MCViewPoint

Opinion from a Libertarian ViewPoint

Rip-Off the Rich? – LewRockwell

Posted by M. C. on January 30, 2019

https://www.lewrockwell.com/2019/01/laurence-m-vance/tax-the-rich/

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According to the latest figures released by the Internal Revenue Service (IRS):

  • In 2016, the top 50 percent of all taxpayers paid 97 percent of all individual income taxes, while the bottom 50 percent paid the remaining 3 percent.
  • The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
  • The top 1 percent of taxpayers paid a 26.9 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.7 percent).

“The rich” are also punished through the phase-out of tax exemptions, deductions, and credits as their income rises.Yet, according to Democratic politicians like Senator Elizabeth Warren, Representative Alexandria Ocasio-Cortez, Senator Bernie Sanders, and former Senator Hillary Clinton, “the rich” are still not paying enough in taxes.

Senator Warren has proposed a “wealth tax” on the richest Americans:

We need structural change. That’s why I’m proposing something brand new – an annual tax on the wealth of the richest Americans. I’m calling it the “Ultra-Millionaire Tax” & it applies to that tippy top 0.1% – those with a net worth of over $50M.

Her proposal would “assess a 2 percent annual wealth tax on individuals with more than $50 million in net worth, increasing to 3 percent on those with more than $1 billion in wealth.”

Representative Ocasio-Cortez has proposed a higher income tax on the richest Americans:

You look at our tax rates back in the ’60s, and when you have a progressive tax-rate system, your tax rate, let’s say, from $0 to $75,000 may be 10% or 15%, etc. But once you get to the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60% or 70%.

“That doesn’t mean all $10 million are taxed at an extremely high rate,” she says, “but it means that as you climb up this ladder, you should be contributing more.” Exactly how much more, and whether higher rates would apply to capital gains and dividends as well as earned income, is not clear.

During the 2016 presidential campaign, Hillary Clinton and Bernie Sanders each proposed massive tax increases on “the rich.”

Clinton wanted an additional tax bracket of 43.6 percent for taxable income greater than $5 million, a 30 percent minimum tax phased in on those earning more than $1 million, a cap on all itemized deductions at a tax value of 28 percent, a new top rate for long- and short-term capital gains of 47.4 percent, an increase in the estate tax to 45 percent, and a decrease in the estate tax exemption to $3.5 million…

And clearly, millionaires are not stupid. Once this happened the first time it would never happen again. No one would who had his earnings confiscated would ever make over $1 million again. And as Daniel Mitchell points out: “Higher tax rates on the rich will have negative consequences for the rest of us.” Higher tax rates on the rich will:

  • reduce capital formation
  • lower economic output
  • shrink the labor supply
  • depress levels of entrepreneurship
  • lead to lower middle-class wages
  • reduce economic mobility
  • drive away superstar inventors
  • lower levels of innovation
  • lead to higher taxes for everyone else
  • encourage tax complexity

“The rich” don’t need to be taxed any higher. They and many Americans who make far less than $1 million a year already pay the vast majority of the income taxes that feed the federal leviathan. And not only do “the poor” pay little or no income taxes, they receive tax refunds from the government of money they never paid in via refundable tax credits. I think the problem is rather that the Congress spends too much money. The national debt is not $22 trillion because “the rich” haven’t been taxed enough.

Be seeing you

tax crime

 

 

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