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Tax the Rich, Why Not? [F0 702]

Updated on June 25, 2019

Why Tax the Rich differently than anyone else?

Why Tax the Rich differently than anyone else?

According to what I have read on hubpages for the people on the left is because it is unfair. Is it really unfair to tax any group differently and then use the word fair? The concept of progressive taxes on Income is a violation of the 14th amendment. That amendment preceded the 16th amendment that allow the federal government to tax income without having to consider apportionment across the states.

That was the start of inequality and unfairness and the core of the unequal distribution of wealth to the rich, and the poor. It is actually the middle class taxpayer that pays more taxes than the other two classes, not in the total amount of money paid in taxes, but in the disproportionate taxes paid.

The key to understanding that paragraph is found in the Internal Revenue Code. That code is heavily endowed with all sorts of tax loopholes, deductions, credits, deferments, and other methods that can only be used by the rich.

Yes, the marginal tax rates are higher than those of the middle class, but the rich can offset, and do an end run around them by using the magic clauses in the Internal Revenue Code.

The middle class is mostly wage earners, and since the 1986 Reagan Tax Reform Act, they have lost the deductions that they had like credit card and other interest, and sales tax. Reagan sold this tax reform act to the people saying he would reduce their taxes. He did reduce their taxes, but only for a few years, then the taxes started to rise again, but the deductions never came back,

Billions of dollars are made in the stock market in a flash, and so are the profits that are realized by the rich. The rich can then use the Internal Revenue Code to minimize their profit, defer it, divert it, and hundreds of more ways to not pay their fair share. The worst they can do is pay the 20% on Capital Gains, and that is almost have of their marginal tax rate or less.

Yes, the top 10% of the taxpayers, pay the bulk of the tax revenues, but that is only the tip of the amount they would pay, if there was no Internal Revenue Code loopholes.

So the answer to the unequal distribution of wealth in the US income tax is not a function of the marginal tax rate. It is based on the tax loopholes in the Internal Revenue Code that can only be used by the rich.

Taxing the Rich

Since the passage of the 16th Amendment, and the implementation of the US codification of the Federal Income Tax, we never stopped taxing the Rich. Yet, today we have the most numbers of billionaires in the US, and in the world. How did taxing the rich with higher marginal tax rates than the middle class or the lower tax class see people like Bill Gates double his billions since the 2008 collapse of the US economy. New billionaires are being created every year.

The US Congress didn't need the 16th amendment to tax, that was already in the constitution, but what they needed from the 16th amendment was the power to not follow the Interstate Commerce Clause and the Apportionment requirement. Since then they have unbridled power in taxing Income.

At one point, in the 1970s the marginal tax rates for the rich was as high as 90%, and it has always been higher than the tax class below it. A hundred years of this higher marginal tax rates has not stopped the rich from accumulating wealth, enough wealth to be billionaires. So, what are the people asking for when they say, Tax the Rich?

The wealthy 10% pay 90% of the income tax, why then are people still saying Tax the Rich.

The Rich couldn't have done any better than congress when they wrote the Internal Revenue Code

The information you don't see is how much the rich didn't pay in taxes.
The information you don't see is how much the rich didn't pay in taxes.

Taxing the Rich doesn't work

History has proven that taxing the rich with the higher marginal tax rates has little to no effect on their wealth.


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    • bradmasterOCcal profile imageAUTHOR


      16 months ago


      That is true, but that is not the whole truth. The rich could be paying significantly more than high income tax because they can fully use the deduction, exemption, delay deferrals, and write offs that no other class can use.

      In 1986, we the people lost our few but very useful deductions under Regan 1986 Tax Reform Act. Ask your husband the tax expert how useful those deductions would be for us today, with the high cost of credit cards, and taxes we used to be able to deduct.

      My point is that if we take away the deductions from the rich like we had taken away from us then everyone could pay the same tax rate.

      Say 20% which is the rate for capital gains.

      20% of $10,000 is $2,000

      20% of $1 million is $200,000

      And in this case the rich still pay more without punitive progressive marginal tax rates. But this would require the redoing of the IRC, not going to happen but it should.

      Another solution is to replace Income Tax with a National Sales Tax like we already have in most states. This is not a Flat Tax because it is not based on income, or the IRS.

      The NST wouldn't include the FICA tax which would still be deducted from you salary. That would allow the NST to start matching the state sales tax.

      10% of 1000 is $100

      10% of $100k is $10,000

      10% of $1million is $100,000.

      Right now the rich can use the IRC to not pay that $100,000 because they have Trusts, Businesses and other write offs.

      The beauty of the NST is that the money is collected at the time of purchase, and there will be no need for a large IRS to collect taxes. And CPAs can still continue doing what they went to school to do, and that is Audit.

      None of this will happen, but it should. I would like to not have to deal with the yearly April 15. It reminds me so much of term projects in school.

      Thanks for the comment, I have been avoiding current politics because nothing has changed for the better, and I can't make changes. I do still comment on the old ones, you know from 4 months ago:)

    • breakfastpop profile image


      16 months ago

      The rich pay most of the taxes. Those that want to vilify them are jealous and ignorant.

    • bradmasterOCcal profile imageAUTHOR


      16 months ago


      I don't know anything about it, and I didn't get much googling it.

      Thanks for the comment.

    • Readmikenow profile image


      16 months ago

      To see why this doesn't work a person need only read Ayn Rand's Atlas Shrugged.


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