Saturday, January 28, 2012

Some Money is Greener than Others

Over on CIP's blog, Cynthia points out:
Our tax code is custom made for wealthy people. Earned income vs. investment income is the crux of the issue. Consider a bright middle class kid whose family scrimps and saves all their after tax income to give the kid a good education. Then the kid goes on to benefit society, maybe a doctor, teacher, scientist, etc. The investment made by his family in his education is taxed at earned income rates: fed income, state tax, local tax, payroll tax. The kid pays 40-50% when all is totaled up, for benefiting society.

Then, take a rich kid who drinks his way through school, his family realizes he’s a loser, so they buy him some Brazilian government bonds paying 10% interest, maybe with money that’s never been taxed in a trust or an offshore account, and he leads the idle rich lifestyle of tennis, golf and vacationing year round. His income is taxed at 15%.

So I guess our system favors loafers over people who benefit society.
(via dailykos) Eugene Robinson writes in the Washington Post:

“The issue I think that’s going to play out this election is that question of Warren Buffett’s secretary,” House Majority Leader Eric Cantor, R-Va., said Wednesday on CNN. “We want her to make more money, we want her to have more hope for the future. . . . [But] this notion that somehow the income that Warren Buffett makes is the same as a wage income for his secretary, we know that’s not the same.”

In other words, it’s not just that the rich are better than the rest of us but also that their money is better than our money.


Lawrence O’Donnell asked Elizabeth Warren about Scott Brown’s statement that Mitt Romney is in an income category that people don’t understand. O’Donnell asked Warren if she understood Romney’s income category, and she answered, “Yeah, actually, I think I do understand it, and that is that Mitt Romney pays fourteen percent of income in taxes, and people who get out there and work for a living pay twenty five, twenty eight, thirty, thirty three percent. I get it. Mitt Romney gets a better deal than any of the rest of us, because he manages to earn his income in a way that has been specially protected for rich folks. I think that’s wrong.”