Tuesday, March 18, 2008

Thinking of "Wealth" and Taxes

I believe that our current US taxation system unfairly taxes many of our poorer people and is unduly generous to many amongst us who can readily afford to pay more in taxes. I can't lay out a simple formula for exactly how things should be changed, but certain things jump out at me.

Working is fairly heavily taxed. Most workers pay quite a few taxes related to their work.

Wealth - is often very lightly taxed. IF one makes huge amounts of "taxable income" it is certainly taxed. Relative to the "normal worker" who might in the US work and earn roughly $40-150,000 or under $100,000 or under $75,000 - if you wish - the person with wealth need not necessarily pay a lot in taxes.

I would think, logically thinking, that IF beyond perhaps a base exemption of $500,000 maximum in home value for a Single residence (not a vacation home and a primary residence), those whose worth is in excess of benchpoints of say: $1,000,000, $10,000,000 and $100,000,000 might logically be expected to pay certain minimums in taxes based upon their wealth.

I'd have no problem with the individual or couple who is worth $10,000,000 paying a substantial amount of taxes in interest/dividend/capital gains income - which might be above the "benchpoint" and thus not due a "wealth tax".

I would have difficulty though in general with the idea that a household whose worth might be $10,000,000 paying say: $20,000 or even $50,000 in income taxes in a given year. Saying that this is a "small business owner" or otherwise "humble" individual or couple seems to me to mock the idea of what a "worker" really is.

I would think that a progressive "wealth tax" which would have several benchmarks and exemptions that would take into account federal income taxes paid by the household would be a good idea. Obviously keeping estate taxes for the wealthy would also be important in this area.

When talking of taxes, I presume that Someone has to pay the bill. Most people do pay and often pay as much as they can afford and should have to pay. Taxing wealth seems one way to make things more fair in allowing us to have necessary government services without creating tax burdens that are impossible or simply unfair for those of middle and lower income.


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