorts should be encouraged. I believe that there should be no “corporate income tax”. I think that “employer contributions” to FICA and Medicare taxes should likewise be eliminated altogether. (Since there would be no incentive to obtain “tax exemption” for provision of health care by employers, I think that would wither naturally – and it should.) I think we should combine all “common” taxes, including the FICA and Medicare payroll taxes (which are the most regressive and universal taxes we have) into some sort of national sales tax. I think we should do away with “highway tax” on fuels for the same reason. When people realize that they’re paying 40% or more of their income in a single tax to support ever-growing (and ever less-responsive) government on every purchase they make, then it won’t be “corporate titans” calling for lower taxes, but Joe Sixpack. We might also consume a bit less, I think, and invest a bit more.

mrrich724's avatar

It doesn’t bother me. A man paying 15% on 15,000,000 is still paying 2.2 million dollars.

If you made $100,000 and payed 25% your 25k contribution is laughable compared to his.

I definitely see how it’s fair that everyone should be taxed at the same rate. Actually, my libertarian feelings lead me to believe it would be better if there was no income tax, as in days past.

But the above thought, about how that millionaire is contributing loads more on his smaller % than I do on my salary lead me to forgo the anger, as they are paying for a whole lot more than we are ANYWAY.

Charles's avatar

Yes is bothers me. I think the only “fair” way is if everyone else pays taxes and I pay no taxes. That’s fair.

Ron_C's avatar

Of course I’m disgusted. The very rich made the laws to insure they stay that way. To top it off, Romney has money hidden in secret bank accounts off-shore. Ironically, he’s the best candidate the Republicans can come up with. They have a serial adulterer and confidence man, a bible thumper that wants to control what you do in the bedroom but want free reign in the boardroom, and an old guy that rotted his brain reading Ayn Rand too many times.

jerv's avatar

It bothers me greatly. While I can see merit in arguments against progressive taxation, I see no valid reason to have or support a regressive system.

Proponents justify it by claiming that those in lower income brackets would not invest if given the chance, so the only way to keep the economy strong is to give people that don’t need money more of it, even if doing so causes millions to suffer. Likewise, they claim that the people who currently get the money are far more valuable than the people who actually provide the goods/services that generate the revenue that allows companies to survive; something we take to extremes.

@CWOTUS How is that last idea not regressive? I may wind up paying 40% of my income in taxes, but those in higher brackets would pay even less than they do now. You want to take the policies that lead us into recession, give them steroids, and accelerate our progress towards becoming a Third World nation. I say rolling back the clock to someone before 1980 would help us get back to what we used to be.
And i think that it’s less about the rich not needing more money and more about them taking it from the non-rich. Take a look at poverty rates; they are increasing right along with the incomes amongst the higher tiers.

GracieT's avatar

I think that it is criminal. I’ve seen some people that want to go to the opposite extreme and have no taxes, but I don’t think that’s really a good idea, because our infrastructure is crumbling and taxes are a necessary idea. I just think that we need to make the tax code fair, and raise taxes on the people whom can most afford it. Paying 15 percent on $30,000 (4500) is more of a sacrifice than 40 percent on 250000 (100000). Ok, those are just examples of what could happen and are probably not accurate, but I hope you get the idea.

filmfann's avatar

Sure, I am unhappy about the way the tax system is set up.
Another aspect of it that makes me mad is how I have to pay taxes on retirement income. They should NOT tax the first $75,000 of retirement income each year.

woodcutter's avatar

Wars benefit the rich. They will say they hate war for the record but deep down where the light doesn’t hit in their pockets, they want a good war from time to time….Argue with me. They don’t want to raise taxes to pay for them. That would wreck the whole thing. They will whine about the deficit getting all out of control and suggest cutting programs that help the less fortunate in order to reign in spending. They want to tighten everyone else’s belt to cover their wars and tax breaks. Listen ,I don’t see a problem if the risk takers get a break the rest of us don’t as long as what they are planning is going to benefit the masses but they don’t. They want to slap each other on the backs for creating 7 dollar an hour jobs and use that to justify getting over. And they have the guile to bitch about class warfare on top of it all.

