U.S. Tax System Favors Wealth Over Work

[Better Believe It]

Weekend Edition
October 8 - 10, 2010

The Golden Fruit
Tax System Favors Wealth Over Work
By GERALD E. SCORSE

Tea Partiers rage against taxes and say they’re too high. Wrong, says billionaire Warren Buffett, on the rich they’re too low.

The Tax Code holds the answer to this standoff, and the Code backs Buffett. Taxes may be the bane of the Tea Party, but they’re a relative boon for the wealthy. Let’s look at some of the ways America’s tax system keeps Warren Buffett’s fortune in Warren Buffet’s hands.

The major vehicle is George W. Bush’s 15 percent levy on long-term capital gains—the lowest since FDR’s first term—and on corporate dividends. The top 1 percent of U.S. households owns nearly 40 percent of all privately-held stock, from which the dividends flow. Similarly, the super rich get more than half their income from capital gains. In the meantime, for the working middle-class, the tax rate on wages is 25 percent.

Taxing income from wealth at little more than half the rate of income from work: it’s the perfect recipe to make sure that Warren Buffett (and all the Buffett wannabes) pay effective tax rates far below what their incomes suggest.

How far below? In 2006, Buffett told an interviewer that his tax bill was “far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office” (and he repeated the statement only recently). His shame in 2006 hits home still: “How can this by fair? How can this be right?”

Read the full article at:

http://www.counterpunch.org/scorse10082010.html