progressive income tax

Progressive Income Tax

What do you think?

1. Everybody should pay the same dollar amount of tax (regardless what they earn).

What do you think?

1. Everybody should pay the same dollar amount of tax (regardless what they earn).

2. Everybody should pay the same percentage of their income.

What do you think?

1. Everybody should pay the same dollar amount of tax (regardless what they earn).

2. Everybody should pay the same percentage of their income.

3. We should have income tax brackets with increasing percentages.

What sort of society do you want?

What percentage share of the total wealth pie should the top 20% have?

Well, how about that?Sweden is the nation with wealth distribution that most closely resembles what most Americans want.

What are we talking about (income)?

What are we talking about (income)?

What are we talking about (wealth)?

What are we talking about (wealth)?

What are we talking about (income)?

Progressive taxation – The History

Progressive taxation – The Assault

"I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

- Grover Norquist, Americans for Tax Reform

Progressive taxation – The Assault

“We are not the successor of, we are not a continuation of Western civilization. We are a unique and different civilization.

- Grover Norquist, Americans for Tax Reform

Progressive taxation and inequality

Redistribution – other tools

• Earned income tax credit

• Food Stamps

• Medicaid

• Supplemental Security Income

• Housing assistance (Section 8 etc.)

• Estate Tax

Why Progressive Income Tax?

1. Theory of Marginal Utility

2. Helps avoid plutocracy

3. Egalitarian economies are healthier

4. Americans are healthier

5. Founding Fathers wanted a Republic, not Aristocracy

1. Marginal Utility

That third piece of pie at Thanksgiving doesn’t taste as good as that first piece. And that 99th stack of $10,000 isn’t as valuable to you as the first 5 stacks.

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

2. Plutocracy

Getting elected is expensive. Who are our elected leaders listening to?

Aw, c’mon!

This helps explains the occupy movement.

2. Plutocracy

Getting elected is expensive. Who ARE our elected leaders?

3. Healthier EconomySpurring economic growth is one thing. Sustaining it is

another. Income equality is a critical factor.

3. Healthier EconomySpurring economic growth is one thing. Sustaining it is

another. Income equality is a critical factor.

3. Healthier Economy“But the rich are ‘job creators’ and we need to give

them tax breaks to make more jobs!”

3. Healthier Economy“But tax cuts for the rich will stimulate the economy!”

3. Healthier Economy“But tax cuts for the rich will stimulate the economy!”

3. Healthier Economy“But higher marginal tax rates will hurt

small business owners!”

3. Healthier EconomyActually small business owners were 7 times more

likely to use the EITC.

Let’s say a small business (less than 100 employees) has net profits of $250,000. Under Obama’s proposal that business would have paid an extra 3% tax on income above $174,400. That’s an extra $2268.

3. Healthier Economy“During the 1970′s, for every dollar of new investment in plants and equipment, $1.30 in stocks were traded on the U.S. exchanges… But from 1998 to 2007, $27 in stocks were traded… for every dollar of corporate investment in plant equipment. Such a rapid stock turnover has diverted the attention of managers of enterprises from long-term planning.” - John Miller, D&S

4. Healthier AmericansInequality causes shorter, unhealthier and unhappier lives; it increases the rate of teenage pregnancy, violence, obesity, imprisonment and addiction; it destroys relationships between individuals born in the same society but into different classes. - Wilkinson & Pickett, The Spirit Level

4. Healthier AmericansInequality causes shorter, unhealthier and unhappier lives; it increases the rate of teenage pregnancy, violence, obesity, imprisonment and addiction; it destroys relationships between individuals born in the same society but into different classes. - Wilkinson & Pickett, The Spirit Level

4. Healthier Americans“Below 60,000 dollars a year, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve rarely seen lines so flat.” – Daniel Kahneman, Nobel Laureate

= $60,000?

5. Founding Fathers wanted a Republic, not AristocracyEuropean primogeniture and entail laws enabled the aristocracy to pass on their fortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wanted to avoid these concentrations of wealth.

Entail and primogeniture “concentrate the property of the country, and with it the power and influence of a few.”

Senator James Barbour

5. Founding Fathers wanted a Republic, not AristocracyEuropean primogeniture and entail laws enabled the aristocracy to pass on their fortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wanted to avoid these concentrations of wealth.

“The balance of power in a society… accompanies the balance of property in land.”

But…

“But the rich pay more taxes!”

“But the rich pay more taxes!”

“But the rich pay more taxes!”

“But the rich pay more taxes!”

“But the rich pay more taxes!”

“But you could be rich some day!”

“But that’s human nature!”(aka “The poor will always be with us)

“But that’s human nature!”(aka “The poor will always be with us)

“But big gov’t isn’t the answer!”

“Well, I don’t want my tax dollars going to ‘those people’!”

"The share of benefits flowing the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007“ – NY Times, 2/12/12

The placard reads “Keep the government out of my Medicare!”

“Well, I don’t want my tax dollars going to ‘those people’!”

Entitlement spending that goes to healthy adults accounts for 9% of total entitlement spending.

“Well, I don’t want my tax dollars going to ‘those people’!”

Of the $1.1 trillion in tax expenditures (mortgage interest deduction, employer-paid health benefits, favorable tax treatment for capital gains and stock dividends) two-thirds of those benefits go to the wealthiest top fifth of households and 24% to the top 1%.

“But millionaires will flee!”

“End the Death Tax!”

“End the Death Tax!”

“To keep farms in the family we are going to get rid of the death tax.” - President Bush

“End the Death Tax!”

“To keep farms in the family we are going to get rid of the death tax.” - President Bush

When asked to find examples of families that had lost farms to the estate tax the American Farm Bureau Federation could not find one family.

The Estate Tax is 35%. The first $5 million is exempt.

Welcome to the U.S.

In the United States, the top 1 percent controls roughly 40 percent of the nation’s wealth. According to a study, which examined Roman ledgers, pre-imperial edicts, and Biblical passages, Rome’s top 1 percent controlled less than half that at the height of its economic power.

Welcome to NY

The Good News

HEADLINE 68% Of Millionaires Support Raising

Taxes On Millionaires

POLLAbout three-quarters (73%) of Democrats say that what bothers them most is that the wealthy don't pay their fair share; this compares to just 38% of Republicans who say the same. Independents side with the Democrats -- 57% say the wealthy don't pay their fair share of taxes.