Tax the rich? States not sure
Voters support higher taxes on the wealthy, but governors and legislatures are hesitant.
This article is by Robert Frank and Laura Saunders of The Wall Street Journal.
In the partisan fight over taxing the rich, state "millionaire's taxes" have emerged as the latest and most hotly contested battleground.
In New York, New Jersey, Maryland, Oregon and California, state governors are at war with legislatures over taxing their state's highest earners to plug revenue gaps.
Advocates of the taxes say that with the wealthy riding the recovery of stock markets and global growth, and with less fortunate Americans facing unemployment and a housing slump, the top earners can best afford to foot the government's bills. Opponents say the taxes amount to a redistribution of wealth and encourage runaway government spending.
Polls show that many voters support taxing the top 1% or 2% of earners in each state. A Marist Poll, for instance, found that 64% of New York voters support preserving New York's millionaire's tax, which hits residents of the state who earn $500,000 or more a year.
"It's very high-powered money in that you can raise a lot of revenue without affecting many voters," said Donald J. Boyd, senior fellow at the nonpartisan Rockefeller Institute of Government.
Yet so far, the calls for hiking taxes on top earners have fallen flat at governor's offices and state legislatures.
In Maryland, Gov. Martin O'Malley, a Democrat, has argued against renewing a 0.75% additional tax on incomes above $1 million. The tax was enacted in 2008 and expired this past December. At that point, Maryland's top income-tax rate reverted to 5.5%.
New Jersey's millionaire's tax, which raised the top rate to 10.75% from 8.97% for those making more than $1 million, was effective for 2009. When the legislature passed an extension in May 2010, Republican Gov. Chris Christie immediately vetoed it. This year lawmakers reintroduced legislation, but Gov. Christie has vowed to veto it if it passes.
California's top current rate of 10.3% includes an added 1% for taxpayers with incomes over $1 million. Democratic Gov. Jerry Brown has recently called for extending this tax for five years. An extension would require either a super-majority of legislators, which appears unlikely, or a public referendum, according to state tax expert David Brunori of Tax Analysts, a tax publisher.
In New York, Gov. Andrew Cuomo, a Democrat, wants to allow the 8.97% rate on incomes over $500,000 to expire. A resolution in the state Senate supports the governor's plan, although some lawmakers have called for retaining the 8.97% rate on incomes over $1 million.
In Congress last year, the House-passed health reform bill financed the measure in part by imposing a 5.4% surtax on those with incomes over $1 million, which was replaced by a Senate provision increasing hospital insurance taxes for affluent taxpayers, according to Clint Stretch at Deloitte Tax. In March, Rep. Jan Schakowsky, D- Ill, sponsored a bill imposing a 45% top income tax rate on those earning more than $1 million and a 49% top rate on those earning more than $1 billion.
Though attractive to voters and many Democratic politicians, millionaire's taxes carry risks. Because the incomes of top earners are the most volatile, such taxes are among the most unstable sources of state revenue. "In general, if there were an edict from economists, it would be that states should strive for broad bases and low rates," Boyd said.
Some also argue that special taxes on the wealthy can drive the highest earners to lower tax states. After Maryland passed its millionaire's tax, the number of residents with net taxable income of $1 million or more fell more than 30% to 4,910 in the 2008 tax year. Yet analysts say all but 2% of those million-dollar earners continued to live in Maryland, suggesting that the drop was mostly due to lower incomes during the recession.
"The problem is that, whether you have an increase or decrease in millionaires, it's difficult to prove that taxes were the cause," said David J. Rosen of New Jersey's Office of Legislative Services.
More from The Wall Street Journal and MSN Money:
I will never understand the idea of the "rich" paying "more of their fair share" By definition fair means the same, how can the rich be asked to pay more if its fair? The "rich" already pay more in absolute terms, the least we can do is keep the percent the same.
When will we get out of this Robin Hood mentality in this country. Some people will make more than others. There will always be people who make more than me and I have no problem with that idea. That means they have a more valued skill set, are smarter, work harder, or have been lucky, but that's ok. That is what makes America great, and we should never discourage the desire to get ahead. The way the system is now we discourage hard work, and encourage the lazy. Take from those who have and give to those who take.
We are in real trouble in this country if this continues.
