Thursday, September 16, 2010

Taxes and the Rich

Our local, liberal newspaper published a letter today claiming that Republicans were engaging in class warfare because they were in favor of extending the Bush tax cuts for everyone, including the wealthy. The writer of the letter somehow thought that it was the poor and middle class who are paying an undue share of taxes and that the wealthy should be taxed even more.

There seems to be a number of liberal Democrats, including President Obama, who think that the purpose of income taxes is to redistribute income rather than to run the government. One would get the impression that lower income wage earners are supporting the high income earners when this is simply not true. In fact, the top 25% of all wage earners pay 83% of all federal income taxes with the top 1% paying an incredibly high 35%. The bottom 50% of wage earners pays only 4%. Tax brackets range from 10% all the way up to 35%. In fact, about 47 % of citizens paid no federal income taxes at all for 2009 because their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. Credits for low- and middle-income families have grown so that a family of four making as much as $50,000 owed no federal income tax for 2009, as long as there were two children younger than 17 in the household.

There are a number of other issues in the Obama tax proposal that will impact everyone – not just the rich. For example, raising the taxes on dividends (which are already taxed as corporate profits), on capital gains, and curtailing the deduction for business interest expense which will hurt small businesses. Plus, as the Republicans and some Democrats are saying that with the current economic crisis, this is not the time to raise taxes.

What Democrats don’t seem to realize is that the high income tax earners already pay more than their share. We must be careful we don’t kill the goose that lays the golden egg.

Written by Jim P., a Conservative with Common Sense

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