That is what bothers me.

saint's avatar

I think he paid about 6 million.
I won’t make a fraction of that in my lifetime, much less write a check for that amount to the US Treasury for one year’s taxes.
That’s alot of money.
Some people don’t pay anything.
If 6million is not enough, how much is?

CWOTUS's avatar

Well, @jerv, what do you expect people are going to do with the money that they earn? Eventually they spend it, don’t they? Isn’t that why we earn money? Aside from that, I expect that the first manipulation that would be demanded in a “national sales tax” scheme would be to exempt groceries and rent, at least to a certain amount. (“Property”, on the other hand, would probably be taxed as any other good or service. And the mortgage exemption would die a totally deserved death.)

jerv's avatar

@CWOTUS Those of us in the lower brackets spend it. They must in order to survive. That is also why I oppose consumption-based taxes; they must spend most of their money to survive. That would give them a far higher tax rate than people that have money left over after paying rent.

Those at the top don’t really spend much. Sure, many dollars, but usually a smaller percentage of their income.

As for the middle though, I know quite a few people that are not rich that invest. Not to the extent that Warren Buffet does obviously, but they have enough left over after paying the bills to do some investing and enough desire for a better future to actually do so, even if it’s just a 401k. Hell, you hear me complain about being a bit on the poor side, but part of that is because 5% of my gross income gets socked away. If I had more money, I would do more and possibly be able to retire before I die.

Now, another thing about a sales tax is that there are many other ways that someone can invest without anything that would qualify as “sale”, and if such a plan gets implemented, odds are that more will crop up.

Keep_on_running's avatar

It is beyond wrong and totally illogical.

ETpro's avatar

Actually, Mitt ROmney only paid about 13.9%. That has no impact on how I feel about Mitt Romney as a person. He followed the law. It makes me feel the law is very unfair, and that the people who can afford lobbyists to do their bidding for them, the very wealthy and the corporations, now get all the breaks when they really don’t need them.

It also bothers me that so many middle class Republicans have drunk the GOP Kool Aid about giving huge breaks to millionaires and billionaires creating jobs. The capital gains tax rate under Ronald Reagan was 28% and we somehow created jobs. It wasn’t cut to 15% till George W. Bush helped America;s underprivileged millionaire investors, and he racked up the worst job creation record since Republican Herbert Hoover presided over the Great Depression.

Oh, and the fact that Romney wants to cut his own tax rate down to 10% and raise taxes on the working poor, that DOES affect how I feel about Romney as a person.

woodcutter's avatar

It also bothers me that so many middle class Republicans have drunk the GOP Kool Aid about giving huge breaks to millionaires and billionaires creating jobs. So very true. Its talk like this that will cause conservatives to cry about ad -hominem attacks. Because they know it’s true. Just ask Lucielle about that one.

jerv's avatar

@woodcutter The sad truth is that both sides will always complain about ad hominem attacks… largely because both sides use them frequently. And with all of the name-caging going on, it’s unlikely that we will ever see any sort of tax reform, especially so long as compromise (or even listening to opposing viewpoints) is seen as a sign of weakness.

ETpro's avatar

@woodcutter That wasn’t an ad hominem attack. It did not go after the person as a person. It laid out a series of facts that back the claim. They are verifiable.facts. The claim that cutting taxes on millionaires creates jobs cannot be backed up by evidence. Tha claim that it does not do so, but that it unnecessairly widens the gap bewteen the rich and the rest of uis, and that is is deconstructing the middle class, that you can demonstrate. The numbers prove it to be true.

jerv's avatar

@ETpro The numbers only prove things to people that actually care about facts. For those who tend to start with a desired answer first and then fudge the steps between it and the question in order to try and justify themselves though… not so much.

woodcutter's avatar

The whole ad hominem flap I was describing is middle income conservative cheer leading for the corporations because they are being made to believe they should. They take offense to the idea they are being tricked and used by these entities as if they are being played….ohh that really cheeses their collective dicks. I mean, there were no conservative leaning home owners who got screwed out of their homes due to the very people they side with? Hard for me to believe.

Answer this question




to answer.
Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
Knowledge Networking @ Fluther