Why Tax Work More Than Other Income?
I have trouble understanding how any decent American could want to tax investment or inheritance income at a lower rate than work income.
I can understand how, from a “running for office” perspective, it makes sense to give tax breaks to rich people, because they can (and do) give big campaign contributions in return. And those same rich people can (and do) hire economists to explain how some of the money rich people don’t pay in taxes will “trickle down” to workers.
But I have yet to see a moral or ethical justification for a CEO who gets millions in stock option “capital gains” every year paying a lower tax rate on that income than a truck driver pays on $40,000 a year.
Note that in addition to income tax, the working person is subject to “payroll tax” that the capital gainer or heir does not pay — and that the “payroll tax” (FICA) rate alone, including employee and employer contributions, is currently 15.3%, or slightly more than the *total tax rate* on long-term capital gains.
This is a national problem, not a partisan one. It is going to take all of us, working together, to solve it.
Thanks for your help,
Robin Miller
Bradenton, FL
PS - This is an email I sent to Florida Senator Mel Martinez. I’ll post his reply if and when I get it.
June 20th, 2006 at 8:05 am
The payroll tax is Social Security taxes. Lately politicians have gotten away from calling it the social security tax. According to FDR when this tax was implemented, it is a “Premium” like an insurance premium to provide you with your Social Security benefits. Rich people already pay far more than they could ever collect in Social Security. Are you suggesting that Social Security become just another Welfare Program? Where people do not pay their own way? That is what I get out of your comments. It’s like old people today. They call it “my” social security… They dont consider that in most cases they collected every cent thy paid in plus interest in less than a year. Anything they collect after that is yup, you guessed it: “Welfare”. They have to have something invested in it to make it worthwhile….
November 14th, 2007 at 6:12 am
Yes this is a problem of ’structured inequality’ that serves a financial elite rather well.