Reply #21: Chicken and Egg [View All]

[TreasonousBastard]

There are a number of things at work here. Income, wealth, and taxes are all related, and tax equality can be looked at from a number of angles.

The original statement was that high income people pay most of the taxes. That can be argued in many ways, and I would argue in this specific case that the median household income is around $50,000, which means that of the half that make less than $50,000 many are low wage and pay little or no income taxes. They do, of course, pay all those other taxes, like FICA, Medicare local real estate taxes, etc., but Limburger and his ilk prefer to ignore regressive taxation, and falsely insist that "higher" incomes pay "all" the taxes.

Adding wealth into the discussion changes things drastically. Many of the truly wealthy pay little or no income taxes at all, unless they are caught in the alternative minimum tax. Because of the way they are able to engineer their income, they will rarely pay a rate significantly above the rest of us hoi polloi. Warren Buffett himself obseved that his tax rate was about the same as his secretary's, and he admitted that that was disgraceful. He does pay lots of taxes, but he admits that the fact he pays millions a year in taxes is only a raw number, and his actual tax rate is really low.

Wealth and income are related, but there have to be some distinctions made. Someone making $250,000 a year may have a high income, but not be wealthy, and pay a lot in taxes. Someone inheriting $12,000,000 in real estate with limited income, stocks paying low dividends, and non-coupon bonds may be wealthy, but not have that high an income, and may pay little in taxes.

Ultimately, the more money you have, the more you benefit from loopholes and exemptions.