Have you guys ever noticed this country grew to be the strongest country militarily, financially, and with the highest standard of living in the world at the time, by the end of the 19th century, and during that time there was no privately owned Federal Reserve bank(Central Bank), and get this no personal income tax at all on any of the citizens. It was considered unconstitutional to tax ones life, which is what he trades as labor for his income. Shortly into the 20th century the Federal Reserve was given dictatorship over our money system, and income taxes were declared constitutional. To just give you and idea of how great that managed money system and taxation program are, note: I started in the work force in about 1970 I could buy one ounce of gold with 42.00 u.S. today one ounce of gold is around 1,400.00, at Wal-Mart they sell a 55" led TV for 1,400.00 which sports fans in value is equivalent to 42.00 in 1970 money. Yes I know we have had raises over the years to combat that, but do the numbers, are you making that much more to cover the real purchasing power lost. Also consider how money saved in the bank has lost it's purchasing value during that time. 42.00 saved since 1970 in the bank will buy what now. The dilution of money is totally an instrument of theft from the people by their government and the Federal Reserve. Anyone else printing money is imprisoned.. Thomas Jefferson and George Washington warned about just such behavior by government and what it would do to the people and their freedom. Wonder how they knew? They were well aware of past history and what happens when government is allowed to get large. The power to tax is the power to destroy. our constitution is being violated daily by those that have sworn to up hold it, the constitution was written to protect the people from the government, not for the governments benefit.
A little side note Hong Kong had no central banking system and was the fastest growing economy in the world during the last half of the 20th century.
If it were not for cheap Asian labor making virtually everything we use, can you imagine what we would be paying for things.
What do you expect the guys running this country can't even balance their own check book,how do you expect them to do a go job for you. This started about 80 years ago with the great depression brought to us by the central banking system, then the seeds of socialism were introduced. What is planted will be harvested. I read that some where.
Lkessler, I would humbly submit that the very wealthy have very robust and significant representation in our system of government; hence the difficulty of raising or even maintaining their level of taxation. It's also my belief that this is also the reason that GE paid an effective taxation rate of -60%.
The solution, or one of them at least, would be to close the loopholes to the corporate tax that allow this. As far as companies that decide to move their corporate offices offshore to avoid paying taxes, (Halliburton), that's fine...don't allow them to bid on government contracts, (or award them no-bid) under the America First provision of ARRA. They don't want to pay taxes in America, fine. They aren't American companies. And we only do business with American companies.
It seems to me that there's bound to be a reason someone would pay millions of dollars to get a job that pays a couple hundred thousand. On that subject, why doesn't the matter of Legislator/Executive pay ever come up? Seems like you could fund a bunch of public radio for the cost of the last Congressional pay raise.
Tax EQUALLY ACROSS the board now that is fair and doing one thing the way it was meant to be. its a step in the right direction there are many more things to correct and do right..Stand Up for what is right and just for all... Little revolts are starting all over the world and it IS going to happen here it is just a matter of time and getting sick and tired of all the greed...Time is now to change EVERYTHING and go back to our ROOTS and what our ancestors Made and drafted our Constitution for and that was for the American People You all have amended and re worked it so badly over the years its a shame...all for Greed and none of the changes are for the better...time to start from the beginning I think!!!
For those that make comments about business and all the money it soaks up think about this. 6% on the retail sales of virtually everything sold in this country under the words sales tax, is more than the avg. pretax profit percent of most companies. I am saying is, not only do the governments take in tax moneys on virtually everything including your income, but they get an additional 6%+
which is more than most industry makes. they do this with no investment, no risk, etc. And they
can still not make ends meet. They have to borrow, float bonds, and at the Federal level they just dilute your money by printing more if they want. I don't think we need to fault the rich, I think we should hold the last 80 years of bureaucrats and elected officials feet to the fire and ask what their problem, is and how much are they going to contribute to pay off this mess they caused.
* I do not begrudge anyone collecting their Social Security, they paid it. What I am unhappy about is how that system has been so poorly managed by those holding office. The method is much the same as Maddoff used in his operations and he is where now? Maybe there are a few more that need to be with him.
I might add this about taxing the rich. Taxes are a part of the expense of doing business. When taxes go up it's costs are added to expenses. This will necessarily tend to raise prices, which you pay. Just like matching Social Security that business pays, that goes into the cost of doing business, so is added to the price of product sold. Guess what you or we the people buy the products, so we actually pay the matching S.S. payment as well...There is no free lunch regardless of what politicians tell you. If you go back in history and read the tail on S.S. and that the rich employer was going to pay for half your S.S. payments. Well read the proceeding again. Remember the government has and produces absolutely nothing it merely
shuffles it around takes a part for it's friends, politicians, and bureaucrats then gives you the dregs, and like happy little lemmings we gobble up the idea the government is doing something...Certainly it is, taking your freedom and destroying your wealth potential.
