The Only Really Good Tax Idea: Tax the Rich More, The Middle Class Less

Conservatives want to reduce taxes on the rich in order the shrink the size of government. Liberals want to increase taxes on the rich in order to increase the size of government. Both conservative and liberals use convoluted arguments that purport to show their own idea would help the middle class. Neither argument is very convincing.

There’s really only one way to help the all-important middle class demographic. Not with think tank theories or indirect down-the-road hopes. This better way is direct and simple, and would allow our national economy to escape its endless doldrums.

This better way is to tax the rich more, and use the extra revenue generated to reduce the tax burden on the middle class. Not an overall tax increase, but a dramatic shifting of the tax burden.

There are many ways to do this. Flatten the payroll tax, for example, and expand its reach to all incomes, earned and unearned, thereby allowing a payroll tax rate of 4 or 4.5 percent for all taxpayers, rather than the 6.2 percent currently levied just on the middle class. A similar approach could be applied to income taxes, raising the top rate from 39.6 percent to 43 percent, while lowering middle class rates of 25 percent and 15 percent to 22 and 12 percent respectively.

A transaction tax on stock market trades that would hit Wall Street’s high frequency traders, who account for more than 60 percent of all trades these days, could generate revenue used to reduce middle class tax rates of 25 and 15 percent further. A higher inheritance tax that takes more from wealthy heirs and passes on still more tax savings to 25 and 15 percent taxpayers. Many other possible tax transfers are out there for anyone bothering to look.

And what would be the effects of all this tax transferring, this shift in the tax burden? More spending power for the middle class that is this country’s spending engine, currently in deep sputter mode. More jobs created by this spending. Fewer people falling from the middle class into poverty, reducing the need for more government subsidies. Smaller government deficits as the economy speeds up. Larger profits for companies selling goods and services. And on and on.

The present conservative idea about taxation is cruel, economically destructive, disruptive to our social stability. The present liberal idea about taxation is outmoded, unsustainable, a threat to investment and innovation. Neither idea is what’s needed today.

It’s time to get out of the tax hole both our major parties have dug. Time to think new again. Tax the rich more. Tax the middle class less. Save the economy.

Let’s do it.

(Murder At Bernstein’s, a novel by the author of this piece, is now available from Amazon.)

5 Comments

  1. What no change in cap gains?

    All those are really good ideas, which is exactly why they will never be implemented until we have a full scale meltdown circa 1929 style. There are a LOT of stupid people that frankly either can’t be bothered to understand how things work or can’t understand if they tried, neither of which reason stops them from having intense opinions about it. The fact is its really easy to tell people that taxes = bad and makes sense at a gut instinct level. Despite the historical evidence to the contrary.

    Increasing taxes to the point the govt could do things on a large scale, essentially its job, was the point where this nation went from a ho hum power to a Super Power. FDR changed us forever. Before him, we were just another kid on the block. What we need to do is convince people that the govt can actually effect massive change for the better. Show them how awful life was in the beginning of the 20th century for the vast majority of Americans. That having a govt that can actually protect the people of this nation from the people at the top of it is a critical factor in the difference between the life of your average American vs. the life of the average Bangladeshi citizen. The world is full of low taxation small govt nations, and unless they are really tiny with some wonderful natural resource to cash in on, Dubai for example, they are all really crappy awful places. Govt is good, as long as we have the laws to keep power in check, which we do. Less it would seem day by day, but that is another issue.

  2. Look, it only takes a certain amount of money to have a “nice life” with all the necessities and plenty of luxuries. So my suggestion is that we create a Panel, call it Shift Half of Taxes Upon Pigs, or SHTUP. The panel would determine what the “nice life” would cost in each geographical area and adjusted for the number of dependent children under 26 and would come up with the dollar amount that would cost per month and call that the SHTUP Income Threshold Income (SITI). Any excess (extra) income, including the income that could be derived from taking assets and turning them into an annuity stream, would be SHTUPed, meaning that the excess would go to the IRS and hence be used to lower the tax rates of hard-working middle class folks.
    I’m sure Buffet would love this plan.
    Next, we go after the international corporations with I-SHTUP.

