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InvisibleBlack -> RE: Patriotic Millionaires' Message to Congress "Tax Me" (12/9/2011 10:54:09 PM)
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Whether or not the government is "corrupt" or the extent of the corruption - you will still have to fund it as even a corrupt government is better than no government unless we're talking about levels of corruption so profound that social order has entirely collapsed. I would argue that the first step is to determine what the ideal effective levels of taxation are and then shape your government to operate within that amount of revenue.
Currently we seem to be wasting a fair amount of energy and time debating the tax rates for people with extremely high incomes. This is a complete waste of energy because a) that group does not consist of static individuals but is mostly comprised of people who make a massive amount of money for a single year (lottery winners, people selling estates, etc. etc.) and then fall out of the bracket and the overall numbe of such people is actually very small. Arguing about the marginal tax rates for a tiny sliver of the tax base (i.e. people with incomes of over $1 million or whatever) makes for good politcal rhetoric but is pointless from a tax policy perspective. The amount of tax revenue involved, relative to the overall tax pool, is tiny. Beyond this, any argument involving nominal tax rates is, at best, pointless and, at worst, deceptive. No one (anywhere in the world) pays the nominal tax rate. Exemptions, deductions, and the like result in distortions to the tax rate. The only useful statistics to discuss is the effective tax rate.
I will use these numbers: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456 - although equivalent statistics can be found in other locations.
Basically, in the past thirty years, the highest rate the top 20% have paid is 28% in 2000 and the lowest rate is 23.8% in 1986. In 2007 (the last year with good data) the rate was 25.1%. This is probably about right. Bear in mind that 2000 was the height of the dot.com bubble. I do not believe under any circumstances no matter what gyrations in tax policy you perform, you can jack tax revenues up to dot.com bubble levels today. Could you, in theory, potentially force rates up a percentage point higher? Probably. Is this going to "save the economy"? No. Will it create jobs? No. Will it "balance the budget"? No.
From a policy standpoint I think the nation as a whole would be better served by simply making an announcement that there will no changes of any kind to income tax rates for the next two years (which would create stability and certainty) than an ongoing brawl over tax rates which leaves those with money to invest or business ideas to pursue with a situation where they have no clue what might happen next month, let alone next year.
The area where serious scrutiny is needed and where effective changes could be made which would not only have a significant change in tax revenues but would also assist in rectifying economic imbalances is in the area of capital gains taxes. Our current system encourages short-term speculation at the expense of long term investment. By keeping the capital gains rate far below the income tax rate and with interest rates so low, it almost forces people to push their money into equities and avoid any form of investment that would result in "income". My own solution would be to impose a capital-tax with time-based brackets - i.e. any capital gain realized in less than a year would be taxed at an extremely high rate (say 50%), any capital gain between 1 and 3 years at a lower rate (say 25%) and any capital gain realized in longer than 3 years would not be taxed at all. This would effectively penalize short-term speculation, high-speed trading, and the like and massively reward investment in equipment or development of assets (i.e. infrastructure spending).
Of course, Wall Street would hate this no end and Goldman Sachs would probably go to war to prevent this - but that's part of the point.
Back on topic - I saw a survey from Forbes a month ago - 99% of all millionaires surveyed do not want to pay more taxes. The fact that there are one or two who do and are willing to say so is about as useful as finding five people in America who want believe the Earth is flat. A few anecdotal points do not make for a valid model.
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