Taxing the ‘rich’ is in the air

Aug. 8, 2012

By John Seiler

“Tax the rich” is a mantra not only in America, but globally. In California, Gov. Jerry Brown is insisting that anyone making $250,000 or more a year is “rich” and should pay more. At the national level, President Obama also is insisting that some making $250,000 or more is “rich” and should pay “their fair share.”

In France, new President Hollande wants to impose a 75 percent tax on those making more than $1.2 million a year.

Hey, why  not? The rich just rob from everybody else and splurge on yachts and Rolls Royces. They never re-invest their money in business and jobs creation. Instead, it’s governments that wisely spendsthe tax money taken from the rich, re-investing it in the education of workers, crucial research on new products and economic stimulus packages.

The Financial Times noted on the international climate (may be a pay wall on the link):

“Pierre Moscovici, the country’s finance minister, told Le Monde: ‘This is not a punitive measure, but a patriotic measure.’ The rich, he explained, are being given an opportunity to make ‘an exceptional contribution’ to solving France’s financial problems….

“The truth is that the new French government is at the extreme end of a new global trend: an international backlash against the wealthy that is reshaping politics from Europe to the US to China.”

China, of course, had long experience under Mao Zedong with punishing the rich for their sins, such as the Great Leap Forward (1958-1961) and the Great Proletarian Cultural Revolution (1965-71). Unfortunately for the Chinese, after Mao died in 1976, his successors, especially Deng Xiaoping, unleashed greed and rich people started creating companies and exporting gizmos to the shelves of Walmart in America. But Mao still is featured in their currency, the yuan, so perhaps they can return to a time when the rich didn’t exploit the poor. The FT:

“The lifestyles of the rich and powerful is now the most sensitive and dangerous topic in Chinese politics. The website of Bloomberg News was recently shut down in China, apparently as punishment for the publication of an article on the family wealth of Xi Jinping, soon to be China’s new president.”

It’s also unfortunate that, while countries such as France and America and California are punishing the “rich,” other countries are taking advantage of this policy. The FT:

David Cameron, the British prime minister, has offered to roll out the red carpet for French tax exiles.” 

There always are reactionaries. Both countries are part of the European Union, which makes it easy to cross borders for work and residence. Fortunately, wiser heads may prevail even there:

“But even in Britain, where the top tax rate is 45 per cent, there is a new mood of antagonism towards the rich. Even conservative politicians dare not defend bankers’ pay….

“If this new mood hardens, it could mark the end of an era of lower taxes, deregulation and rising inequality that began in the late 1970s, with the rise of Margaret Thatcher and Ronald Reagan in the west and of Deng Xiaoping in China When Lady Thatcher came to office in 1979, Britain’s top tax rate was 83 per cent. She cut it, first to 60 per cent and then to 40 per cent — where it stayed until the financial crisis. Reagan inherited a top income tax rate of 70 per cent and cut it to 50 per cent and finally to 28 per cent. In China, Deng Xiaoping captured the spirit of the times when he remarked: ‘To get rich is glorious.’”

The new theme is: “To be taxed is glorious.”

Currently in California, the “rich” pay a top federal income tax rate of 35 percent and a top California state tax rate of 10.3 percent. Total: 45.3 percent.

If all the tax increases go through, those numbers would go, respectively, to 38.6 percent and 13.3 percent. Total: 51.9 percent.

Actually, an even better idea would be to restore the 91 percent federal level from the 1950s. Combined with the 13.3 percent California top tax rate, if Brown’s tax increase is passed, the top rate here then would be 104.3 percent.

A tax rate of 104.3 percent would benefit the rich the most because their money would be ploughed back into the economy on the construction of infrastructure projects such as the California High-Speed Rail Authority, thus generating more wealth for them and everybody else.

The 104.3 percent income tax rate: It’s an idea whose time has come.

17 comments

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  1. Soquel Creek
    Soquel Creek 8 August, 2012, 09:10

    The more people learn about Governor Brown’s big-government tax hike (Proposition 30), the less they’ll like it. It’s bad public policy, horrible tax policy, an abuse of the democratic process, and the wrong medicine for what ails California.
    http://soquelbythecreek.blogspot.com/2012/07/california-proposition-30-governor.html

    Reply this comment
  2. Soquel Creek
    Soquel Creek 8 August, 2012, 09:11

    As for California’s glorious people’s high-speed rail project, watch the testimony that most voters never heard–from one America’s biggest promoters of high speed rail.
    http://soquelbythecreek.blogspot.com/2012/08/the-testimony-on-californias-high-speed.html

    Reply this comment
  3. us citizen
    us citizen 8 August, 2012, 09:47

    Hey Gov Brown…….go pound sand. Get rid of the illegals and their entitlements and you might have some left over money. Do that FIRST.

