I haven’t seen the tax bill, haven’t even read any facts about it, so I am just responding to Rush Limbaugh’s opening bit on his Friday show. He describes the structure of the tax in question as this: the first $45,000 of income gets taxed at a very small relief rate. Then money after that gets taxed at a higher, normal rate. More rates may ensue, I don’t know, and then when you are above a certain threshold, your tax rate is 39.6%. That is the top proper bracket. Then a funny thing happens: your millionth dollar of income, however that may be defined, will be taxed at a penalty rate which is 6% higher, so 45.6%. Let’s call these 40 and 46 just for convenience. You keep paying at the penalty rate not forever, but until you have filled in the hole left by your relief rate tax. Rush says that the relief rate on the first $45K provides about $12K in relief from whatever the prevailing rate is, and so, he says, the next $200K past a million are taxed at 46%, and then the rate goes back to the prevailing rate. That’s right, it goes back down. Now you can clear a billion dollars in income (say) and presumably still pay at the prevailing rate — all except for the window between a million and a million-two.
Rus argues that this is fundamentally flawed, because it is a sop to those progressive statist democrats (of both parties) who insist that tax cuts be “paid for” by tax hikes elsewhere. This backs up the notion that the money belongs to the government, or that your fellow man has a better claim to your money than you do, and that the government is here to help your fellows to your stuff. Fair enough — I rail pretty well against winning a fight for the wrong reasons, thereby ceding the larger point. That’s called a Pyrrhic victory, that is, a tactical victory but a strategic setback. Yet the larger point to me is this: this is a tax which does not go on to soak the rich as a class in order to relieve the poor as a class, but which only resets a relief rate on the basis of an individual’s own balance seems quite fair to me. I do support a mildly progressive tax structure, and if anything is wrong with the plan, it is the fact that 40% is the prevailing rate. That’s the real problem. This so-called “bubble tax” is not what’s wrong with the plan, as described by Limbaugh. I understand the point he is making with regard to principles, and I find his stance valid in general. I just do not think that he has set his scope wide enough to capture what’s wrong and what’s right about this.
I support this bubble tax, if it is as Limbaugh has described it.
?Why do you support a progressive tax structure. Taxes should be across the board, not progressive. Such taxation is grossly unfair. If you earn a dollar and pay a dime in tax, earning four dollars should mean you pay four times as much – forty cents. Not eighty cents or as dollar.
Tax should have nothing to do with how much you earn but how much the state taxes you. And guess what – if the state had less taxing power, they wouldn’t have the money to spend and might have to cut spending. Lord help us!
Howdy!
I support a mild progressivity because the price of milk and eggs doesn’t go down when you’re having a bad year. Not that it should — that would be a “means-tested” food program (ObamaGrub?).
I like this proposal better than rising brackets, which never stop at the high end, and which cause “donut hole” problems at the low end.
Don’t get me wrong — I would vote for a flat tax, which I see as politically unlikely, but I also like the idea of the social safety net. I am not opposed to welfare programs in theory, but those would be better run by the states.
If the Feds must tax — and they must — I think that cutting a small break like this for the low end is not a bad idea, and I like the idea that “filling that hole” is accomplished on an individual basis. And in a way, the tax is applied to the dollar, not the person, as your $45,001st dollar doesn’t cause your whole income so far to be taxed at a higher rate. No negative incentive to remain on the slime line.
Anyway, the core of your question is why support any progressivity (in the mathematical sense, not the social!) at all — I think it’s part of a driver of ownershp and good risk management.