Why do the richest one percent of Americans often pay less taxes than their employees struggling to make ends meet? For most Americans, our recent tax day was about as welcomed as a trip to the dentist. But a cab driver working the double shift probably had more reason for discomfort than a hedge-fund manager on Wall Street because of an immoral tax system that lets many millionaires and billionaires get away with paying a lower rate than working families. It's time for a broader values debate that includes an honest discussion about economic justice and tax fairness.
Pastors don't preach many sermons about the tax code, and Jesus did not have a specific tax plan that he touted on the dusty roads of Nazareth. But our political debate over the economy and taxes could use more talk about core Biblical principles of justice and the common good and less deceptive rhetoric about "class warfare." Some political leaders and their champions on the religious right often invoke Christian faith in battles over issues like abortion, but they conveniently ignore the sin of greed and the moral scandals of rising poverty and economic inequality that now darken the bright promise of the American dream.
America's tax policy reveals our values and priorities. The top 1 percent of earners more than doubled their share of our nation's income over the last three decades, but their tax burden has plummeted in comparison to middle and working class Americans. Those who care for our grandparents in nursing homes, educate our children and police our streets are paying more of their income in taxes than oil companies who lobby Congress to rig the tax system in their favor. This is morally wrong, and should stir our conscience in the same way Biblical prophets took up the call to challenge injustice in ancient times.
Billionaire investor Warren Buffet, whose secretary has a higher tax rate than he does, called for common-sense tax reforms and polls show that the vast majority of Americans agree. However, 24-hours before "Tax Day" the U.S. Senate voted against the "Buffet Rule" that would help level the playing field by requiring millionaires to pay at least a 30 percent tax rate.
The Senate's lack of compassion for the middle class and the poor begs one to ask -- "Do members of the U.S Congress have a moral compass?" It's difficult to make a practical case against the Buffet Rule when tax rates on millionaires have dropped sharply over the years as a result of the Bush tax cuts, which are a major contributor to our nation's growing debt. By some estimates there are more than 60 millionaires in the Senate and more than 150 millionaires in Congress.
The GOP budget proposal, drafted by Rep. Paul Ryan of Wisconsin, would make draconian cuts to food assistance for low-income families even as it makes the Bush tax cuts permanent and cuts the top individual tax rate to 25 percent, the lowest level since the Hoover Administration more than 80 years ago. Americans don't envy the rich. Success and ambition are part of our nation's entrepreneurial spirit. But the American creed also holds sacred the bedrock values of equal opportunity and shared responsibility for the common good. It's not "class warfare" to ask the wealthiest among us to contribute their fair share. Crumbling bridges, underfunded public schools and fraying safety-nets for the most vulnerable at a time of soaring wealth for the top 1% are a shameful testament to skewed tax policies and backwards budget priorities.
If politicians want to impress voters with appeals to moral values, they should start by vowing to end these injustices.
If you make, say 3 million dollars a year, and pay 105.000 dollars in tax (3.5%), this is nothing compared to someone paying 10% over an income over 50.000, even though the absolute amount is bigger.
105.000 dollar is more than 5.000. There's no denying that. But the financial sacrifice is much bigger for the person having to hand in 10% of his income.
But now my main concern. I am new here and don't know the stance of Rev. Otis Moss III on this, but this article strikes me as hypocritical. Churches pay no tax at all, yet they demand a share of the subsidies, benefit from infrastructure built with tax-money etc. Why?
The rich pay procentually less than the middle-class. But Churches pay nothing. Nothing! And yet they receive. How is that for financial justice?
And the argument that the Church gives to society in different ways is not accepted by me. The Church gives selectively, and not always is it's work in society beneficial.
Besides, I too do voluntary work, yet I don't get tax-exemption.
It's interesting that individuals who write a $30+ million dollar check to the IRS are deemed as paying less than a secretary.
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Try again.
Now, if it will help the economy to tax certain types of income at a lower rate, than that is what we should do. But that is a technical issue, not a fairness issue.
In my opinion, the best possible tax system we could have would be the Fair Tax, as it would tax spending rather than earning. That way wealthier people would effectively pay much more in taxes, there would be no loopholes, and changes in the system would be noticeable to everyone.
Obviously, a millionaire paying the same tax rate will be paying more in dollars than someone making $50k per year. The author, as you point out, may have failed to address this in the article, but so what? It is not really relevant to the point.
As far as the difference between the income rate and capital gains rate, that is technically true. However, income from investments is still income.
Yes, it is obvious, but it's articles like this and speeches by President Obama that I believe try to incite wealth envy into those who don't take the time to think about what is being said. Lines like "the rich are not paying their fair share" and "Warren Buffett pays less in his taxes than his secretary", which may not be used in this article, are misleading. Therefore, it is relevant because these types of misleading comments are being used all over the place to gain support for higher taxes upon the rich.
Finally, you said that "income from investments is still income." Well yes, it is, but it is not taxed the same which is why there is a problem in the first place. This is because people who are intelligent enough and work hard enough to make A LOT of money are typically the ones to exploit the lower capital gains tax. This is why I said I support the Fair tax, because it would eliminate the differences because it only taxes what you SPEND.
The fair tax would also raise taxes upon the rich in its own fair way; Wealthy people spend more = wealthy people pay more taxes.
Tax individual and corporate income at a flat 8% rate (with no deductions, credits or loopholes), tax individual net wealth at 2% (excluding $15,000 cash and retirement funds) and impose a 4% Value Added Sales Tax (VAT) on business.
The low flat income tax rates for individuals and business have great appeal to conservatives. The 8% corporate rate and 4% VAT would be the lowest and most competitive of all the developed countries. [Rep. Ryan was supporting an 8.5% VAT only a year ago].
The net wealth tax is radical by U.S. standards but most high earners would willingly pay a 2% net wealth tax in exchange for eliminating the capital gains and estate taxes and keeping 92% of earnings. Few dispute that the lack of healthy consumers has caused the economy to stagnate. The focus on growing the income and wealth of the working class would drive the economy.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com