Musings On The Tax Code
Dread & Awful Czar,
Tax day passed us by again this year, and for the 55% of us who paid taxes, were were reminded, yet again, of the politics and waste that revolve around the sorry state of our Federal Government’s revenue generating system.
Dr. J. has said (plagiarized, sited, whatever) many times, “If you want less of something, tax it; if you want more of something, subsidize it.”
There were three articles that caught Dr. J.’s eye yesterday. The first was an article designed bring out the boogie man known as Class Warfare.
The author either is ignorant of mathematics or using them to deceive a naïve public.
First and foremost, the data is from 2007, the second to last year of the Bush Administration, compared against 1992, the last year of his father’s term in office. He then plays havoc with average rates paid by individuals.
Let Dr. J be perfectly clear, tax rates work like this (assuming your are single, and this is still a gross simplification):
$5,700 is free (standard deduction)
The NEXT $8,350 is taxed at 10%
The NEXT$25,600 is taxed at 15%
The NEXT $48,300 is taxed at 25%
The NEXT $89,300 is taxed at 28%
The NEXT $201,400 is taxed at 33%
EVERYTHING ABOVE $372,950 is taxed at 35%
That being said, only certain kinds of income can be taxed as ‘income.’ Other types of income are taxed as capital gains, other types of income are not taxed at all (municipal bond income for example). There are a legion of deductions available. It is thus possible with our complex tax code that President Obama made $1.795 million dollars (total, not adjusted) last year and paid 25%. Dr. J. made considerably less money than President and paid 24%. Indeed someone could make $200,000 (as was seen in the article) and pay a pittance if he wrote off a significant number of capital losses that year.
All of this sort of behavior and much more is a consequence of our complex and convoluted tax code. Dr. Arthur (Dr. J’s Mancrush) Laffer writes about this in his WSJ opinion piece from the other day. He argues that we, as a nation, lose a tremendous amount of money and productivity conforming to the complex tax code. Indeed, he strongly argues that the current system is a drag on the economy.
Thirdly, Dr. J. has spoken about how the tax code picks winners and losers. Look at the Corporate tax code. Everyone that Bernie Sanders excoriated in his facebook meme obeyed the law with regard to paying taxes. All of Dr. J.’s lefty friends were sharing this meme, crying foul on Big Business, not realizing that the real solution to be cried out for is a simple low loophole free corporate tax structure.
In other words, if the tax codes were simplified for individuals (1% of the first $20,000 followed by 15% above that for individuals, 5% for capital gains) and for corporations (5% flat rate on profits) the world would be a better place. Dr. J just hopes that the House and Senate Republicans are listening. If they aren’t they will be primaried.
Best,
Dr. J.
Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.