The rich pay taxes at a lower rate? That's a problem in need of fixing

Comments (3)

Billionaires pay less because their income is dividends, interest and capital gains all of which is taxed at 15%. A preference should exist for investment in plant and equipment (building a bigger pie) but speculative investments in non productive activities like commodities, high frequency stock trading and non productive real estate (mcmansions and vacation homes) should be taxed as ordinary income. Dividends should be taxed as ordinary income to the recipient but should be fully deductable to the company paying the diviednd (taxed once at the ordinary ones ordinary rate). Interest should be taxed as ordinary income with an inflation deflator. We need capital formation, but tax preferences should exist only for productive (income producing) investments that expand the "pie". Nations get rich by producing and selling goods and services other nations want. They get poor by buying more from abroad than they produce. That is our current problem. This market truth has been true since the before the Romans. The tax code must be changed to promote wealth creation through the production of exportable goods and services. That will grow the pie. By eliminating usless deductions and incentiives it the tax code, and redeploying that capital to the production of goods ans services, the pie will grow. A growing economy will allow everyone to live better. Merely redeviding a static "pie" will not.

Posted by Corey Gkab from Credit Diver Twp., MN | August 19, 2011 2:46 PM

Here's the flaw with the argument: Buffet's major source of income is investment income, taxed as capital gains at 15%. However, that income is after 35%ish of the company's profits is taken/paid as corporate tax. A wage earner pays more in tax, but that comes from pre-tax money for the company (as a cost of doing business.)

Perhaps a better system would be to reverse the roles: corporations pay a flat 15% tax on profit (with very little tax breaks, unlike today) and capital gains is seen as regular income (and subject to the higher tax bracket.)

Posted by Jeb Rach from Orange City, IA | August 19, 2011 8:07 PM

Well said Hani, the rich are able to hire well knowledgeable CPAs to use all the tax loopholes to get as much money as they can.

The right tax percentage that the rich have to pay has a minimal effect on their income, while the tax percentage ordinary Americans have to pay has a major effect on their overall income.

Posted by Huda Fay from VA | August 20, 2011 12:27 PM

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