Whats Fair When it Comes to Taxes?

I think the real question is the balance of having a closely knit society which values the free-market VS. the rising income/wealth disparity between the top and bottom of society(rising tide lifting boats unequally). At what point society so far apart in terms of socio-economic status that the society really isn't "one" anymore? Are taxes somewhat of an answer and if so, to what extend until we start moving towards big govt/socialism(sure some will say we are already there). If we are already there or we shouldn't try to correct this, what is it to be American? Are we all really equal with the same rights if life is a race and people starting in the "back" never will be able to catch up?

Taxes are simply the overhead we pay for living in a society that (1) is subject to the rule of law; (2) operates under an essentially free market capitalist system; and (3) recognizes the interdependence of citizens within that society.

There have been many "tax the rich" threads/discussions before and I am not going to rehash the research but, for all the loopholes, the top 10% of income earners pay about 50% of the federal government's income. Those may not be the right percentages, but you get the gist. A small minority of individuals is subsidizing the funding that benefits us all.

I got no problem with a progessive tax system. The more you benefit from a system that promotes and protects your ability to create and retain wealth the higher proportion of your created and protected wealth you should pay. With a flat tax rate, the underlying assumption is that we all benefit equally from the taxes collected i.e. a person making 25,000K receives a value of approximately 10% from the government performing its function as does a person who makes 250,000 and a person making 2,500,000. I would humbly suggest, however, that a person making 250,000 or 2,500,000 receives a significantly higher proportional benefit from living in a society ruled by laws and supporting a free market economy than the the guy making 25K. There is a reason that the US has one of the highest ratios of millionaires per capita - it's a good, safe place to become rich and that should be worth a proportionally higher premium than being safely poor.

With all that said, I think it's a rough balance. When does "paying overhead" in proportion to your ability to accumulate and retain wealth become straight up "wealth redistribution" - I'm just not sure. I'm okay with the system in place - I think it needs some tweaking but, in general, everybody's paying taxes of some form or another (sales tax, licensing fees, etc.) and those that make the most, pay the most.

The biggest problem is that for the last 20 years we have spent vastly beyond our means and somehow that deficit needs to be made up.

Found the chart I had posted once before somewhere: The Tax Foundation - Summary of Latest Federal Individual Income Tax Data (http://www.taxfoundation.org/research/show/250.html#Data)

Essentially, in 2010, the top 1% of income earners (those making over ~354K) pay ~38% of all income taxes collected (based on the total number of tax returns filed and adjusted gross income). The top 5% (those making over ~169K) pay ~58% of all income taxes.

From the same site:
"•The largest corporations pay the lion’s share of taxes. In 2008, the 1,937 largest companies were responsible for 68 percent of corporate tax revenue
•The overall effective corporate income tax rate on the worldwide income of U.S. corporations is between 32.1 and 33 percent, which is close to the statutory rate of 35 percent."

What about everyone paying the same percentage from their income minus a basic living cost? Set the basic living cost at the current poverty level, which is around $22k. So if you earn $35k then you'll be taxed on only $13k.

The only thing i love more then a deduction is a credit, and if its refundable im really smitten. But I would be happy with having a simple incentive free tax code as long as it was fair. Fair to me means everyone pays the same percentage on all their income (earned or otherwise) less charitable donations.

In your opinion would it be fair to treat everyone equally and charge them the same percentage? Do you think its currently fair that only half of us pay federal income taxes?

Who told you life is fair? If it was fair we would all be well off, there wouldn't be children that go to sleep hungry at night or homeless veterans, or fund managers who pay 15% CGT on the hard earned money of others.

Get over your pursuit of perfection and fairness and start seeking sensibility and practicality. It doesn't seem fair to me to have the local grocery bagger pay $4 for a loaf of bread and 15% on their income tax and for the CEO of the grocery store to also pays $4 for a loaf of bread and 15% on their income tax. On the surface it looks pretty fair but while the CEO wipes his ass with $100 bills and is unable to notice a measly $4 the grocery store clerk will.

The cost of rent/mortgage and consumable goods are high and unless you want to live like a caveman someone making 30k can barely survive in this country. Bottom line is the clerk will consume most of his income on all the things one need to live a decent life while the CEO can't spend enough to on his neighborhood for eternity. As such they shouldn't be treated the same in matter of taxation.

