Wednesday, April 05, 2006

The Rich Get Richer

They always do; but sometimes studies come out that verify the trend. Take, for example, this study done by the New York Times:

According to the study, taxpayers with incomes greater than $10 million reduced their investment tax bill by an average of about $500,000 in 2003, and their total tax savings, which included the two Bush tax cuts on compensation, nearly doubled, to slightly more than $1 million.

These taxpayers, whose average income was $26 million, paid about the same share of their income in income taxes as those making $200,000 to $500,000 because of the lowered rates on investment income.

Forgive me, but does someone with an income of $26 million really need to hold onto that $1 million that would otherwise be paid to the government? I'm not exactly a fan of the federal government, but Robin Leach has convinced me that even the federal government spends money more wisely than the average gozillionaire. (As a nation, we also have to pay for a war and do something about our record-setting budget deficits.)

Some would argue that, if the super-rich are allowed to keep more of their money, they'll create more jobs. Maybe. But I haven't been impressed by the number of jobs—particularly jobs that pay a living wage and provide benefits—created in recent years.

Of course, as I have noted several times before, I am not an economist. But given all of the people who are struggling to get by, I have trouble feeling good about the richest Americans getting even wealthier.


Anonymous Anonymous said...

Tax the rich!

6:34 AM  
Blogger Christopher Drew said...

Are you aware of the fact that revenues to the Federal treasury have skyrocketed since the implimentation 2003 Bush tax cuts?

Here is some data from from the 3/23/06 WSJ [sub. only], a paper that actually has expertise in matters related to the economy:

"In the first five months of Fiscal 2006, through February, overall revenue continued to surge, growing at an overall rate of 10.3%, or an $81 billion increase from the year ago period, to $871 billion. That builds on the astonishing 15%, or $274 billion, revenue increase for all of 2005, which various fiscal wisemen assured us would fall off dramatically. Apparently not.

This year's double-digit increase is roughly triple the rate of inflation, reflecting strong gains in business profits and individual wages and bonuses -- both signs of a vibrant underlying economy. Corporate income taxes are up 30% so far this year, while individual income tax payments have climbed by 10.3% through February."

The deficit that Josh laments is not the result of an income problem promulgated by the millionaire who "holds onto that $1 million that would otherwise be paid to the government." The top 10% of all income-earners, even after the rate rate reductions of 2003, pay almost 85% of the total income tax burden. Any tax cut will, of course, benefit the small group of American's who actually pay income tax. The problem is, as usual, out of control Federal spending. Medicare spending, for example is "growing at a 10.4 percent pace," [WSJ, again] which eclispses defensing spending increases by almost three percentage points. Of course, Medicare spending will skyrocket futher as a result of the free prescription drug giveaway.

And how can the addition of 5.1 million jobs since August 2003 be viewed as anything but fantastic? On 4/7/06, the government announced that the unemployment rate has dropped to 4.7%, a fractional rate that implies the economy is operating at full-employment.

It is my opinion that Robin Leach should not be relied to provide evidence that our all-wise government is better able to spend our money that we are.

11:05 AM  

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