Alex submitted the following:

Here is an interesting article I found this morning:

http://www.nytimes.com/2011/09/18/us/politics/obama-tax-plan-would-ask-more-of-millionaires.html?_r=1&ref=business

All politics aside, I find the populist rhetoric to be completely redundant. Why should the rich pay more, while over half of Americans do not pay any tax at all. I think I read a while ago that the top  1% pays like 30% of the total tax revenue.

What do you think of a “tax the millionaires” plan?

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About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

6 comments

  1. I guess we are "going there". I do always enjoy a good political debate, and the tax debate is certainly a very interesting one. I will first admit my bias that I am fairly liberal, though not as much as my father who I always joke with that I hope I am rich enough to be a republican one day. In all seriousness though, the trend of more and more people paying no income tax should concern all of us, but not necessarily for the reason we first think. Instead of being upset that more people are getting away with something, we should wonder what kind of society that we have created that so many people actually can not afford to pay any federal tax. In 2008, 75% of the people who paid no federal income taxes earned less than $20,000. Can any "rich person really look at their own first $20,000 and think they are paying income tax on any of it? Why should poor people pay more than the rich? In fact, if a rich family owns a home in NJ with a mortgage and 2 children. They are not paying any federal taxes on what is likely to be thousands of dollars more than what those 50% earn in total. So why do we go after the rich? We have an large deficit that needs to be addressed and the only people who can afford to pay more are the ones who have the money. I am not exactly sure what the millionaire tax will be, but we can start by looking at deductions. Do millionaires really need a mortgage or interest deduction for their homes? That deduction was meant to help the housing market and is unnecessary past a certain level.Capping deduction amounts would be relatively easy to do without hurting economic activity.

  2. This is really a controversial debate; depending on which end of the wealth spectrum your net-worth falls will in some way affect your opinion. Personally, I think all Americans should pay their fair share of federal taxes. I agree with the President who argues that the, "middle-class families shouldn’t pay higher taxes than households making over a million dollars annually." Additionally, David Kocieniewsk of the NY Times did some research and discovered that "many wealthy Americans pay considerably less federal taxes because their earnings are derived from dividends or capital gains, which are taxed at no more than 15 percent." Well respected investor Warren E. Buffett also spoke about the current American tax system saying that it, "allows him and some other wealthy individuals to pay a lower percentage of their income in federal taxes than their secretaries do." All of the aforementioned comments are indicators of a noneffective tax system. Therefore, I agree! It is time for a tax reform and I pray that our Congress will come to an equitable decision, sooner than later.

  3. It is easy for me to play both sides of the spectrum in this debate. On one hand, I believe that someone who is making an amount such as $20,000 a year is barely able to provide for themselves and/or family, yet be capable of paying any amount for taxes. However, having the rich pay a higher percentage of taxes doesn't really seem fair either. The thing about that mentality is that if they have it, then they are able to afford the tax as opposed to people who make a lot less. A problem with this is that why would anybody strive to achieve a higher tax bracket if they would be taxed more. I would think ambition and potential would remain at a halt. Some have raised the argument in classes that one flat tax percentage for all would be great. Let's say 10%; a millionare would pay $100,000 while a person making $20,000 would pay $2,000. Although, then we'd have the non profits complaining because of no donations coming in due to taxpayers not receiving any deductions and so on. It seems to me that for a millionare, for example, $100000 would still grant them a reasonable means of living; yet a person who makes $20,000 will really feel the affect of $2,000 missing from them. Not sure what the best way is but a tax reform is definitely in order.

  4. America fought a war about taxes – it was called the Revolutionary War. The colonists were fighting "taxation without representation." The original Articles of Confederation did not permit the collection of an income tax. The later Constitution required an amendment before an individual income tax could be imposed. This is not what the "founding fathers" intended.I would argue that "taxation without representation" is still a problem, because a small minority of people are shouldering most of the tax burden. Warren Buffett's column was very problematic because he does not account for the Federal Corporate Taxes paid by Berkshire before he receives his dividends. For a so-called straight-talker, he's not exactly… let's just say he's not exactly explaining this clearly. Look at Berkshire's income statement: Buffett's taxes are right there, deducted from income, and they are a lot higher than his secretary's.

  5. I still have mixed feelings on this particular tax debate as well, although I have to say that I would probably favour the whole "Robin Hood" concept of aiding the poor. I've heard so many arguments from both sides of the spectrum, I'm still unsure. Basically, one side argues that the rich can afford to pay more taxes, and therefore should. They say that the wealthy have access to more accountants, and lawyers and know how to use these professionals to their advantage. The other argument does not agree. They believe that if the rich do have access to so many professionals and tools what will stop them from doing what they did in the 1970s, when tax brackets could reach as high as 50%. They could invest in elaborate tax shelters and concoct schemes to pay less tax anyway. Honestly, I am not sure if attempting to punish the wealthy with tax hikes is the best idea, but on the other hand, I'm not sure if extending tax cuts is the best idea for the nation economically either.

  6. I as well am torn when it comes to this particular issue. While I do not feel that families who can barely survive off of their income should be paying taxes, I do not feel that it is fair to put hefty taxes on the rich either. While the rich may be able to afford to pay more in taxes and have the means to help alleviate some tax burden that the lower to middle classes do not, it is hardly fair to tax the rich at a higher percentage when they have worked hard to make their money. What incentive does one have to make money falling into one of the upper level income brackets if they are going to be taxed at astronomical amounts? In a tax class that I took this past semester, some raised the question of a flat tax rate to be applied to all taxpaying citizens. The notion of a flat tax rate seems to be a fair and equitable remedy because everyone is paying the same percentage of taxes. There are other advantages to this concept as well with greater ease in filing taxes, less loopholes would be available for companies to manipulate their taxable income, and the burden of double taxation would be removed. However, there are also some cons with implementing a flat tax. Arguements against a flat tax include a decrease in tax revenue to the government, and a greater burden being placed on the middle class. This tax regime would mostly help the upper class, and it still does not resolve the issue of lower class families being unable to pay taxes and support their family.

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