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Rich don’t pay enough taxes

By Kay Bell · Bankrate.com
Thursday, December 29, 2011
Posted: 11 am ET

It's no surprise Americans aren't happy with their federal tax system.

But a new poll finds the problem isn't necessarily the taxes they're paying. Instead, folks are concerned the wealthy aren't paying their fair tax share.

In a survey conducted Dec. 7 to Dec. 11, the Pew Research Center for the People and the Press found that 52 percent of Americans say they pay the right amount in taxes.

However, fewer people now consider the overall tax system as even moderately fair. Forty-three percent of those surveyed this month said the system is fair, compared to 51 percent of people who viewed the U.S. tax system as fair eight years ago.

And roughly 6 in 10, or 59 percent, want a totally new tax system.

Political differences on tax code problems: There's no big partisan divide over the need to overhaul the tax code, reports Pew. Regardless of political affiliation, the survey found most people agreed there is so much wrong with the federal tax system that Congress should completely change it.

But there are differences between Democrats, Republicans and voters who call themselves politically independent when it comes to what bothers them most about taxes.

Most Democrats (73 percent) and Independents (57 percent) said their biggest tax concern is the feeling some wealthy people get away with not paying their fair tax share.

Republicans, on the other hand, said the complexity of the system is their biggest complaint.  That concern was cited by 43 percent of GOP poll respondents, with 38 percent of that group worried about the tax-paying status of the rich.

Pew pollsters say the closeness of the answers by Republicans "reflects substantial intra-party differences along socioeconomic and ideological lines."

Republicans who agree with the Tea Party movement are among the most likely to say the complexity of the tax system is what bothers them most; 57 percent chose that answer.

But Republicans who don't agree with the Tea Party said, by a 49 percent tally, that the feeling some wealthy people don't pay their fair share of taxes is their biggest complaint.

Tax talk, but little change: For the immediate future, though, everyone is probably just going to have to learn to live with the tax system as is.

In 2012, there will be a lot of talk, mainly from Democrats, about taxing the wealthy more. In fact, they plan to bring up a millionaires' surtax again when the payroll tax rate cut extension debate resumes next year.

And Republicans will continue to fight to keep income tax rates at their current levels or cut all of them more.

But precisely because 2012 is an election year, no politician wants to actually take responsibility or blame for any tax changes before election day.

What irritates you most about the current tax system? Will a candidate's stance on taxes affect your voting choice?

Find out what progress Congress makes on tax reform by subscribing to Bankrate's free tax newsletters. You can sign up for a Daily Tax Tip beginning Jan. 9, 2012; for a Weekly Tax Tip; or for both.

You also can follow me on Twitter @taxtweet.

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18 Comments
Potomac Oracle
January 21, 2012 at 12:29 pm

The federal Government taxes us, takes away some of our disposable income, to manage inflation. It dosen't tax to raise revenue. Prior to 1971, taxes did raise revenue because gold standard accounting required some semblance of balance between income and expenditures.

With the abandonment of gold standard rubrics in 1971 the U.S. became a sovereign "fiat" currency nation along with the rest of the nations leaving the gold. As such, the U.S. is the sole issuer of our currency of account. It can never run out of this fiat currency and it can never go broke or, default, unless it politiclly decides to do so.

Operationally, the U.S. is not constrained by revenue to spend. While it has the means to pay all debt, self imposed constraints; debt ceilings, and spurious macroeconomic ratios, would indicate that it does not have the ability to pay debts. Nothing could be further from the truth.

Federal taxes and borrowing these are stabilizers, they manage inflation. They are not revenue raising policy tools.

And how about this quote from the good Fed Chairman Bernanke on 60 minutes for support:
"(Scott PELLEY) Is that tax money that the Fed is spending?
(BERNANKE) It’s not tax money. The banks have – accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed."

There is no such thing as having to ‘get’ taxes or borrow to make a spread sheet entry that we call ‘spending.’ Computer data doesn’t come from anywhere. Where else do we see this happen? Your team kicks a field goal and on the scoreboard the score changes from, say, 7 point to 10 points. Does anyone wonder where the stadium got those three points? Of course not! Or you knock down 5 pins at the bowling alley and your score goes from 10 to 15. Do you worry about where the bowling alley got those points?

Do you think all bowling alleys and football stadiums should have a ‘reserve of points’ in a ‘lock box’ to make sure you can get the points you have scored? Of course not! And if the bowling alley discovers you ‘foot faulted’ and lowers your score back down by 5 points, does the bowling alley now have more score to give out? Of course not!

We all know how ‘data entry’ works, but somehow this has gotten all turned around upside down and backwards by our politicians, media, and most all of the prominent main stream economists.
The Federal Government doesn’t ever ‘have’ or ‘not have’ any money. Just like the stadium doesn’t ‘have’ or ‘not have’ points to give out.

When the federal government spends, the funds don’t ‘come from’ anywhere any more than the points ‘come from’ somewhere at the football stadium or the bowling alley.

Nor does collecting taxes (or borrowing) somehow increase the government’s ‘hoard of funds’ available for spending.
From our point of view (not the government’s) we need to first have U.S. dollars to be able to make tax payments.

Jaed Deaj
January 02, 2012 at 4:01 pm

Joseph,

Why don't you support the FairTax?

