Sunday, April 15, 2012

Tax Time Comes Around

About this time every year many elected official release their tax returns to show how diligent they are at paying their taxes. Just this week President Barack Obama and his wife, Michelle, released their returns as did VP Joe Biden and his wife Jill. Multi-millionaire Republican Presidential candidate, Mitt Romney, indicated that he had a complicated return and was filing for an extension until October, but promised that he would release "something" before the election. As some of the pundits indicated, getting together all of those off-shore bank account reports does take time. For the last tax report, released through his campaign, the indications were that the Romneys paid about 14% on total earnings from stocks and investments of over 21 million dollars. Actual income earnings were somewhere greater than $374,000 -- mostly from speaking fees -- although Romney downplayed these amounts saying it wasn't very much. Just your average Joe?

The Obamas reported over $700,000 in income and indicated they paid over $170,000 in taxes. They gave a comparable amount (mostly earned from his children's book sales) to charities. Their income was down from the more than $1,000,000 they had reported in previous years. again most of this extra income then was also due to book sales. Michelle Obama, who is also a lawyer, and does not have a paying job, nor official function outside of being First Lady, was an employed mother prior to the campaign in 2008. Jill Biden, who has her PhD, teaches at a community college in Northern Virginia. The Bidens' income is described as modest for official Washington. The President's return was described as showing poor money management by a Texas CPA who then went on to criticize his fiscal judgment. Actually, the return was also described as playing it safe and investing in neutral fields (attempting to reduce criticism, perhaps?)

The White House indicated that the Presidents' secretary, who earns about $95,000, paid a slightly higher rate than he did: 23% to his 20.5%. This is the situation famously described also by Warren Buffet -- said to be the second richest man in America. Mitt Romney is said to be the wealthiest man ever to run for President.

So the average American earns much less than any of the people shown above. Average salary for an individual worker was defined as around $41,700 for 2010. That figure is up almost $10,000 from the year 2000. The median household income has dropped, when recalculated for inflation, to levels seen in 1996, according to the Wall Street Journal. It now stands at approximately $49, 500. Women still make about 77 cents for each dollar earned by men. Discussions about implementation of the Buffet rule, which requires millionaires to pay at a higher rate, rather than pander to them as the Republicans have done, seems to be gaining some steam. The following is a press release from Rhode Island Senator Whitehouse: http://whitehouse.senate.gov/newsroom/press/release/?id=DE66F892-B336-418D-941F-F0A489A20B2C

The United States, it is said, has approximately 800,000 millionaires/billionaires -- a small number when one considers that there are about 310,000,000 people in this country. Many of these ultra rich people have echoed Warren Buffet and have asked for a higher income tax rate indexed for higher incomes. "During 2009, the bottom 95 percent (AGI under $154,643) paid 41.3 percent of the total collected, a larger share than the 36.7% paid by the top 1 percent (AGI over $343,947)." Quote from the link above by the tax foundation. Is there any wonder that there exists a widening gap between those who fall into that lower 95% and the rest of the tax payers? Many nations wonder at the voluntary nature and success of the "Americans self-reported income amounts," but they do forget that employers and brokers all report earnings and bank accounts have to be linked to a social security number, even for children, so there are coercive aspects of the big brother systems here.

What do you think about our income tax system? Would you change, as some have suggested, to a flat tax? Is this more equitable? The Annenberg organization FactCheck.org looked at the fine print on such a proposal a few years ago and thoroughly denounced the proposals. Some might remember that former Presidential candidate Rick Perry was touting such a "deal" until it became obvious that he did not understand the math involved in implementation.

What do you think about a consumption tax, such as the European model of a Value Added Tax or VAT? This is a shared tax which considers taxes paid in manufacturing and deducts that from the cost of the goods being sold. If one buys little, one pays less, so it essentially is more progressive. But it is cumbersome in reporting and collections and even in Europe, varies from country to country. With the burden of looking at imported goods and the task of accounting for previous payments across multiple countries, this suggestion appears to be unworkable in this country.

Personally, I think the US needs to reform the tax system. We need to have those who earn more pay more as the income gap continues to widen. We need to fund a government that has a concern for its people and the social safety net. We do not only need to fund the military, as some, such as Rep. Paul Ryan, have suggested with his budget which decimates future Medicare funds and does not touch defense. We do need to support health care and education and the infrastructure of our country, so we can continue to be a great nation which functions well. So -- let's hear from you -- what are your thoughts on taxes?

2 comments:

  1. Former Senator Mike Gravel when running for president supported a VAT and suggested sale of used goods would temper the throwaway, consumerist society as well as potentially bolster the market for repair businesses.

    Taxation itself at the federal level is misunderstood due to a poor understanding of Monetary sovereignty. While states and counties are limited by how many dollars their source (taxpayers) have to give them, the federal government is NOT limited by a finite supply but only by the expectation and long term interest of keeping inflation in check.

    Essays at:
    http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/

    explain this and why NO tax system will ever eliminate the national debt, nor SHOULD it. Macroeconomics is very poorly explained by both elected officials and the media, both mainstream AND unconventional.

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  2. Definitely not a flat tax; that penalizes the poor and is a godsend to the rich. I have no problem with the graduated tax in theory. The problems arise because of the loopholes written in by special interests--and just imagine our government NOT driven by special interests! I can't see genuine tax reform until we have campaign finance reform, public financing of elections only, no corporate personhood nonsense, candidates who pledge to represent constituents rather than corporate masters.
    Anyway, I'm sorry Mr Romney can't get his taxes done on time. Based on what he released earlier, I pay taxes at a higher rate, and I'm just on Social Security. Not fair, and not just.

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