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How Progressives Can Fix the Progressive Income Tax

#1

How Progressives Can Fix the Progressive Income Tax

Sam Pizzigati

This year on Tax Day, for the first time in decades, America’s wealthiest have some genuine reason to worry: The bargain-basement tax rates they’ve enjoyed for over a generation may be on the way out.

That prospect would have seemed ridiculously remote just a year ago. The recently passed GOP tax cut had knocked the top tax rate on personal income down to 37 percent, and new loopholes knocked the actual rate the rich paid considerably lower.

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#2

By all means let’s raise the taxes on the wealthiest. While we are at it, I suggest a new concept: usurers’ prisons.

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#3

"Feed The Poor."

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#4

“Eat the Rich”

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#5

It’s not enough. By “it” I mean the idea on how to sell this.

The real reason the rich could get away with cutting their taxes over the last forty years has been because the working class heard a constant barrage that “taxes are too high” and “we need to cut taxes.”

Walter Monday had the stupidity to tell America in accepting the 1984 Democratic nomination for president that “I’ll raise your taxes.”

What we need to do is tie increases to the top’s tax rate to decreases to the bottom’s tax rate.

What if Mondale had said, “I’ll raise the taxes on the wealthiest so I can lower your taxes.”

I think 70% is too low for the top marginal rate. I think 90% makes sense. I also think we need many more brackets. (So AOC is right for 70% above $10,000,00. Why not more brackets so above $25,000,000 it’s 75%, above $50,000,000 it’s 80%, above $100,000,000 it’s 85%, and above $1,000,000,000 it’s 90%?) Finally we need to lower taxes on the bottom brackets.

Let’s start with Social Security. Let’s lower the actual rate but take off the cap. I wish we could make it a progressive instead of a flat tax, but right now it’s a regressive tax. Once we make it a flat tax with no cap, then we can start lobbying to make it progressive so those making less money would pay even a lower rate than what we’d lower it to when we took off the cap.

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#6

If you saw this before my edit you read 865%!

That happened because as I wrote I had a typo and hit ‘6’ when I meant to hit ‘5’ and so got 86% instead of 85%. Then when I noticed it, before I posted, I thought I’d replaced the ‘6’ with a ‘5’ but instead I just added a ‘5’ and didn’t notice it until after I posted.

Even I don’t want to tax the super wealth at nearly 9 times their income. LOL

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#7

Must we?

I’d rather eat grass.

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#8

I like that idea of incremental increases according to income and wealth. The right is going to fight for much smaller increases of course.
We do have to insist on 95% for the top end and possibly negotiate from there. Hopefully years down the road though.
Then we have to address our military spending. It would be nice to know where all the dark money goes for a start.

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#9

Leave enough grass to roll.

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#10

The Supplemental Poverty Measure shows that 40% of U.S. families have pre-tax incomes above 4 times the poverty rate, but after taxes it drops to 20%. We need less tax in that range so more can stay above 4 times poverty. Four times poverty for one person is $50,000, for 2 persons is $64,000, for three it’s $80,000 and for four persons it’s $100,000, roughly. So about 20% of the nation drops from above to below 4 times poverty into the range 2 times to 4 times poverty. This is not a super wealthy group, their incomes lie in the 50th to 85th percentile of all incomes. Their “overall effective” tax rate (looking at ITEP figures, Who pays taxes in America? 2018) is between 25% to 29% of income. The ITEP report says the “overall effective” rate for the top-earning one percent is 30.4%, a drop of about 4% from 2017 because of the new tax law. There is a study that claims that 56% of all growth since 1972 went to the top one percent, and their incomes tripled between 1972 and 2015; it’s called “The New Gilded Age” at the Economic Policy Institute. In the same period, of 43 years, the lower 99% had an income gain of 15%. The focus of higher new taxes should be on the top 7.1% of tax payers, all who earn more than $200,000 a year. The top 7.1% of tax payers earn about 38.9% of all income (says the Joint Committee on Taxation, Overview for 2019, page 34). The ITEP figures say that top-earning 5% pays 38% of all taxes (federal, state and local). So their income is about 38% of all income, and they pay about 38% of all taxes, says ITEP. This is not progressive, not by my standards. We need about 24 gradations of tax rates, and a higher corporate tax rate. The public should have the option of supporting candidates who make a case, like Warren and Sanders, for much higher rates on the richest, and others like Senator Sherrod Brown who would double the Earned Income Tax Credit, and others who would raise the minimum wage. It’s an urgent need. Good article, Sam Pizzigati.

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#11

I like it. Good idea, Sam. Here’s another one:

  1. Zero tax on the first $100,000 earned per PERSON (no more married filing jointly) and 40% on the amount earned above the first $100,000 earned.
  2. No deductions for anybody, for anything.
  3. ALL income (including all investment income) subject to these rates.

Everybody could do their taxes in their head.

Someone earning $200,000 would pay $40,000 or 20%. A household where both earn $100,000 ($200,000 total) would pay zero and neither would have to file. A household where one earns $150,000 and the other $50,000 ($200,000 total) would pay $20,000 or 10% and only the one earning $150,000 would have to file.

In 2016 (the latest IRS data available) $10.2 trillion was reported in individual income and $1.4 trillion in federal individual income taxes was paid on that. https://www.irs.gov/statist…

Had the above change been in place, $1.2 trillion would have been paid. That $200 billion shortfall could have been made up by raising the corporate tax rate to 28% from 21% (still below the previous 35%) and disallowing the interest deduction for corporations.

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#12

Prior to what Democrats continue to brag was “bipartisan 1986 tax reform” the income tax code was as equitable as it ever has been. There is no need to re-invent the wheel, just restore the tax code to what it looked like 40 years ago and restore all the New Deal regulations that have been terminated during the past 40 years.

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#13

Progressive taxes try and address the symptom and not the problem. What is needed is a system wehere there IS no 1 percent and where incomes and WEALTH normalized.

No matter the amount of taxes paid no system should exist where it has one person owning 15 homes each of which is worth more than another can earn in an entire lifetime while another person is forced to sleep under a bridge.

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#14

I like Sam’s idea, and I like martman2’s idea as well. To counter the argument that progressives are just ‘anti-wealthy’, and in an attempt to get more of us pulling in the same direction, what about then including a significant tax -break- for the upper tax brackets in any year in which there is some quantifiable level of improvement in a measure of widespread welfare, such as the Genuine Progress Index? (GPI is -not- GDP, it is much more widely scoped) That way, the rich have an interest in, and might use their skills and resources to improve conditions for -all- of us. I sent messages to both Clinton and Sanders before the last election with a proposal of this kind, but unfortunately both of them ignored it.

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