Why should wealthy people be taxed more?

Question

Granted, I am not an accountant or a tax specialist. I have, however, been on both sides of the financial spectrum

Why is there such a common notion to tax the poor less and the rich more? Don't the wealthy deserve to keep the fruits of their labor as much as the less fortunate? Why isn't there just some kind of flat percentage that is taxed across the board?

What do you think?

Answer 1

There is this faulty notion that I see evident in some of the responses here that the economy is some machine that produces wealth independent of human action. They posit that the wealthy are somehow "lucky" or "fortunate" and so should share the wealth that the machine will continue to spit out no matter what we do.

WE are the machine - each one of us. The economic machine will not continue to work regardless what we do to hamper it. When we take money from successful entrepreneurs, we 1) reduce their incentive to produce in the future and 2) confiscate and consume (government spending is almost always consumptive!) capital that might have otherwise been put to productive work. When tax authorities confiscate the earned profits of entrepreneurs, they reduce the overall net wealth of society.

On your implicit question of fairness, let me pose to you the following situation. Let's say that I am an entrepreneur who sells apples. I sell very high quality apples, so I am able to sell them at a higher price than other apples. I sell quite a few apples, so I become very wealthy.

You frequently purchase my apples. You consider their excellent quality well worth the extra amount that you pay. On the whole, you are quite happy with the exchange.

Now you see me, a wealthy person. Not knowing or caring that I am responsible for the apples that bring you pleasure, you say that I have been "favored". I should pay my "fair share".

What gives you the right to enjoy my apples and then to take back the money that I rightfully earned in transacting with you and many others?

It is fair to let a wealthy person keep ALL of their income if they have EARNED it.

Of course, there are some wealthy people who have not earned their wealth. Government does generally crack down on the petty criminals, but at the same time it enables some to get very rich thanks to preferential regulations, tarrifs on competitors and outright subsidies. These people do not earn their wealth, but it would be foolish to expect government taxes to right these wrongs since government was complicit in the first place.

I sometimes get carried away with my responses. I hope that my long answer influences your thinking and was worth the trouble to read. Thanks for reading!

Answer 2

First of all, the rich have more - so they can pay more. It's the opposite of that old saying that "you can't bleed a turnip." Secondly, because they have more, they are less inconvienced by taxes - no matter how high taxes get, the rich can still pay for basic necessities - that's not true for the poor. Third, smart rich folks don't actually pay more - they invest in tax-deferred retirement accounts, and tax shelters that sometimes actually include a tax credit, especially when they don't involve positive returns. The rich can also live overseas, where the first $70K is non-taxable, or write off their expenses and home office, etc., etc. Poor people generally don't even have a tax accountant to inform them of such options, and by definition, they couldn't afford them anyway. But regressive taxes such as sales tax, which hits everyone "equally," in reality hits the poor for a larger percentage of their income than it does the rich, since everyone uses roughly the same number of diapers, bread, butter, and other so-called staples.

Answer 3

Warren Buffet, the third richest man in the World said that it is an outrage that he is taxed at a lower rate than his secretary. Accordingly, a true American PATRIOT once said "Why shouldn't the American people take half of my money from me? I took all of it from them." That man was Edward Albert Filene, the founder of the US Chamber of Commerce. In 2006, the US government spent $92 BILLION dollars on Corporate Welfare. Where did that money come from, you ask? US TAX PAYERS! WHY are the hard working Americans being forced to support these Corporate Giants on our backs? If you raise taxes on the rich, and close property tax, income tax, state and federal tax loop holes and start taxing earnings from stocks, dividends and capital gains, you could then lower taxes on the poor and middle class. Then what you'll have is "Bubble Up" economics. The poor and middle class will spend that money in those same companies, corporations, etc. which will allow record profits and for growth of the company, and job growth as well. Seems win-win to me. It may even allow some of those middle class folks to open their own small businesses and create jobs as well. The problem is that all of those opposed to that plan only worry about themselves. They've got MILLIONS of dollars, but it's not enough. They need MORE! And paying no taxes or a flat tax would only hurt the poor and middle class even more. Do NOT be mislead. Just read the reports on CTJ.org and see for yourself. Less taxes means less money for our police, fire departments, emts, first responders, less money for our military, for our roads, bridges and schools, etc. The list goes on and on. And the rich Republicans don't care because they can afford to hire people to protect them, to put their kids through private school, etc. Republicans want to "starve the beast." They want to cut taxes and run up huge deficits so that they can decrease the size of our government. And why do they want smaller government? For the same reason criminals want fewer cops; it's easier to get away with MURDER. Historically speaking, In a time of war a President should RAISE taxes to pay for the war, not cut taxes that go disproportionately to the RICHEST 1% of the country. Cutting taxes for the richest and most well off in America shows just where Republican loyalties and priorities lay.

Answer 4

The greater the separation between the wealthy minority and the poor majority, the closer we come to violent revolution as has been evident throughout human history.

A flat tax would indeed redistribute wealth, but the wealthy have wisely invested their resources in the best politicians money can buy so no significant changes to the current tax policy that favors them keeping their wealth are forthcoming.

Answer 5

Because the wealthy are more able to pay a higher percentage without having an adverse impact on their lives. If you tax the poor the same percentage as the wealthy, their actual spending power decreases, as they need to spend a higher percentage of their income on the necessities of life, food, shelter, transportation, etc than do the wealthy. The higher earners have extra money, which, yes, they put into savings and investments. I'm not denying that. But taxing the poor and middle class ensures that they will have less opportunity to ever become anything more than poor or middle class. If they are taxed less, they will either be able to save and invest more, or simply put more money into the economy by spending more. If you tax the wealthy more, they will not become less than wealthy, they may simply not become even more wealthy.

Answer 6

You've seen Obama's ad, huh? Well you should realize that neither McCain OR Obama can do the things they each say the other is going to do. Nor can they do the things they PROMISE to do for us WITHOUT Congress passing the bills! The president is nowhere near as important as people are thinking. It is our Senators and our Congressmen who make/pass/deny changes to EVERYTHING! From taxes to war funding and health care. It is congress who we need to know, write and make do their jobs in a way that reflects the peoples views.

Answer 7

How about this: no one should be taxed, and the government should give up all of the socialist roles it plays right now, and return us to a state of Constitutional freedom and prosperity. This is not an unusual or unfounded philosophy: it is what John Locke, Adam Smith, and numerous other enlightenment thinkers described, and the idea that led us to the American Revolution.

Answer 8

I'm not sure your premise is accurate. In fact, the middle class seems to be the group that is disproportionately paying the highest level of taxes. Here is part of an article on Warren Buffet's views of taxation in the U.S.:

"Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.

Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation."

A link to the entire article is below.

Answer 9

I agree..people only look at the federal tax and don't add in the state and local taxes

Answer 10

simple, for example, a $100 tax will hut somebody making $20,000 a year a lot more than someone making $100,000 a year.