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The Rich Don’t Have Enough?

January 11th, 2013
Great article in Common Dreams about taxes. It's not about raising taxes, but rather collecting the taxes that are already in place. Every year, this is how much could be collected were it not for special exemptions and other avoidance techniques, used primarily by the rich:
  • $1.25 Trillion: special deductions, exemptions, exclusions, credits, capital gains, and loopholes;
  • $450 billion: the 17% of taxes being under-reported and/or unpaid;
  • $250 billion: money hidden in tax havens by people like Mitt Romney;
  • $250 billion: corporate tax avoidance has cut their payments from 22.5% to 10%;
  • $300 billion: getting rid of the cap on payroll taxes.
The article adds $100 billion lost if the estate tax is repealed, but since it has not been repealed, I do not include this. The total comes to $2.5 trillion a year, more than double the current deficit. It would be sheer idiocy to suggest that somehow these exemptions pay for themselves by more than a small fraction. True, some of this is distasteful and some not feasible; we could not magically collect all unreported taxes, and many of the deductions are badly needed by the middle class. However, even if only half of these were achieved, collecting what could be realistically found and ending special exemptions mostly for the rich would instantly eliminate the deficit, and even give us a start on paying down the debt. Not that it will ever happen, of course. We do, after all, have to pay respect and homage to the insanely ludicrous fantasy that making rich people pay taxes will stop them from trying to make money. Sadly, that theory is so deeply ingrained that the recent Republican presidential candidate actually campaigned on cutting tax rates for rich people nearly to zero. He wanted to slash corporate taxes, have no taxes on capital gains at all, and eliminate the estate tax. And nearly half the country voted for him.

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  1. Troy
    January 11th, 2013 at 17:04 | #1

    Here’s per-worker after-tax corporate profits, in 2005 dollars:

    http://research.stlouisfed.org/fred2/graph/?g=eqq

    this increasing profit-making shows up in the divergence between corporate taxes paid and after-tax corporate income:

    http://research.stlouisfed.org/fred2/graph/?g=esF

    shows corporations are netting $1.8T ($2.1T gross) and only paying $300B in taxes, for a 14% tax rate.

    http://research.stlouisfed.org/fred2/graph/?g=esG

    is after-tax corporate profits over wages. The higher that goes the bigger the pie kept by corporations.

    ludicrous fantasy that making rich people pay taxes will stop them from trying to make money

    what nobody seems to understand is that the “rich” do not make money from the bottom of the sea, the Mines of Zanzibar, or among themselves. They make their money pulling it out of the 95% of the population below them on the totem pole.

    http://taxfoundation.org/article/summary-latest-federal-income-tax-data-2012

    for the raw data,

    http://www2.ucsc.edu/whorulesamerica/power/wealth.html

    for a good analysis and more depth, and

    http://research.stlouisfed.org/fred2/series/GINIALLRH

    for the trend of income disparity in the US. It’s really a big problem!

    If you have time you can read my ranting over and over here:

    http://delong.typepad.com/sdj/2013/01/rough-transcript-stimulus-or-stymied-the-macroeconomics-of-recessions.html#comments

    yes I need to get my own blog!

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