Saturday, October 1, 2011

OpEd from Institute on Taxation and Economic Policy, a nonprofit, nonpartisan research organization

America needs tax reform. We’re not collecting enough revenue to meet the nation’s needs and the U.S. collects less in taxes, as a share of our economic output, than most other developed countries.
Our tax system does virtually nothing to mitigate the income inequality that has grown to levels last seen during the Great Depression. Far from being overtaxed, the rich pay taxes roughly in proportion to their income. My organization estimates that in 2010, the richest 1 percent of Americans (who had average incomes of about $1.3 million) paid 21.5 percent of the total federal, state and local taxes, and received 20.3 percent of the country’s total income.
The services provided by government — roads facilitating commerce, schools creating a productive workforce, defense and protection of property providing the stability that businesses need — have benefited the wealthy families who own most businesses, corporate stocks and other assets more than anyone else. These fortunate Americans should contribute more to sustain these services.
First, if Congress simply does nothing, the reductions in the personal income tax and estate tax first enacted under George W. Bush and extended by President Obama will expire at the end of 2012. We estimate that if they are extended again, over 47 percent of the benefits would go to the richest 5 percent in 2013, and poor and middle-class families would see only modest benefits. If Congress again presents the president a choice between extending all the tax cuts or letting them all expire, the president should choose the latter.
Second, lawmakers must eliminate loopholes in the corporate income tax that allow profitable corporations like GE to avoid U.S. taxes. CEOs complain about the 35 percent corporate income tax rate, which is higher than that of most countries, but the percentage of profits that corporations actually pay is much lower because of the loopholes they enjoy.
A 2007 report from the Bush Treasury Department found “the United States takes a below-average share of corporate income in taxes” compared to other developed countries. Some corporate profits are not taxed at all. We recently found 12 major profitable corporations, including companies like GE, Verizon and Boeing, collectively paid a U.S. tax rate of minus-1.5 percent over the past three years.
Some investors say this is not problematic because these profits are taxed under the personal income tax when they are received by individuals as dividends. But two-thirds of stock dividends are not taxed because they go to tax-exempt entities like retirement plans. Even dividends received directly by individuals are not taxed as much as the wages earned by middle-income people. Dividends are currently taxed at a top rate of 15 percent and are not subject to the Social Security payroll taxes that apply to most wages. This allows some super-rich investors like Warren Buffett to pay taxes at lower rates than middle-income people.
By eliminating these sorts of special breaks and loopholes for wealthy individuals and profitable corporations, Congress can raise needed revenue and bring fairness to our tax system.
Steve Wamhoff is a policy analyst with the Institute on Taxation and Economic Policy, a nonprofit, nonpartisan research organization that works on federal, state and local tax policy issues.

No comments:

Post a Comment

Gift/Memorial Suggestions

Several of our friends have lost loved ones (human and pets) and we found that one of the best ways to honor their memory is to give to an animal charity.
What better way to recognize a life of love, than by giving another life a chance for love?
We donate to many animal rescues, but because we volunteer with
DC Weimaraner Rescue and Coast-to-Coast Dachshund Rescue, those are our 2 favorites.
Consider giving the chance of life to a dog or cat.

About us

We're two married guys who enjoy the simple things in life, especially our dogs. We volunteer for dog rescues, enjoy splitting dinners, exercising, blogging, helping friends and neighbors, ghost investigations, coffee and tea, Tudor history, weather, superheroes, comic books, mystery novels, traveling, 70s and 80s music, classic country, piano, gardening, writing books on ghosts and spirits, architecture, keeping a clean house, cooking simply, and keeping in shape. You'll find tidbits of all of these things on this blog and more.

Tom and Rob Thinking Hard!

Tom and Rob Thinking Hard!
Wondering what home project to do next