Monday, November 8, 2010

Tax Rates

I just read an article that confuses me.

Of course, to really understand whether what Warren Buffett says is true, I'd have to be smarter and I'd have to do more research. But in matters of wealth, I'll trust his experience more than mine.

One of the values of USAmerican society is to work hard and earn a place in the world. Those 'rags to riches' stories touch our collective psyche , because deep down we want the struggling entrepreneur to succeed. We don't tend to begrudge wealthy people their wealth, especially if they earned it themselves.

So if we root for the little guy to succeed, we also should expect that the person who is already wealthy should pay attention and work to keep their wealth, yes? But the article I cite above indicates that the tax rate on income from work is higher than the tax rate on income from investments.

Here's the way I figure it: If you don't have much money, you have to work, since there's not enough in your bank account to tie up in investments. If you have money, you don't have to work, since you can live off some of your wealth and invest the remainder. It's a simplistic look, but the way I see it, the richest among us have a lower tax rate that working people.

That doesn't seem right to me, but I'm not surprised. See, most of the legislators fall into the 'wealthy' category. And we all just want to serve our own best interest, don't we?


1 comment:

  1. In terms of pure income tax (income from wages), the system is supposedly progressive. But I have no doubt in my mind that this article is probably the truth. And it probably is the reason why the gap between the rich and the poor, and the amount of wealth controlled by the superrich, has risen since the 1970s.