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home : opinions : letters February 05, 2016


4/27/2012 9:59:00 PM
Letter: Rich pay plenty of sales taxes

EDITOR:

In my friend Tom Cantlon's column on April 18, he continues his display of misunderstanding and confusion about tax policy and how economics actually work.

Tom worries that the wealthier among us pay a smaller share of their income over to the government in taxes. But of course the wealthy pay much more in sales taxes because they spend more. Has Tom noticed they drive more expensive cars, live in larger houses, wear more expensive clothes and even take longer, nicer vacations? All of this means they pay more tax than the rest of us.

The real goal appears to be simply increasing the size and power of government at the expense of our freedoms and well-being. The "simple, obvious truth" is government at all levels is too big and too intrusive in our private lives.

John Stevens

Prescott



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Reader Comments

Posted: Sunday, May 06, 2012
Article comment by: Zig E.

Hokas - I wasn't meaning to say that banking regs brought down the wealth disparity. There were many things that changed that dynamic. Mostly economic growth. I guess it comes down to what we believe causes that economic growth. I don't happen to think "trickle down " works. But I know this is a very complicated subject with no totally right answers. And as I said, not my favorite subject as well. I think we've beat this horse enough, and I have appreciated the conversation with you. And I've been taking notes.
Hope you have a good day - I'm sure we'll mix it up again : )


Posted: Saturday, May 05, 2012
Article comment by: Hokas Pokas

@ Zig E.:

You might have missed it, but I was referring the UK about 20 years ago. But currently, they raised income taxes and found that revenues went down. They are going to reduce income taxes in 2013.

That is an interesting observation regarding the reduction in wealth disparity as being caused by the banking regulations. But, don't you think it is at least as likely, even more likely, that the reduction in wealth disparity was simply caused by the stock market crash. A lot of very wealthy people lost very large amounts of money. That's my bet.


Posted: Saturday, May 05, 2012
Article comment by: Zig E.

Hokas - Bare with me here ( I really don't like economics ), but from what I understand the " recovery " in the UK is weaker than it is here. Their economy is growing at a much slower rate than ours. This is due in part to the austerity measures they have put in place.
Bottom line. If we were to look at all of this as if it wasn't our country, but some made up one, what would we think ? Income disparity was high right before the collapse of the economy in 1929. After that collapse measures were put in place ( banking ) to prevent that from happening again. Apx. 80 years later those measures are removed, income disparity again rises to very high levels, and another collapse occurs. Logic would seem to say that there is a correlation, and to continue on this path would lead, not to recovery, but to a further downward trend.

Kenny - Obviously there are differences in currency. There was probably a lot of bartering back then as well. And it is ancient history so yes there are limitations. And YES, I'm giving one side. Hello - It's a two side discussion. But ignoring the parallels between systems that have failed historically and our present one, would be well .... stupid. We are, after all, supposed to learn from our past mistakes.
Quote - " Try to learn life's mistakes vicariously ".


Posted: Friday, May 04, 2012
Article comment by: Kenny H

You are rather arrogant to assume that I don t something about history though. Your opinion IS biased because you insist in telling only one side of the tale. There is a big flaw with their "study". It's called currency. Yes, you can track the pattern of what happened to the Roman Empire and comparing it to the modern day U.S. However, how currency was exchanged then and how it is now are two totally different beasts altogether. They even admit that their method is an "educated guesstimation". They could not properly gauge what senators and some other "top tier" people made during that time. Point is, you cannot properly compare a society, which had a totally different currency structure to ours.

Posted: Friday, May 04, 2012
Article comment by: Hokas Pokas

@ Zig E.:

Thanks. Enjoyed yours as well.

To me, this is about learning something new. It is about discovering facts surrounding an issue. Wherever those facts come from. If I stumble on something that is important to share, I put it out there. Criticism and debate is what democracy is all about, even in a small town newspaper.

