Drudge Retort: The Other Side of the News
Tuesday, September 12, 2017

Let's say you and I are neighbors. You're an emergency room doctor, and I don't work, thanks to a pile of money my grandparents left me.

You spend your days and nights stitching up gunshot wounds and helping children survive asthma attacks. I've gotten really good at World of Warcraft, winning EBay auctions, and frying shishito peppers to just the right crispiness.

Let's also say we both report $300,000 in income to the Internal Revenue Service this year. Who pays more in taxes?

You do, by a lot. You owe the IRS about $38,500 more, assuming each of us pays the maximum with no special deductions. I also have more flexibility to lower my burden with tax planning strategies and other tricks, and I get to skip about $24,000 in payroll taxes that you and your employer must fork over each year.

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This isn't some quirk of the U.S. tax code. Politicians have intentionally set tax rates on wages much higher than those on long-term investment returns. The U.S. has a progressive tax system in the sense that well-paid workers sacrifice much more than poor workers on their "ordinary income." But Americans with so-called unearned income -- qualified dividends and long-term capital gains -- get a break. A billionaire investor can pay about the same marginal rate as a $40,000-a-year worker, a fact Warren Buffett has famously lamented.

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"The last time Congress passed comprehensive tax reform, in 1986, it eliminated the gap between workers' and investors' taxes. Their rates didn't start diverging again until the early '90s, when Congresses controlled by Democrats boosted taxes on wealthy Americans' wages more than on their investments. Republican-controlled Congresses widened the gap further by slashing rates on rich investors in the late 1990s and early 2000s.

A 1986-style rebalancing is unlikely to happen this fall, however, as President Trump and his fellow Republicans in Congress attempt to tackle tax reform. The gap may even widen further.

A key goal is to "simplify the [tax] code so much that you can fill out your taxes on a postcard," House Speaker Paul Ryan said on CNN on Aug. 21. While other details of proposed tax reform remain fuzzy, Ryan and other Republicans have been promoting a draft of that postcard on social media.

The first line asks filers to write down their previous year's wages. For you -- the ER doctor in the fictional scenario above -- that would be $300,000. The second line asks filers to add just half of their investment income. For me, that would be $150,000.

The form's simplicity makes its priorities clear: No matter what rates are applied or which deductions or credits are allowed, a worker would end up paying twice as much in taxes as an investor with the same income."

#1 | Posted by BruceBanner at 2017-09-12 09:56 AM | Reply | Newsworthy 1

Donny Doll Hands tax scam will give the 1% over 60% of the tax cuts. Why? Because they pay off their Congresscritters.

#2 | Posted by 726 at 2017-09-12 10:01 AM | Reply

A 1986-style rebalancing is unlikely to happen this fall, however, as President Trump and his fellow Republicans in Congress attempt to tackle tax reform. The gap may even widen further.

May?

No it will get worse.

Bank on it.

Donny Doll Hands and the GOPpers care 0% about the plight of the middle class despite what -------- they publicly say.

#3 | Posted by 726 at 2017-09-12 10:02 AM | Reply

I have a feeling like we will be subjects to royalty when this is done. I can see the signs of it already. The new laws will make it even worse.

#4 | Posted by BruceBanner at 2017-09-12 10:04 AM | Reply

What is going on is that the 1% want all the benefits of living in the US without having to pay for any of it.

#5 | Posted by 726 at 2017-09-12 02:23 PM | Reply | Newsworthy 3

They've been led to believe their spending is paying for it.

#6 | Posted by BruceBanner at 2017-09-12 03:21 PM | Reply

Religion was created to keep the poor from killing the rich. When the pheasants finally give up on religion the 1%'ers are going to be in big trouble.

#7 | Posted by lfthndthrds at 2017-09-12 03:27 PM | Reply

Someone with time on their hands can go search the archive for my tax reform plan. Step 1 was to tax ALL earnings as wages.

#8 | Posted by MUSTANG at 2017-09-12 03:33 PM | Reply

7

what about the doves and the turkeys?

#9 | Posted by eberly at 2017-09-12 03:36 PM | Reply

#7 I can't help myself....I think the pheasants gave up on religion when they were introduced to the double-barreled shotgun, although one might argue when they're hunkering down they're praying the dog doesn't sniff them out.

#10 | Posted by MUSTANG at 2017-09-12 03:37 PM | Reply | Funny: 1

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#9 Arrghh...you beat me by a minute!

#11 | Posted by MUSTANG at 2017-09-12 03:37 PM | Reply

ha ha ha

#12 | Posted by lfthndthrds at 2017-09-12 03:57 PM | Reply

What is going on is that the 1% want all the benefits of living in the US without having to pay for any of it.

#5 | POSTED BY 726 AT 2017-09-12 02:23 PM | FLAG: | NEWSWORTHY 2: FYI

Who pays the most income taxes: assets.pewresearch.org

#13 | Posted by MSgt at 2017-09-12 04:26 PM | Reply

A link about income tax in a discussion of capital gains tax?

Congratulations on such a clever deflection!

#14 | Posted by snoofy at 2017-09-12 04:29 PM | Reply

#8 - I don't mind reduced taxes on investments, but this is getting ridiculous.

Be rich, be happy, enjoy the fruits of your labor, but don't ask people still climbing the ladder to subsidize your playground.

#15 | Posted by BruceBanner at 2017-09-12 06:16 PM | Reply | Newsworthy 2

#13 Taxpayers over $250K pay 51.6% of taxes but take home 56% of taxable income. Sounds like they have a good deal going. But they want more.

#16 | Posted by 726 at 2017-09-13 04:14 PM | Reply

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