Some will say, well, why should the CEO have to subsidize other people...to these people I say who is subsidizing the CEO and why shouldn't they pay more considering they benefit the most?

my thoughts:


With all that said I personally believe that everyone who earns money should pay taxes. I also think everyone should pay the same percentage in taxes, which is absolutely not regressive as some say, its proportional. Don’t worry under a completely proportional tax system the rich still pay more in taxes. I do not understand (although im open to consideration) why some people should pay a different percentage in tax then others. I will say that while I like flat tax plans and hybrid flat/fair tax plans like Cain’s, I do think “passive income” should also be taxed the same as “earned income” under a proportional system, so things like capital gains and qualified dividends would be taxed like everything else. As much as the estate tax sounds like a “king’s tax” I would be up for taxing estates but only at the same equal rate as all other income. Im undecided on SS.

The bolded portion is the main thing I have a problem with. It's fashionable now to complain about the capital gains tax, but I actually have a real problem with it. Here's an example:

Let's say, for instance, I'm able to invest $10k of my after tax income in a given year. In that year I make $1k on my investments and I sell off my stock. I don't think I should then be taxed again because I earned $1,000 after I already paid taxes on the money I invested, and if I am, I certainly don't believe it should be at the same rate as I already had been for earning the money I invested.

Now, that example doesn't address folks like Warren Buffett who don't really do anything other than invest, but it illustrates the issue that lots of normal people could face. So, what would be a solution to this? Progressively tax higher capital gains earners? I'm not exactly sure, but I can tell you if the capital gains tax rises to the same level as my payroll tax, I'll probably be a little hesitant to invest any of my money.

The bolded portion is the main thing I have a problem with. It's fashionable now to complain about the capital gains tax, but I actually have a real problem with it. Here's an example:

Let's say, for instance, I'm able to invest $10k of my after tax income in a given year. In that year I make $1k on my investments and I sell off my stock. I don't think I should then be taxed again because I earned $1,000 after I already paid taxes on the money I invested, and if I am, I certainly don't believe it should be at the same rate as I already had been for earning the money I invested.

Now, that example doesn't address folks like Warren Buffett who don't really do anything other than invest, but it illustrates the issue that lots of normal people could face. So, what would be a solution to this? Progressively tax higher capital gains earners? I'm not exactly sure, but I can tell you if the capital gains tax rises to the same level as my payroll tax, I'll probably be a little hesitant to invest any of my money.

You only get taxed on your profit which is new income. The billionaires hide their money from taxes using similar strategy with capital gains and it isn't fair at all.

You only get taxed on your profit which is new income. The billionaires hide their money from taxes using similar strategy with capital gains and it isn't fair at all.

I know that, I still have a problem with it when it's on a smaller scale, though. I'm not saying that I necessarily have a solution to the problem, but I don't know that raising the tax is fair to the people who aren't able to put much in and don't end up earning much, either.

At this point... I don't even know any more. I've always felt a "Flat Tax" would be good because everyone would have to pay the same % of what they earn. There would be no complaining about how the rich get richer, the poor get poorer, and the middle class is what runs this country.

Then I've felt everyone has to eat so make a "Food tax". Everyone gets hit equally. Same for the most part with a "Gas tax". Everyone who drives gets hit equally.

I'm not a smoker and hardly a drinker but what pisses me off more is when they want to raise tobacco tax as if that will solve our problems. Lets make the smokers pay for everything. Another was VA's stupid idea a few yrs ago to attack the people who get DUI's. The Gov. had this brain storm that it costs like 60 mill to repair VA's roads and on average there was "X" number of drunk drivers a year and by taxing them extra VA would make the 60 mill easily. They reduced everyones taxes figuring the drunk drivers would carry the load, but most Judges didn't think the law was fair so they started throwing DUI cases out of court. VA quickly fell 60 mill in the hole. lol. Then after it was challenged in VA's courts it was considered unconstitutional. All the extra tax that drunk drivers paid had to be repaid back to them by the state. lol.

I know that, I still have a problem with it when it's on a smaller scale, though. I'm not saying that I necessarily have a solution to the problem, but I don't know that raising the tax is fair to the people who aren't able to put much in and don't end up earning much, either.


Whatever problem you have with it is unfounded. You have 1k in new income, how you got it is irrelevant. If it helps think of the process investing in stock as having invested in a business and making a profit (exactly what you're doing actually). You will pay and you should pay taxes on those proceeds.