Wednesday, April 13, 2011

Wealth vs work: our tax system

Take two taxpayers with incomes of $400,000 a year:

One is a neurosurgeon who, the first in her family to attend college, broke through the glass ceiling through hard work and now earns $400,000 per year, on which she pays a top marginal income tax rate of 35 percent.

The other is a wealthy heir who, instead of working, jaunts port-to-port on a yacht while collecting $400,000 a year in investment income from his multi-million-dollar inheritance, on which he pays a top marginal tax rate of only 15 percent.
Those two hypothetical cases illustrate one of the gross inequities of America’s “two-tiered” tax system. It rewards income from stocks, dividends, real estate and investment portfolios with a marginal tax rate of only15 percent, while income from work – wages and salaries – pays 35 percent.

A surprising group of wealthy taxpayers have stepped up to the plate to propose an end to this favoritism toward wealth over work. Responsible Wealth and United for a Fair Economy have launched a campaign to “Tax Wealth Like Work.”

Among the points made by the campaign:

-- “Eliminating the special break for capital gains and dividend income would raise enough to completely avoid the massive $61 billion in budget cuts being proposed by Republican members of Congress.”

-- “Alternatively, the revenue could be used as federal aid to states, eliminating a significant portion of the $112 billion in budget deficits faced by 44 states.[

-- “Taxing the earnings of just the top 13 hedge fund managers as ordinary income, instead of the special 15% rate as capital gains, would generate enough revenue to pay for 300,000 teachers.”

For details, see the Website
http://www.faireconomy.org/wealth_vs_work

Although the issue of taxes is not treated in the encyclical by Pope John Paul II titled “On Human Work,” the document gives no support to a two-tier tax system. To the contrary. Certainly not in its chapter, “Priority of Labor.” (http://www.vatican.va/edocs/ENG0217/__PD.HTM)


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2 comments:

Allan Ornstein said...

http://www.wealthversuswork.com/

sewi said...

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