Redistributing the Tax Burden – and the Wealth

In the course of addressing the concept of people helping each other, and this presidential campaign where the candidates talk of pushing the tax burden on the very rich, the top few % of the population – there’s a great deal of criticism or sarcasm. Marx’s concept of ‘FROM each according to his ability; TO each according to his need’ which was so brilliantly, and scornfully exposed in most of Ayn Rand’s novels doesn’t hold true in today’s economy.

Today, the average ‘taxpayer’ is working more hours than ever on jobs that are paying less than ever before. They are not slacking off. They are not freeloaders. They just aren’t earning what they are worth. The median income level for 116 million American households for 2007 was $50,233
Can you really support a family of four on that in an urban area where just the rent/mortgage is about $14,000 per year?

IRS statistics (2005) show that less than 3% of the population has income over $200,000. (and less than 3 million people with net worth of $1.5 million or more.)

The problem is, among the 1/3 million taxpayers whose net worth is over $5 million are many executives on Wall Street and publicly held corporations who have been paid millions of dollars for doing a sub-standard, or even criminal job – or for selling sub-prime loans, knowing the homeowner would never be able to make the payments when the honeymoon rate ended. These people are not the Randian or Nietzschian superman who perform to top standards or create great works.
Since they won’t have to face legal fees or criminal prosecutions, do you really mind if they pay a little extra tax to cover the cost of unemployment, health care, and housing for those whom they’ve bankrupted?

In an interview with the Libertarian candidate Bob Barr on one of the news shows last weekend, he was asked what he would have done if he were president during this troubled time. Barr said one of the first things he would have done is to instruct the attorney general to start some criminal investigations in the misconduct by Fannie Mae and Freddie Mac. (Why haven’t I heard anyone else say that?) One of his press releases says , “We need an independent investigation of the money spent and tactics used by Freddie Mac and Fannie Mae that enabled them to so abuse the public trust.”

I don’t know very much about this Libertarian fellow who used to be a Republican Representative from Georgia. What he does tell us about himself is – that Bob Barr supports firearms, and is for marriage for everyone. But doesn’t even mention a woman’s right to chose on his list of issues at all. (Don’t you want to know which way he leans?) He is an advocate of less government – in keeping with the Libertarian philosophy.

Let’s face it, we all like the idea of less government – and having the government stay out of our business. In fact, we just saw the results of the government staying out of the mortgage industry. They stopped overseeing the transactions and removed the regulations. Did the market forces take care of things themselves? Heck no! Perhaps the laissez faire concept doesn’t work as well as theorists think it should?

Barr does want to reform the tax system, perhaps replacing income taxes with a consumption tax, like the Fair Tax System. It’s like a national sales tax of 23% (wow!). As a consumption tax, it’s a regressive tax. The burden is higher on the taxpayer who spends the largest percentage of her income on consumables – poor and middle class. Sure, the wealthy may pay more in absolute dollars (think of the tax on a yacht). But as a percentage of their income, the Fair Tax is a small percentage. I’d still rather see a flat tax on taxpayers and businesses – where everyone who earns more than 2x or 3x minimum wage pays a fixed amount of tax. Period. With no fudging or cheating, the overall tax rate can be lower.

Hey, this is neat. The Fair Tax folks compared McCain’s and Obama’s tax plans to the Fair Tax.

By the way, looking at the IRS statistics from 2005 tax returns, have you come to realize that Barack Obama wants to shift the largest part of the tax burden for the entire country onto the shoulders of about 3 or 4 million taxpayers? As angry as we might be at the country’s current economic situation, that’s impractical and ridiculous. We need a president who’s in touch with financial reality.

We’ve already talked about McCain’s proposal to switch health care costs and choices directly to the taxpayer by giving each household $5,000 to cover the cost of over $12,000 worth of premiums for a family of 4. What a clear understanding of family finances that is!

Unfortunately, so far, none of these candidates make me feel secure about our future.

Please, please, someone tell who we can trust to lead our country?

We’re getting down to the wire and I can’t figure out who is going to the least damage if elected!