  3. First, I will say, “it can’t work for a million reasons”. However, in my humble opinion, the only Fair Tax is the Same Tax on every person, rich, poor and corporations(remember, corporations are people,too). Every person and corporation would pay the Same Percentage Tax on every dollar that flowed through their hands. For example, if the Same Tax Percentage is set at 10% this year and you made $10,000,000, then you would pay $1,000,000 tax and keep $9,000,000. If you made $10,000, then your tax would be $1000 and you would keep $9000. NO Loopholes, NO Tax Deductions, NO Refunds, NO Nothin’. All those under the Poverty Level(which will be a set percentage of what the top 1% make) will receive aid through a totally separate department. All incomes and Taxes would be available to all citizens on the Internet. This way we would all know that the Wealthy and Corporations are paying their Fair Share.

  4. Flat taxes RUIN economies. They rapidly funnel money to the top, the people who can afford to save, and take no account of the fact that the people at the bottom paying the same percentage have to devote a much higher percentage of their income to simply living. Flat taxes are one of those ideas that sound simply and fair but in reality are horrible when actually implemented. I’d like to see one case of a country with a flat tax that doesn’t have massive income inequality, to the point of a failed economy, and any middle class at all.

  5. Perhaps it is my ignorance about economics, but It seems to me that Mr. Silverstein has already agreed with a large part of the Democrat’s agenda. However, do Democrats want most of this added revenue to go only into increasing the size of government? Haven’t the President and other Democratic leaders repeated frequently that some ideas coming from the GOP about streamlining government, are indeed valuable and will be considered, when determining the budget. But, I also think that using taxes to create certain government bureaucracies is often a good idea and a necessity.

    If Wall Street continues to be free to use and abuse its own devises—we will never eliminate the possibility of another Stock Market crash and another crushing recessions and/or depression!

    Do we really want Wall Street to play by its own rules and give service only to the spectre of human greed? Does Capitalism have to be done without regards to ethics, and aren’t some ethics promoted through simple forms of government regulations? The problem is, that—although Republicans are useful critics whose influence can serve as our economic watchdog—that influence can be used to deny any Government growth at all due to the institution of necessary forms of government oversight.

    PBS has recently been airing an excellent program about institutions that remain to big to fail, and are run by executives that are too big to jail. At the moment, these executive can enable themselves with legal defences that are virtually impenetrable. It is my hope that crusaders like Elizabeth Warren will be able to arm twist the controls away from big businesses, and, in doing so, halt the madness of executives who know that the wheelings and dealings done by themselves and many of their fellows, have not exhibited the least bit of concern about their customers—rather, only about whether what they want to do, in order to make a profit–after that, why shouldn’t they let the economy plummet? at least they will have nest eggs and golden parachute befitting a king—And why worry, The government will just have to bail them out over and over again!

    about the “Fair” tax rate proposed by, Today, I’m not sure that my 10 percent tax rate, without any appropriate deductions for my ten children, is truly fair, when compared to a billionaire who may pay 100,000,000 dollars,in taxes, considered as his/or her, fair 10 percent, while still having 900,000,000 left to raise his two children with and, spend on his latest Lamborghini. Is this really a fair way to share the tax burden?

    Although a wealthy person may pay quantitatively much, much more than I would, he or she, would still be able to provide any security, material luxuries, or personal privileges needed (of any kind that money can buy) to ensure a promising future for his children. On the other hand, I may have to work several different jobs, feed my children out of cat food cans, and barely scrape by with enough to pay the rent, and/or the babysitter!

    If we all would live the 9,9,9 way, inspired by Herman cain during his 2013 presidential campaign, We could always receive wonderful discounts on second hand items. And, with our forced frugality, we can feel ever so lucky and grateful to search for fitting clothing at our local Salvation army, or Goodwill stores—for seven wonderful days of the weeks, every day, for the rest of our lives!

    Unfortunately the easy fixes sold to us by people who are unrecognized economic geniuses, seldom work out, and, are just one other way to discriminate in favor of the wealthiest among us!

    The best solution would require a socialist economy regulated by wage and price freezes that would eliminate the many inequities created by dominant fat cat business owners, and, would bring inflation under possibly permanent control.

    Realistically speaking though, we live in a capitalist society that is much more nuanced and complex concerning the creation and use of financial power. But all of this smacks of socialism or communism, and tea partiers are currently claiming that we must assert our own greed and instincts in order to secure our economic survival. It won’t work unless it has too, and it may have to work very soon in a world filled with angry men who all are willing to die, and kill innocent children, over what allah wants, or what Jesus wants, etc. etc. But,it is really what we want, that is the problem, rather than many other things we will have to address, very soon, as the environmental factors and economic events make or break our civilization and, force us to see the beauty of forest, despite the trees!

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