You're right, it may be a bad omen. Should there be more taxation and government spending or less? More government debt or austerity? Tough questions. If there is more government spending and higher taxes, my bet is there will be lower tax revenues and more government borrowing and printing of money. This can lead to bond downgrades and higher borrowing costs. This causes higher inflation, which hurts the poor the most. Cut government spending and return to fiscal responsibility is not popular among us citizens, the poor suffer again, and the rascals will get voted out. Glad I'm not one of those rascals. Austerity is what they are doing in Europe. It worked in the UK 20 years ago. It is not popular, for obvious reasons. For my money, that is the way to go.


Posted: Friday, May 04, 2012
Article comment by: David X Jones

Of course Rich people pay more taxes.But, not by percentage.


Posted: Friday, May 04, 2012
Article comment by: Hokas Pokas

@ Jeanette:

WHAT?!? I took all that time and trouble to create that chart especially for you and this is your response? I am crushed. Truly, crushed.

The data at that web site is collected from the IRS and other government sources. The evidence is indisputable.

If you want the boring old tables, try this IRS web site:

http://www.irs.gov/taxstats/article/0,,id=172265,00.html


Posted: Friday, May 04, 2012
Article comment by: Jeanette C

@ Hokas – Good grief. Now I know how President Reagan felt when he said “There you go again.”

As to the rest, sorry. Once I’ve researched a link a blogger has provided and realize that s/he has extracted a fact and slanted it for their own agenda, credibility is fractured. Whether the analogy is “Peter and the Wolf” or “Fool me once” I lose all interest in continuing the “conversation”.


Posted: Friday, May 04, 2012
Article comment by: Zig E.

Hokas - To give credit where credit is due, I found while looking at numerous charts and graphs, that your statement that there has been greater income disparity before in this country is indeed true. In 1929 the disparity was 1% holding 44.2% of the wealth. Its now at 1% holding 40%. Considering how things where in 1929, this still seems to be a very bad omen.

Posted: Friday, May 04, 2012
Article comment by: Zig E.

Regarding the last10 years wealth going to the top 1 % , I have heard that from more than one source. So while there might be some play around the edges as to how they figure those things, I'm sure its generally close. Close enough to hurt, that's for sure. I'm also getting tired of doing others homework as well. I'm sure you, unlike some others, have googled it, and I will, but I'm sure its valid. You generally don't hear things repeated on the news that aren't, but there are always exceptions.

Like your quotes, by the way. Here's one for you ( not on point but I like it ).

" For every rule there is an exception. The exception to that rule is there are no exceptions".


Posted: Friday, May 04, 2012
Article comment by: Hokas Pokas

@ Zig E.:

"If you add to the truth, you subtract from it." ~The Talmud

Do you think we may be resorting to a little bit of exaggeration? To say, "99% of the wealth created in this country over the last 10 years has gone to the top 1 %." Really? Please document that, I cannot find it. I understand that wealth is different than income. However, according to data from the IRS, in 2009, the top 10% accounted for only 43.2% of AGI, while the bottom 50% earned 13.5%. In addition, the top 10% paid on average 18.1% of their income in federal income tax, while the bottom 50% paid only 1.9%. The numbers don't add up.

http://www.irs.gov/pub/irs-soi/09inratesnap.pdf

Income disparity is popularly measured using the "Gini index". This is what was used in the news report you seem to be so excited about (http://thinkprogress.org/politics/2011/05/04/163476/us-unequal-uganda-pakistan/?mobile=nc). I did a little reading up on this Gini index. Here is what I found:

- It does not measure absolute wealth. The poorest people in the U.S. are far better off than the poorest people in Pakistan or the Ivory Coast.

- It does not take into account non-monetary benefits, i.e. wealth or income derived from personal agriculture, food stamps, health care, education, housing subsidies, and so on.

- It does not take into account a highly regressive tax structure. So, a country may have higher average income in the lowest income group, which would be used to calculate the Gini index, but then take it away by having a larger, regressive tax system like a VAT. Western European countries, like Sweden come to mind, where 77% of the countries wealth is held by just 5% of the population. (in the U.S. the top 20% own about 85%).

"What makes us discontented with our condition is the absurdly exaggerated idea we have of the happiness of others." ~French Proverb


Posted: Friday, May 04, 2012
Article comment by: Zig E.

