The law of increasing & decreasing tax impact simply means that the more a person makes, the more in tax impact he or she can absorb, while the less a person makes the less in tax impact he or she can absorb. This law is one of the main reasons the wealthy should pay a much higher percentage on a progressive and fair tax scale.
For example, Gov. Mitt Romney’s recently released tax returns showi that in 2010 he earned $21. 7 million but paid only 13.9 % or $3 million on his income, because it's classified as capital gains. In fact, many of the super rich live off of investments that are taxed at a lower rate than earned income, plus those wealthy Americans who do live off of earnings from work are able to pay well below the current top rate of 35% due to a host of loopholes and deductions.
However, rather than present abstractions, let’s compare Gov. Romney to a person who earned $20 thousand in 2010, and let’s suppose that person paid the same rate as Gov. Romney, 13.9%. That person’s tax bill would be $2,780. On the face it looks as though Gov. Romney took a much bigger tax hit than the person earning just $20,000--and in raw dollars he did. But the tax impact on his lifestyle and the ability to sustain himself and his family is infinitesimal, because Romney is still left with nearly $19,000,000 to cover the basics in life---and way beyond the basics. On the other hand, the person making $20,000 suffered far more impact, because his or her tax burden of $2,700 truly is big money to him or her, leaving the person with only $17,300, making it more difficult to cover life's basic needs.
Now, let’s give the individual earning $20,000 five children, which is what the governor and his wife once had at home. That person is almost $10,000 dollars below the poverty level for a family of six as per 2010 statistics, and is left with less than $3000 to feed, clothe, and house each person in the home for the year. On the other hand, the Romneys ---if their five children were at home---would have over $3,000,000 to feed, clothe, and house each member of the family. Obviously, the Romneys can absorb far more tax impact than the vast majority of American families and should pay a significantly higher percentage than the vast majority of American families in order to cover our nation’s expenses.
The law of increasing & decreasing tax impact shows why a flat rate is unfair and a progressive rate is fair. Those Americans who have reaped great material reward from our system should completely absorb the poor person's tax burden, and they should partially and substantially absorb the middle class person’s tax burden by paying a higher percentage, whether earned off of labor or money. Furthermore, when there is a demand put on a nation’s expenses, whether due to war or economic downturn, the wealthy have the responsibility to have their tax impact increased, because as stated earlier, they have reaped the lion’s share of the rewards; in short, they have to money to spare.
- Jim Jacobs
For example, Gov. Mitt Romney’s recently released tax returns showi that in 2010 he earned $21. 7 million but paid only 13.9 % or $3 million on his income, because it's classified as capital gains. In fact, many of the super rich live off of investments that are taxed at a lower rate than earned income, plus those wealthy Americans who do live off of earnings from work are able to pay well below the current top rate of 35% due to a host of loopholes and deductions.
However, rather than present abstractions, let’s compare Gov. Romney to a person who earned $20 thousand in 2010, and let’s suppose that person paid the same rate as Gov. Romney, 13.9%. That person’s tax bill would be $2,780. On the face it looks as though Gov. Romney took a much bigger tax hit than the person earning just $20,000--and in raw dollars he did. But the tax impact on his lifestyle and the ability to sustain himself and his family is infinitesimal, because Romney is still left with nearly $19,000,000 to cover the basics in life---and way beyond the basics. On the other hand, the person making $20,000 suffered far more impact, because his or her tax burden of $2,700 truly is big money to him or her, leaving the person with only $17,300, making it more difficult to cover life's basic needs.
Now, let’s give the individual earning $20,000 five children, which is what the governor and his wife once had at home. That person is almost $10,000 dollars below the poverty level for a family of six as per 2010 statistics, and is left with less than $3000 to feed, clothe, and house each person in the home for the year. On the other hand, the Romneys ---if their five children were at home---would have over $3,000,000 to feed, clothe, and house each member of the family. Obviously, the Romneys can absorb far more tax impact than the vast majority of American families and should pay a significantly higher percentage than the vast majority of American families in order to cover our nation’s expenses.
The law of increasing & decreasing tax impact shows why a flat rate is unfair and a progressive rate is fair. Those Americans who have reaped great material reward from our system should completely absorb the poor person's tax burden, and they should partially and substantially absorb the middle class person’s tax burden by paying a higher percentage, whether earned off of labor or money. Furthermore, when there is a demand put on a nation’s expenses, whether due to war or economic downturn, the wealthy have the responsibility to have their tax impact increased, because as stated earlier, they have reaped the lion’s share of the rewards; in short, they have to money to spare.
- Jim Jacobs





