The Rich to Pay More in Taxes

By: Murad Ali
A new tax system proposed last week will increase overall taxes by 6 to10%. Those who earn $500,000 or more will be hit hardest by the taxbill proposed by House Ways and Means Committee Chairman Charles Range.There are a number of reasons why Charles Range proposed the tax billand it appears to make sense. The change may reflect the overall newrealities of the economy and the demographic responsibilities of therich.The Changes:Those who earn a million dollars ormore currently pay 18% of all federal taxes but that number will riseto 20%. Likewise those who earn $500,000 to $1,000,000 will move from6.7 % to 7.1%. Those who make between $100,000 to $200,000 will see adrop from 25.4% to 24.3%. Most of the 86 million households would get atax cut in 2008 and 3.6 million households will pay more taxes. Lowerincome houses will get more tax credits and the Alternative Minimum Taxmay be repealed (AMT). The AMT was originally designed to encourage thewealthy to pay their taxes and while using the AMT a person cannot getthe advantages of a number of different tax bills.

However, asinflation has degraded the dollar and people earn more dollars the AMTis not affecting millions of middle class Americans. Getting ride ofthe AMT and offsetting with additional taxes on the wealth will opensome middle class Americans up to these tax breaks. If Range’sBill actually gets passed we won’t see any major changes until 2009.Upon that year much of what we currently know about our tax world maychange dramatically and the pressure on the Middle Class will bereduced. The new tax proposals are likely to be seen by the superwealthy who controls the government administration and public offices. The Reasons: Thedemographics of the country have changed significantly. There are morecurrent millionaires and new millionaires produced each year then inany other country. At the same time the Middle Class is on the declinedue to inflation risks, the loss of manufacturing and the effects ofglobalization. The top 1% of the country has 38% of the net worth inthe country while the bottom 50% have less than 5% of the net worth. Thehuge disparities in the economy show that the wealthy are becomingricher and much of the rest of the country is becoming poorer. Asinflation raises the income of the middle class is being eaten up. Inaddition, the middle class which doesn’t have access to millions ofdollars can’t open up stores, businesses and other money makingpropositions. The new tax bill makes sense when we considerthat the wealthy have an unfair advantage and own a major percentage ofthe economy’s wealth. Therefore, the wealthy are simply paying more oftheir fair share and can’t hide behind offshore accounts, tax breaksand their government influence to skip on their responsibilities.

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