How about something like "The Fair Tax" which "catches" EVERYBODY ... no loopholes, no underground economy, no offshore sanctuaries ... just pay the tax, get Washington to START living with THEIR means ... and lets get on with it!
When I read that Warren Buffet has made the comment..."my secretary pays more in taxes than I do"?
Thats because our government over the years (including both parties) have provided enough tax loopholes that the rich REALLY don't pay as much in taxes as you would expect. Why do you think the majoritiy of politicians running for office are wealthy? They are not in that job to "protect those who voted them in". They are there to continue the preservation of the laws that allow the wealthy in America to continue and grow their wealth. You don't really think they are in office to look out for the interests of voters do you? Its been said that the voting process in America is something the rich allow us to participate in to appease us...keep us bickering between parties...distract us while they continue to run our govt behind the scenes. They love partisan bickering. They pay their candidates well to keep it up because it keeps you from seeing whats really going on.
Where do Liberals come from when they say that the Rich don't pay their fair share. If you make One Million Dollars you pay about one third in Federal tax, which is $333,000.00, not counting State and Local Taxes, and not counting taxes on things that they Buy, food, Utilities, Gas, Phone, and what other stupid tax that the Liberals put on us through the years.
If I were President I would cut
How come today we hear that the Social Security tax should be raised, Or the age limit should be raised. BUT we never hear about the people who don't pay into the system like the People on Welfare should be cut. They get free, Utilities, Education ( If they go to School), Food, Living courters, Medical, These are people who just live off of the System. Make them go out and clean the Road Sides, Instead of Prisoners, Like here in North Carolina.
Don't punish People who worked and Keep the System Going Most of their lives.
The only thing that I would tax of the Rich are the Bonuses that they get, I would tax them 100%. Here is a good example, My band President makes a good Pay, and at the end of the year he gets a $7, MILLION DOLLAR BONUS, and they want to pay a person who puts their money into His bank 3/4% Interest.
If they would make these people pay back all the Bonuses back to 1980 these Company's would be in the Black instead of the RED.
Take Fannie Mie and Freddie Mac, Frank Raines got a 50 MILLION DOLLAR BONUS and it was losing money. Do you know who Frank Raines is, WELL he worked for BILLY BOY CLINTON, after he got out ,another of CLINTON'S Cohorts, Guerilla got the JOB and SHE was paid $850,000.00. But lets blame Bush, and I do Because it was during his time in Office that it went on. Bush tried ,BUT he sent a Pencil neck in front of Congress and the Black Caucus , Barney Frank's, Called him everything but a white man. It was on Tv, Look it up.
I watched a 20/20 the other night and BIG BUSINESSES are moving to Ireland because they are getting taxed at 12% instead of 33% like here in the US. If they would come back to the USA it would create over 100,000 JOBS. So Keep taxing , Remember when you create a JOB you create a Tax Payer.
Why is the government even talking about raising taxes on individuals? Isn't the whole reason why we're in this budgetary mess because the government can't properly manage the money they already get? Why do corporations like GE pay $0 in taxes, while they debate squeezing more money from individuals already contributing? This isn't a liberal or conservative thing. This is a situation where the whole lot of them are responsible for this mess. They are doing nothing, but finger pointing in order to avoid correcting the problem.
I have an idea. Just like the American people are expected to be fiscally responsible, why doesn't the government try taking a stab at it? Can't afford something? Then we don't spend money on it! Gee, what a concept.
Their mismanagement of this countries wealth is down right criminal. They borrow from Social Security in order to pay for Medicare/Medicaide, and then turn around and say we're going to run out of money for SS when we otherwise wouldn't have? They've got some nerve to ask for more money.
Thank you President Obama. Thank you for spending more money on things we couldn't afford. Thank you for going 'line by line' through America's budget, and coming up with nothing. Thank you for shirking responsibility, by pointing fingers at the people there before you. Thank you for proving you never had a single answer to any one of America's problems, but love to continually remind us all what those problems are. How "it's going to be tough, and change is always tough". Because we had HOPE, but you don't change a damn thing.
The guestion isn't should we tax the rich it is how much. But before we start taxing the rich we need to close all the loop holes. I want to know how a corporation like GE can have 14.2 billion in profit and not pay a single dime in taxes? How does that work. Also why do we subsidies oil companies? It seems unpatriotic to me to manipulate data to avoid paying taxes.
RELATED ARTICLES
DATA PROVIDERS
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