Jaed Deaj
January 02, 2012 at 3:59 pm

Ray in MD,

Why keep an income tax in place that only keeps us all enslaved to politicians and lobbyists so they can auction off our paychecks and only 50% of the U.S. population pays for the entire revenue? Enact the FairTax, ending the income tax, getting politicians out of everyone's paychecks permanently and have the WHOLE WORLD start paying into our Treasury under it's sales tax?

U.S companies would not be taxed but foreign companies would be!

Joseph
January 02, 2012 at 2:36 pm

This post brought out all the FairTax people to comment

Cary
January 02, 2012 at 11:54 am

Sure the Democrats want to enact a "millionaires tax" but as soon as they do and all of their followers cheer them on for being for the people, they'll enact a new set of loopholes to give back what they've taken. The Republicans are the same.
The FairTax will level the playfield for all Americans, and give U.S. businesses a chance to compete on a worldwide level again.

Dan Hunt
January 02, 2012 at 9:55 am

This article illustrates the current tax code is beyond repair. There needs to be a fundamental change in the tax code structure by replacing taxation on income with taxation on consumption via The FairTax Act(HR25/S13). The FairTax will replace all federal income taxes with a national sales tax and abolish the IRS. The non partisan bill has been introduced to each session of Congress since 1999. It currently has 74 cosponsors and was heard before The House, Ways and Means Committee in 2011.

Everyone will pay their fair share under The FairTax as people will be taxed when they make purchases. As a rule of thumb, the more people earn, the more they spend. No tax system could be more fair than by giving the people the power to decide when and how often they will be taxed.

Complexity will be greatly reduced with The FairTax. No longer will people have to fill out a multitude tax forms quarterly or annually as everyone will pay the tax at the point of sale nor will they have to worry about complying with the more than 70,000 pages comprising the federal income tax code. Contrast that number with the 136 pages in The FairTax Act. It doesn't get any simpler than not having to fill out forms knowing the IRS will no longer be looking over your shoulder.

The FairTax is the solution both Democrats and Republicans can endorse knowing a growing grassroots movement will support them at the polls. There FairTax is much closer to becoming reality than any other tax proposal. There is no reason not to demand it become law by November 2012.

Robert Williams
January 02, 2012 at 9:22 am

"What irritates you most about the current tax system?"

1. It is regressive. The payroll taxes are highly regressive and hurt middle-America worse than any other tax.

2. It is an INCOME Tax. It punishes productivity, savings & investment, and yes...wealth. Our tax system is what is wrong with this country and it needs to be eliminated.

3. It doesn't treat any one American the same. With its 80,000+ pages, it is the most unfair system in the world and there is no possible way to "fix" it without destroying it altogether.

4. It does not tax Illegal Immigrants, Tourists, or anyone in the Underground Economy. Not a single person in any of those groups will ever claim an Income. So how will they ever pay INCOME taxes?

5. The IRS. Need I say more?

6. “a heavy progressive or graduated income tax” is the 2nd Plank of the Communist Manifesto. We have been entertaining Marxist ideology for nearly 100 years - and nobody seems to care.

7. Corporate Taxes. We have the highest corporate taxes in the world. Our corporate taxes have been pushing our wealth off American soil for decades now; to the tune of over 10,000,000 jobs and $14 TRILLION dollars. We need to bring our money and jobs home.

8. Small Business. Small Business is what fuels America. Our current tax system does little to nothing to help Small Businesses grow and flourish.

9. The current tax code does absolutely nothing to help the poor, lower- or middle-class Americans. It gives them free money, which has created nothing more than a "Nanny State". Because the tax code punishes productivity, the more a person works, the more a person works to pay off their tax debt. The poorer that person is, the harder it is for them to pay off that debt.

So what is the Answer? The FairTax Act of 2011 (HR-25/S-13/HJ RES 16). The FairTax is progressive; it will eliminate punishment on productivity; it will treat ALL legal US citizens the same by taxing everyone at 23% and UNTAXING them up to the National Poverty Guideline; it will tax illegal immigrants, tourists, and the underground economy equally (at 23%, without untaxing the illegals and tourists); it will abolish the IRS; it will return our tax system to one that is not communist, Marxist, or socialist; it will eliminate corporate taxes and return all that wealth and jobs back to America within 2 years; it promotes Small Business by eliminating the highly regressive FICA and SECA taxes that Small Businesses often struggle to pay; it eliminates the income and payroll taxes that poor, lower-, and middle-class American's are forced to pay while providing them with additional funds to keep their heads above water while they work their way our of poverty; AND it is revenue neutral (meaning that it will raise the same amount of revenue that our current tax system does).

I urge everyone in the bankrate forums to take a look at the FairTax; do some research on it; and, when you find the articles that make claims against the FairTax, that you dig deeper and don't make ill-informed or faulty statements about it without first asking questions. Chances are, if you see something that doesn't look right, you're just not fully understanding it.

hurleybird
January 01, 2012 at 8:42 pm

Forgive me if i step on any toes but it seems that this country is barking up the wrong tree concerning taxes. The fact that roughly HALF of this country pays NO taxes at all is all you need to know about why this problems persists. I dont care who you are or what your situation is, if youre an American citizen you ought to be paying taxes, fair and simple. Because the fact of the matter is the people who pay no or little tax ALSO receive more assistance in other forms as well, so its a double whammy. Dont pay a thing in but take plenty out, when will this country wake up????????????????????