Originally Posted by Dumpy Dooby
To expand on this, he claims that the rich have seen the "biggest tax exemptions" and "lowest tax rates," which is mostly incorrect (I'll explain the qualifier in a second). There are a few very wealthy folks that manage to shuffle things around or whatever and they bring down the averages.
I say it's "mostly incorrect" because the rich have
seen some of the biggest tax exemptions (he's right about that, but only because the topmost brackets used to be 90+% and it was exemptions that brought their effective tax rate down to rates much more reasonable), but the "effective tax rate" (a term he even uses in the video) for the wealthiest has always been higher than everyone else. Moreover, the rich have seen the smallest reduction in "effective tax rate" in the last 50 years.
("fed. tax" = all combined federal taxes paid by individuals, including both income and corporate gains)
1970 fed. tax % -> 2005 fed. tax %
1st quintile: 8.0 -> 4.3 (46% reduction)
2nd quintile: 14.3 -> 9.9 (31% reduction)
3rd quintile: 18.6 -> 14.2 (24% reduction)
4th quintile: 21.2 -> 17.4 (18% reduction)
Top 1%: 37.9 -> 31.1 (18% reduction)
Exemptions, deductions, and things of that sort were there to encourage them to put their money in to circulation. If they didn't there would be taxes to have the govt do it for them.
For example if they donate 2 million dollars to their favorite charity they dont pay taxes on it. If their business hires a person they don't pay taxes on the new employees income.
And the 90% rate you speak of was 50 years ago. Today, with the rates where they are, the guy is right. And our society has determined that taxation is based on %. Guys like Mitt, the guy in the video, buffett, their primary source of income is taxed at 15%.
The reality is we need money flowing in a circle like that guy mentions. Reality is taxing everyone $500 regardless of income, won't support things like a massive military.