    Reply this comment
  4. us citizen
    us citizen 8 August, 2012, 09:55

    Great info Soquel!

    Reply this comment
  5. Gerald Caskey
    Gerald Caskey 8 August, 2012, 11:27

    Everyone should be taxed the same. Why should you pay more just because have more. Its stupid. We should get the 50% who pay none, get off their butts and get to work and pay some taxes.If you give the government more money, they will find more things to spdend it on.

    Reply this comment
  6. Rex The Wonder Dog!
    Rex The Wonder Dog! 8 August, 2012, 16:13

    Actually, an even better idea would be to restore the 91 percent federal level from the 1950s. Combined with the 13.3 percent California top tax rate, if Brown’s tax increase is passed, the top rate here then would be 104.3 percent.

    No one, I repeat NO ONE ever paid a 91% effective tax rate, the number of tax deductions in the 1950’s was 100 times more than what we have today. The effective tax rate in 51 was probably lower than it is today.

    Reply this comment
  7. Rex The Wonder Dog!
    Rex The Wonder Dog! 8 August, 2012, 16:14

    We should get the 50% who pay none, get off their butts and get to work and pay some taxes.

    Everyone PAYS TAXES, everyone. You are speaking only of the income tax, but there are hundreds-thousands of other taxes that apply to everyone regardless of income, like the regressive sales tax.

    Reply this comment
  8. Soquel Creek
    Soquel Creek 8 August, 2012, 17:24

    Rex The Wonder Dog!, you’re right. Every Californian pays sales tax and California already has the nation’s highest state sales tax rate. Unfortunately, Governor Brown’s Proposition 30 tax hikes want to push the rate even higher.
    http://www.twitpic.com/a68e2d/full

    Meanwhile, most of the money for California’s General Fund comes from Personal Income Taxes (PIT). PIT revenues provide 63% of General Fund revenues while sales taxes provide just 21%.
    http://www.twitpic.com/ah3i1m/full

    However, because California’s PIT taxes are so very income-progressive, the top 2-3% of taxpayers contribute roughly half (50%) of the entire PIT tax bill. This means that the population roughly the size of Riverside, CA generates about a third (31%) of the General Fund, not including their sales tax contributions. These few taxpayers pay more in income tax than the entire sales tax generates from all Californians. Meanwhile, the majority of Californian taxpayers and voters contribute little of California’s income tax revenue.

    Despite already having the nation’s 2nd and 4th highest state income tax rates, Governor Brown and his cronies want to burden California with the nation’s 1st, 2nd, 3rd, and 5th highest state income tax rates via Proposition 30.
    http://www.twitpic.com/a68drw/full

    Proposition 30 is bad public policy and horrible tax policy. You can read more about it here.
    http://soquelbythecreek.blogspot.com/2012/07/california-proposition-30-governor.html

    Reply this comment
  9. BobA
    BobA 9 August, 2012, 09:35

    I don’t see what the big deal is about raising the tax on the rich as long as it is targeted.

    A fair and simple 4% flat tax should be implemented with very few exemptions on the first $550,000 of income and 10% for incomes in excess of $550,000 up to 1.5 million dollars. Incomes in excess of that amount should be taxed at 20%. Small businesses with more than say 10 employees should be exempted from the 10% & 20% flat tax rates.

    California should also impose an additional wealth tax of say 15% on those who bank more than 1.2 million dollars per year after taxes.

    The math is simple and straight forward. If you make $50K/year, you tax bill is $2000. If you make $200K/year, you tax bill is $8000. If you make $551,000/year you tax bill is $55,100. If you make $1.55 million/year, your tax bill is $310,000. If you make $1.6 million/year, your tax bill is $560,000 and so forth.

    By my simple formula, a Hollywood scum bucket making $20 million/year would owe $7 million in taxes. It all seems fair to me. Comments??

    Reply this comment
  10. Rex The Wonder Dog!
    Rex The Wonder Dog! 9 August, 2012, 15:56

    Let me make this very clear- the sales tax should be LOWERED, not raised.

    The sales tax rate should be, at most, 6%, at most. 4%-5% would be ideal.

