Printed letters, October 10, 2012

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Contrary to Russel Keith’s letter – “Rich pay their fair share of income tax revenues” (October 10, 2012) – the “rich” do not pay an adequate share of U.S. tax revenues.

First, the Organization for Economic Co-operation and Development based its analysis of comparative tax structures on the nominal tax rates published by each country’s taxing authority, not on the effective rates actually paid.  As evidenced by Mitt Romney’s 2011 federal income tax return, there can be a far cry between the nominal rate (about 25%) and the actual rate (about 14%), and the latter is also subject to elaborate manipulation (Romney could have paid only about 9%) using tax shelters, self-loans, etc.

Second, even if it is true that the “U.S. has the most progressive tax system in the world”, there is nothing “stupid” about the “idea” – which was championed by Republican icon (and closet “Marxist”) Teddy Roosevelt beginning in 1910.

Rather, the progressive income tax is eminently practical, because “that’s where the money is”.  Moreover, if it were really true that the rich “pay between 40 and 60 percent of their income to government”, our budgetary/debt problems would be insignificant.  In fact, the top marginal tax rates – both actual and effective – are at their lowest since 1930.

Thus, as a matter of “fairness”, because the wealthy benefit disproportionately from the “ordered society” (“rule of law”, etc.) paid for with tax dollars, so too should they pay disproportionately more for that privilege.  How much more is a matter of politics.

Keith also forgets that the U.S. expends more on national defense than the rest of the world combined.  As evidenced by Mitt Romney’s plan to increase defense spending by another $2 trillion over the next ten years, both the already wealthy—and would-be-wealthy defense contractors—will benefit disproportionately from such profligacy. 

                Bill Hugenberg

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