Who Should Pay the Most Tax?

Do we tax the wealthy relatively less because they invest in the market? And does this ultimately create jobs because companies have more money to spend? Do emerging markets such as China count? Isn’t that foreign investment? Will that help the US economy? And also how much of the total capital investment in stocks is accounted for by middle class 401K contributions?

If 70% of the US economy is consumer based then are the bulk of tax payers middle class? And thus should the middle class pay relatively less tax because they are more likely to buy American goods? The wealthy may be 1% of the population if one counts someone earning over $250,000 a year as wealthy – maybe that number should be much higher. Also what percentage of wealth income that gets supposedly huge tax breaks, is invested in economies outside of the US such as in China and India – and is thus being extracted from the US economy and invested into other countries? Can one conclude that if consumers are not buying anything because they are jobless then there is no need for products? So ultimately there is less foreign investment in China, for manufacture of goods that will ultimately be sold in countries like the US. Why is there any point whatsoever in giving the wealthiest any tax breaks?

Does any of this make any sense? It all seems logical to me. It also strikes me that whenever I hear a Republican saying that you can’t tax the wealthiest the most, and don’t the tax corporations – because it doesn’t work; but they never substantiate their argument with anything. There is never any proof offered. It doesn’t make any sense to me to give a tax break to a corporation that then takes its manufacturing base and ships it offshore to Mexico or China. And what happens to the war on terror if the manufacturing base is offshore? Will M1 Abrams tanks be made in China? Or Mexico? Ultimately, those tax break dollars provide jobs and funding to some other country, and then those goods are shipped back for jobless US middle class citizens to buy on credit, that is borrowed from – you guessed it – China. Is any of this making sense?

Something doesn’t add up here. It might appear that the resulting policy should be economic protectionism and economic isolationism. Why are these such ugly terms inside the US? Being European by heritage, these terms are used in Europe to describe the reluctance of the United States of America to voluntarily enter the melee of World War Two in Europe – and so perhaps neither protectionism nor isolationism have anything to do with economic issues from a European perspective.

What can we do to level the playing field and encourage better economic prospects for the US that doesn’t jeopardize the potentially enormous market being created by the new global economy?

  • Limit sizes of banks to limit systemic economic risk.
  • Make interest payments taxable, including leaving dividends taxable.
  • Tax all financial transactions to discourage the greed and unfairness of high frequency trading – a very small levy will suffice.
  • Tax capital gains at the same rate as regular income taxes given there’s no evidence it helps to continue doing what Robin Hood and Jesse James were reputed to have been partial to.

See more at Wall Street’s Bad Rap.