Hi, and welcome to my government 2305 Blog. Over the next couple of months I will be discussing government activities, policies, and current events and affect us today.
With that in mind, I've been reading lately about proposed tax increases for the wealthiest Americans and how it will affect the U.S. economy. President Obama is proposing a tax increase for families that earn more than one million dollars a year and an increased capital gains tax on wealthy investors. The current capital gains tax stands at 15% while income tax for all Americans is between 35 and 39% on standard wages. This means that wealthy investors pay the same capital gains tax as the middle class American, even though they may make millions of dollars a year in the stock market.
Someone who makes millions of dollars every year generally has several sources of income, some of those taxed at a lower rate than others. Additionally, social security tax only applies to the first 106,000 dollars of earned income. Some one who makes 100,000 dollars a year pays social security on all of their income while someone who makes 2 million dollars a year only pays social security on 5% of their earned wages. Effectively the wealthy may actually see their overall tax rate fall as their income increases.
Nicknamed "The Buffet Rule," after billionaire Warren Buffet who endorses the idea of higher taxes for the wealthiest Americans, the plan will likely meet stiff opposition in the house and senate by Republicans. Their thought being we don't need to tax the people who are going to create jobs any more than we already do and that the wealthy will be the ones to stimulate the economy so it can prosper.
I think we all want to be uber-rich one day and have to worry about how many millions we will pay in taxes. I know I do. But I can see it from both sides. On one hand, wealthy Americans do have the opportunity to stimulate the economy and invest their wealth to the benefit of us all. They have the money to stimulate their local economy, which, in theory, overtime influences and stimulates the national economy. This is a "trickle-down" economics theory popularized during the Reagan Administration. The more money people have, the more they'll spend, and the better the economy is.
I also understand that the national deficit grows everyday and those in power have to come up with something to try and stem the flow. Taxing people who have the most money seems to be a recurring theme in the Obama Administration and appears to be something the President truly wants.
Capital gains taxes at a higher rate for those who make the most money in the stock market seems to be a good idea to me, and I don't think the majority of people who make more than a million dollars a year in their standard wage earnings would mind paying a little more if you asked them. I wouldn't mind. It's a divisive issue for sure and one that will continue to be hotly debated. Links to a couple of the articles I read are below. Check it out; let me know what you think.
