Egalitarian forces argue that the gap between high-income people and low-income people is too high. The gap in income inequality is too large they claim. The One Percent own far too much of the nation and world’s wealth. To make society more equal, some Americans are calling for the redistribution of income by soaking the rich. This strategy targets the one percent to be taxed more, and the benefits of such taxation should go to low-income people.
Statistics vary. But figures show that the one percent in America have an income over $500,000 per year. Income, however, does not include assets such as homes, cars, furniture, jewelry, and other possessions.
Newly elected New York City mayor, Bill de Blasio, wants to impose a higher municipal income tax on the one percent living in the Big Apple earning more than $500,000 per year. The money derived from the tax on the one percent would go toward universal pre-school.
The Affordable Care Act (often called Obamacare) imposes several taxes on the one percent people. There is, for individuals making over $200,000 per year, a 3.8 percent tax on investment income. This is income derived from dividends, interest, rent, and capital gains.
Obamacare also raises the Medicare tax on the wages of individuals earning over $200,000 per year. The normal Medicare wage tax is 1.45 percent. An equal percentage must be matched by the boss. However, the Medicare tax — on wages over $200,000 — rises to 2.9 percent. Again, the boss must match this amount.
There is nothing new about disliking high-income people. For years, many people have hated millionaires and billionaires. Heavy lays the crown.
But is higher taxation on the one percent the best economic action to take against people who make over $1 million per year? According to federal government data, only 300,000 Americans earn over $1 million per year. In a country of 300 million people, that is far less than one percent of the population.
So what, if anything, should society do about high-income people? Should the one percent be taxed and have their money go to government? Or is there another possibility?
Money going to government can go for wars and such entitlement programs as Social Security, Medicare, and Medicaid. About 70 percent of America’s annual federal budget of about $3.6 trillion goes for the Pentagon and entitlement programs.
America is having trouble creating jobs. Since 2008, unemployment has been much too high in the United States. During the depths of the 2008-09 recession, unemployment reached 10 percent.
By December 2013, unemployment dropped to 6.7 percent. But that 6.7 percent is deceiving. That percentage refers to people out of work and actively looking for a job. It does not cover individuals who have given up looking for work. If unemployment statistics covered the real rate of unemployment, the figure would be about 15 percent.
To obtain more money from the one percent in the U.S., taxes on new investment should be abolished. More investment will mean more jobs, more new products, and higher productivity (which can be achieved, for example, by buying more powerful computers).
If there were no tax on business investment, especially investment in start-up businesses, then America becomes a tax haven for investment. Wouldn’t America be better off with hundreds — or thousands — of new Googles, Amazons, or Apples?
In addition to abolishing taxes on investment, the corporate income tax should be eliminated. Firms in such high-tax nations as Germany, France, and Great Britain, might, indeed, want to establish more factories in America.
Americans need to ponder an important question: Should more money from rich people go to government, or should more money from the one percent go toward the creation and expansion of American commerce — and the jobs derived from commerce?