The Taxing Question
Mike Konczal at the Next New Deal looks at the question: Is Taxing Capital Income Fair?.
The main thing I take away from the article is that the people talking about eliminating the capital gains tax don’t live in the real world and aren’t qualified to be bookkeepers, much less accountants.
Income is income, regardless of how it is earned. NTodd covered Andrew W. Mellon’s argument for taxing capital gains at a higher rate than wages.
Since the question is about fairness, the fairest solution is to not discriminate between earned [wages] and unearned [capital gains] income, but to treat them the exact same way.
I note that in his textbook example Joanathan Gruber neglects to mention that the reason that Ned pays higher taxes than Homer is because Ned had more income.
The problem with consumption taxes is that it isn’t “fair” for a single guy like myself to pay lower taxes than a single mother with a couple of kids to raise. She will obviously be consuming a lot more than I will, and pay higher taxes as a result. Is there anyone who really thinks that that is fair? [Well, other than the 1% and the sociopathic Republicans, of course.]
4 comments
Ned and Homer, if moved to Texas, would be treated in the appropriate Christian manner: presumed nondrinker Ned would pay no state income tax because there isn’t one, but Homer would pay 8.25% sales tax on his six-pack of Duff purchased in an urban area. That’s fair, right?
Florida also depends on the consumption/sales tax, which is why the 1% don’t buy things here, unless the legislature exempts them from sales tax, which the legislature frequently does.
But of course simply buying things out of state doesn’t exempt you from paying sales/use tax on the item. That million dollar yacht that you bought in Texas? The state law still requires you to pay the sales/use tax on it when you bring it home to Florida. And I’m sure 100% of millionaires who do that comply with the law, right? 😈
The Cayman Islands don’t believe in sales taxes, which is why so many yachts seem to have Cayman Island flags on them as they ride the waters of Biscayne Bay. The Florida Department of Revenue does its best to explain the laws to people who forget them, but they don’t get a lot of encouragement from the elected officials.
It is a matter of protecting their privilege, which is why people like Rmoney are willing to spend more on attorneys than paying the taxes that are assessed.