Well Kenny since you asked, - The study was done by two historians ( Walter Schiedel and Steven Friesen ). Your welcome to look it up. I'm guessing that those two guys know more about it than you ( or I for that matter ) so calling something " biased " just because you don't agree is well .... stupid ?

Posted: Friday, May 04, 2012
Article comment by: Kenny H

@Zig E - You said "Its now even worse than during the Roman Empire !"

Really? Show us this proof because the last time I checked, there was no record of what everyone made and no record of the income gap in the Roman Empire. That one statement alone kills the rest of your biased post. Good luck with reality is all I've got to say.


Posted: Friday, May 04, 2012
Article comment by: Hokas Pokas

Jeanette,

You're right, that was an overly broad generalization. I should have written that you don't like people who take a risk, invest in the manufacture and sale of a product by employing people and, if they make the right business decisions become wealthy. As opposed to, say, actors or musicians who employ people as an afterthought, to shine their shoes, and get rich because, well, they look pretty. I suppose you think that is OK.

Thanks for looking up that info. However, you are not looking at the complete picture. There was no point omitted. Although these tables give you the effective tax rates, it does not show the actual revenue collected. The federal income tax revenue has pretty much increased steadily over that time period (http://www.usgovernmentrevenue.com/revenue_chart_1980_2009USb_13s1li011mcn_10f). The U.S. government has been receiving record revenues. We do not have a revenue problem. We have a spending problem.

Taken together, what that means is the top 50% of income earners have been paying more of the federal income tax, until we have the situation that we have today, or for the last couple of years, where the top 50% provide ALL the federal income tax revenue.

Indeed, with things like Obamacare, more people will be paying more in taxes.

Ciao!


Posted: Thursday, May 03, 2012
Article comment by: Jeanette C

Hokus, so if I extend your logic in "knowing" me further … if I compare the number of women in the workforce to the percentage of women who are actually in top management, I must not like men if I’m against racism towards those of different nationalities, then I must not like whites if I feel that someone has been unjustly targeted, then I must not like the legal system if I disagree with some of my country’s actions, then I must not love America or if I don’t like injustice, then I don’t like their oppressors (actually, that last one would probably be true).

I went on the link you provided and you’re right, "The trend towards less taxes being paid by a growing number of low income groups has been going on long before the current economic situation". It would have been more accurate however to have stated that the trend towards less taxes being paid is reflected in all 5 quintile groupings (poorest to richest). Curious that little point was inadvertently omitted.

You’ll be happy to note however that the trend is reversing and the poor are going to be paying more taxes in the years ahead. Of course, a more accurate statement would be that all 5 quintile groupings will be paying more.


Posted: Thursday, May 03, 2012
Article comment by: Jill Dosh

Class warfare, another lame distraction from Obamas horrible record. If I see a successful person, I want to learn from them how they succeeded! That won't happen if I approach them with a spiteful attitude, jealous of their status/wealth. Honor those who made it the American way, through hard work and long hours. Heck, they may have a job opening?

Posted: Thursday, May 03, 2012
Article comment by: Zig E.

Hokas - I saw on the news today that income disparity in this country has just passed up Pakistan and the Ivory Coast. Its now even worse than during the Roman Empire ! This is what happens when workers wages flat line for 30 - 40 years. 99% of the wealth created in this country over the last 10 years has gone to the top 1 %. This can not, and will not continue. The middle class won't sit still for this. They can't afford to. When Obama wins in November, and Hillery wins in 2016 and again in 2020, the regressive party will be all but pushed out of serious government. And that's the price they're going to pay for their greedy regressive policy's. I use to think that having the Republicans on board was a good thing. The old checks and balance thing. But with this " new " Regressive party, I don't believe that anymore. They're simply too out of touch and frankly a bit wacky.

Posted: Thursday, May 03, 2012
Article comment by: Zig E.

Hokas - believe it or not I think a VAT should be looked at as part of the solution. Particularly if its used for a single payer health care system.

@Response to - Your so far out in right field that it's not worth responding to you.


Posted: Thursday, May 03, 2012
Article comment by: Hokas Pokas

@ Here We Go Again:

All of the items you bring up as "indirect" tax burdens on the poor are supposedly accounted for in the ITEP report that Mr. Cantlon references in his original article on this subject. Look up and read the report.

