To get right to the point: Why should “The Rich” pay so much in taxes? In all the recent arguments about the provisions of the new tax law, no one ever makes a reasoned case for the high brackets.
Those protesting that they’re too high simply argue that any taxes are effectively “taking money I’ve earned.” Those claiming the percentages are if anything too low simply state “The Rich” deserve to be heavily taxed. Neither side provides a rationale for its position. I propose to try to do so.
I intend to define “The Rich” in terms of those brackets and I’m going to argue that at the very least the top three brackets comprise – “The Rich”: 32% for taxable income of $157,500-$200,000, 35% for taxable income $200,000-$500,000 and 37% for $500,000 taxable income and over.
For starters, most Americans—or so I contend—do not understand that it is only the income at and above each bracket that is taxed at that percentage. That is, no one pays 32%, let alone 37%, on their entire income. In fact, “The Rich’s” income up to $157,500 is taxed only at 24%. Moreover, all these percentages refer to taxable income—what’s left after all legitimate expenses, itemized deductions and other questionable deductions have been taken.
And there’s the rub. The higher one’s income, the greater the certainty that people will have used accountants and tax lawyers to exploit every possible provision and/or loophole to bring their taxable income down to the minimum. (And by the way, deducting the pay to these individuals as an expense.) Don’t for a minute imagine that when you read of someone being paid $1 million a year that he or she is paying anywhere near 37% of that sum in taxes. In fact, many of the richest people, like many of the largest corporations, pay little or even no income taxes.
Still, I’m willing to accept that this leaves a relatively small percentage of Americans paying the large percentage of the country’s income taxes. So let’s return to their complaint (and that of most Libertarians and Republicans): “They’re taking money I’ve earned!”
But really, can anyone honestly claim that—in an America in which hundreds of millions of people work hard for 35-40 hours a week just to make, say $35,000 a year (let alone $20,000)—can people sitting at desks and manipulating numbers really be said to be “earning” such sums as $500,000? Even a university president or college basketball coach who is paid $500,000—have they “earned” that when the janitors in their buildings work 35 hours for 50 weeks a year to earn $35,000?
Which brings me to my rationale for why “The Rich” not only should, but actually deserve to pay those large taxes. I contend that there is no one earning $157,500 (for that matter, $57,500—but more about that later)—no one in the top three tax brackets who does not depend greatly on large numbers of Americans who earn, say, $35,000 a year or less. People who live from paycheck to paycheck, who can’t come up with even $500 for a sudden emergency, whose net worth doesn’t even come close to $10,000.
Where to start? Virtually all the food eaten by everyone depends on people who earn pitifully low wages—often below minimum and sometimes even cheated out of pay. Not just the primary laborers in the fields and food processing plants but most workers along the chain that brings food to all our tables. Yes, the great chefs and maitre’ds, and sommeliers in “The Rich’s” favorite restaurants are well paid, but much of the staff earns minimum wages. As do store clerks and delivery personnel, and just about everyone else in the food chain.
As do most employees in the other two basic survival sectors—clothing and housing. Again, “The Rich” can tell us of the well-paid dress designers and tailors they frequent but these are only the visible top of the clothing pyramid. From the makers to the sellers of clothing in America, the vast majority of workers are low paid.
Then there is housing. Yes, the owners of grand residences and of the large construction firms and the strongly unionized trades—electricians, plumbers, carpenter etc.—are well compensated, but once more, large numbers of poorly paid Americans toil to build and maintain both residential and commercial buildings.
How about that janitor in your building? And the doormen? Then there’s the cleaning lady. Maybe a maid. Probably a nanny. Those taxi drivers. The daycare workers. The school teachers.
Do you pay a small fortune to your private schools? Yes, but the staff—including teachers—probably works for less than in the public sector because they, too, value the privileged environment you want for your children.
The children to whom you want to leave your “hard earned” savings. Thus, in addition to complaining about the high tax brackets, you object to the ”death tax.”
My point is simple: “The Rich”—and ALL of us who have been paid well over the nation’s median income—have greatly profited from all those low-paid hard-working people. And note that I have not even referred to the millions of “illegals” in America—working with sub-minimum wages and contributing to Social Security that they cannot receive–—let alone the billions of low-paid people around the world who also support our lifestyles. This is why I think there is nothing unfair about the high tax brackets. They simply are a way for “The Rich” to give back a bit of the money they were paid—not earned—at the expense of the underpaid.
So why not expect—demand!–that everyone with an income, say, over the median household (now about $59,000) pay taxes to support Medicaid and CHIP and food stamps and subsidized housing and school lunches and all such programs that basically return some of the money we owe the recipients for working for us at low wages.