    Eventually it will be 10% and then eventually even 10% will not be enough….caught a dork school admin on the news today claiming education gets less $$$ today than it did 20 years ago (it definitely does not) and that the education system is going to “crash” if Clowns sales tax is not approved…..errr……get ready for a crash Bubba, because the pension sales tax is DOA

    Reply this comment
  11. Rex The Wonder Dog!
    Rex The Wonder Dog! 9 August, 2012, 16:08

    However, because California’s PIT taxes are so very income-progressive, the top 2-3% of taxpayers contribute roughly half (50%) of the entire PIT tax bill. This means that the population roughly the size of Riverside, CA generates about a third (31%) of the General Fund, not including their sales tax contributions. These few taxpayers pay more in income tax than the entire sales tax generates from all Californians. Meanwhile, the majority of Californian taxpayers and voters contribute little of California’s income tax revenue.

    SC, I do not argue with your numbers about how much of the overall tax revenue is coming from the top 1%-5% of income earners, but I think you should also realize that the top income earners are receiving an even greater share of the income being produced. My position is clear, we need to contain gov spending, BIGTIME, before we start looking at raising taxes on anyone-including the top 1%-5%. When virtually every gov employee has a $100K or more overall compensation deal-including janitors, parking lot attendants, secretaries and unskilled cop/ff/prison guard jobs, then we have big-no HUGE- expense problems.

    See, I grew up a hardcore democrat, hardcore, and also a BIG private sector union supporter. I still support private unions b/c if they over reach, like the UAW have, they lose jobs and lose power. There were 1.5 million UAW members 20 years ago, today it is only 400K, because those people simply cost too much at $100K per job for auto assembly. They have had terrible leadership and I wish they could see that. Now, the public sector unions are a whole new ball game. The Dems USED to watch out for the small guy-today they throw the small guy-and everyone else- under the bus to please a small segment of the population, the ones who bankroll them, the public unions. The overall health of the state, it’s citizens and the little guy mean nothing to them, only how to toss regressive taxes on the little guy so we can pay janitors $100K+ comp packages.

    Now every gov yahoo on this and other sites think I am some right wing nut case b/c I stand up to the public union abuses and their dirtbag enablers the state Dems.

    Reply this comment
  12. NTHEOC
    NTHEOC 9 August, 2012, 16:38

    This video will enlighten all of you!! Even you john seiler. It involves all of us,public and private employee’s.
    http://youtu.be/8Y-u0UnKZ_U

    Reply this comment
  13. Rex The Wonder Dog!
    Rex The Wonder Dog! 10 August, 2012, 00:20

    I have been posting Bernie Sanders videos all the time, just posted 3 of them on the SDReaders website last week………he is 100% correct. Sad he is retiring, he is one of the 2 or 3 in Congress who gets it 🙂

    Reply this comment
  14. NTHEOC
    NTHEOC 10 August, 2012, 00:36

    Now that surprises me Rex!

    Reply this comment
  15. BobA
    BobA 10 August, 2012, 07:36

    Rex:

    Bernie Sanders is a socialist and if not, a communist. So are you a fan of socialism? Communism? Which “ism” are you for? Is it you opinion that the only good wealthy people are all democrats and that only wealthy republicans are evil and greedy? Is it your opinion that school teachers, fire fighters, police officers and government bureaucrats are the most productive citizens and if so, what do they produce?

    Reply this comment
  16. Soquel Creek
    Soquel Creek 10 August, 2012, 09:10

    Rex The Wonder Dog!, believe it or not, I support public-sector unions but only in right-to-work states. IMHO, the 1st Amendment guarantees the existence of public-sector unions as the “right to peaceably assemble” and an instrument of “petitioning for a governmental redress of grievances.”

    Unfortunately, here in California, union membership is mandated for some public jobs. Sure, there’s a byzantine way to “opt-out” but it still costs the employee. There is no “free assembly” in California’s public-sector unions. Essentially, it’s a money-funneling for the California Democratic Party using taxpayer dollars. Is it surprising in the least that the two biggest spenders in California politics are two public-sector unions? It it any surprise that they give nearly all their political contributions to the party that holds a nearly 2-to-1 majority in BOTH Houses of the California Legislature and who hold EVERY major statewide office?

    1. California Teachers Association (CTA)
    2. California State Council of Service Employees (SEIU)

    CHART: http://www.twitpic.com/75tc0v/full

    I personally belong to two trade unions–by my own free choice. Membership is not forced on me. If the union no longer meets my needs or too often supports positions with which I do not agree, I will drop my membership and stop paying dues–again, by my own free choice.

    Reply this comment
  17. NTHEOC
    NTHEOC 10 August, 2012, 09:26

    BobA,
    I hope you took the time to watch the whole video and remember this,” Figures don’t lie but liars figure”. Stop lying to yourself!!!

    Reply this comment

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