By the way, all income groups pay these added government imposed costs.


Posted: Thursday, May 03, 2012
Article comment by: Response to Zig E: More regulation

...

At the federal level alone here are only (at least) 9 Cabinet departments, spending untold billions of dollars every year, that regulate various aspects of not only the U.S. economy, but every aspect of your life.

Let’s see we have the Departments of: Transportation, Housing and Urban Development, Health and Human Services, Education, Energy, Labor, Agriculture, Commerce, and Interior. In addition, there is the alphabet soup cluster of federal agencies such as: the IRS, the FRB and FDIC, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA.

And that is just a small, small, small representation of a growing government and eroding liberty.

Think about this: What did the 911 hijackers have in common with the airliner that crashed into the WTC? What does every bank that failed have in common with Bernie Madoff? What does every poisonous snake in Arizona have in common with your electric bill? What does every illegal immigrant have in common with your the local pharmacy?

ANSWER: All are 'regulated' by the government.

Government regulations do nothing to increase your safety, life expectancy, security, or improve your circumstance...they only regulate YOU.


Posted: Thursday, May 03, 2012
Article comment by: Here We Go Again

Yes, Your right. Many poor people pay no Direct income taxes. But the poor pay a lot of indirect taxes. Many poor people have cell phones, and line phones.Taxes are paid there. Many poor people have cable T.V. Lots of taxes are paid there. Many poor people drink and smoke. Lots of taxes are paid there. Many poor people drive and own cars. They pay for car insurance, tires, and gas. Lots of taxes are paid. Many poor people get traffic tickets. Lots of taxes are paid there. One of the reasons why people are Poor, Is that they spend all their money every month. The Poor people in this country help to support the Govt. and the Rich....

Posted: Thursday, May 03, 2012
Article comment by: Hokas Pokas

@ Zig E.

Let me point out that all the countries you list have a VAT. That is a consumption tax. It ranges from a low of 10% in Canada to a high of 25% in Sweden. The tax is paid on almost all products and services. It is similar to a sales tax. Everyone, rich and poor, pays. The very tax system that Mr. Cantlon argues is regressive. They also have much higher personal income tax and payroll tax rates overall. These countries also have the lowest corporate tax rates. By the way, the EU is in worse shape than we are.

@ deductive reasoning:

http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#cite_note-Piketty_.26_Saez-24

@ Jeanette:

I do know something about you: you don't like rich people. Below is the reference you asked for. It is only 1979-2005, before the crisis. In addition, you will find the top income group has been paying a higher proportion of taxes.

http://www.cbo.gov/publication/41654

Ciao


Posted: Wednesday, May 02, 2012
Article comment by: Jeanette C

Oh Hokas, is this the best you can do again? Without knowing anything about me, you're now down to trying to categorize and stick labels on me because you and I disagree on a topic. Accept my apologies.

In regards to your earlier posting "The trend towards less taxes being paid by a growing number of low income groups has been going on long before the current economic situation", please provide the source. As the same statement can be said about the wealthy, It will be interesting comparison.


Posted: Wednesday, May 02, 2012
Article comment by: deductive reasoning

Hokas Pokas- Could you provide your source for income disparity being higher a century ago? I have not heard that before.

Posted: Wednesday, May 02, 2012
Article comment by: Zig E.

Hokas - Canada, Norway, Austria, Germany, and I believe Sweden, Switzerland, Australia have all weathered things better than we have. They also don't have the income gap that we do. In fact no other advanced country has a gap as large as ours. I also couldn't help notice the country's that you listed are not, how shall I say this, quite as advanced as the ones I listed. So I guess the question is do we want to be more like Mexico or Canada ? I'm not interested in racing to the bottom by competing with China or Mexico in order to make corporate America more wealthy. Raising the " top " doesn't raise the " bottom ". That's called " Trickle Down ", which has been shown not to work, except for the " top ". When you have an income disparity that's approaching 300/1, things are going to change one way or the other. The rich call it class warfare - the rest of us call it survival. It's always the ones with the most, including the most to loose, who first scream " class warfare " when people start to notice the unfair income disparity. Simply put - Greed knows no boundary's.


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