Marilyn vos Savant - wealthy and taxes

I expected the woman “with the highest IQ” would be a little smarter than this, but she probably is among those wealthy that considers their tax bill to be amazingly high. :smack:

The wealthy like to spout the fact that they pay the majority of income taxes. Yes, that is true when you look at the hard numbers. But that’s only part of the story (the one that serves their self interest), because 20% of $1million is going to be larger than 20% of $1,000. By the same token, 80% of $1million is much larger than 80% of $1,000 … that is the cash remaining in their pocket.

Mitt Romney did pay a ton of taxes for the one year he was forced to release his tax return, dollar wise. But it was only 15% of his total income for the year. That is still absurdly low. My tax rate last year came to 18% which is a higher rate and yet a much smaller hard number. 18% of $40K is a lot harder to come up with than 15% of whatever number Romney’s AGI ended up at. Because he has MORE MONEY. Get it?

If wealth was more evenly distributed, so would the tax burden (and if business taxes weren’t so absurdly low, it wouldn’t all land on individuals and families).


LINK TO COLUMN: http://www.straightdope.com/columns/read/1118/do-the-rich-pay-very-little-tax

Smarter than what?

Welcome to the SDMB.

Although you might think so because you clicked a “comment on this answer” link on a specific column, there’s no connection between this forum thread and the original column, so none of us can tell what article you’re talking about.

(Yeah, it’s one of the things we love about SDMB.)

For future reference, please copy-paste the URL of the article somplace in your opening comment, like this: Do the rich pay very little tax? Wouldn’t a flat tax be fairer?

ETA: I’m guessing that’s the column you’re commenting on, since on-topic and mentions Marilyn vos Savant. If I guessed incorrectly, my apologies.

Thanks for that, knowing is half the battle. There’s no way to edit my previous post, is there?

Smarter than the asshats that make up the Faux News / Rush Limpballs audience.

As Moderator, I’ve done just that. Welcome to the Straight Dope Message Boards, juliabliss, we’re glad you’ve found us.

Not after 5 minutes have passed, no. The idea is to make us have to stick with what we write. Occasionally, you can ask a mod to edit a really messed up post, but there’s no need here. We’re used to having to click a link in the second post.

I found her reply to be very strangely worded. The rich pay “a truly stunning amount of tax, and there are virtually no exceptions”? :dubious:

Well, I guess having incredible spatial reasoning skills doesn’t magically translate to stunning political and economic analysis. Who could have guessed? Still, her writing is usually a little less . . . stringent?

I was also disappointed that Cecil didn’t bring up the tax rate vs hard number issue.

Then there’s the fact that while the 1% likes to bitch about income taxes, there are also sales taxes, payroll taxes, property taxes, etc. That 48% that Romney was bitching about may not pay income tax per se, but they do pay plenty of taxes. The wealthy don’t get hit nearly as hard as the rest of us when it comes to social security taxes or sales taxes, for example.

In every Income tax argument, those defending the current system always make some variation of “The top x% of taxpayers pay 5x% of the total taxes.” and proceed to dazzle with numbers and examples. However they never mention the top tiers pay a far less percentage of their income as taxes than those in the middle and lower incomes. Ergo, unfair.

Donald Trump (not specifically but as a proxy), may pay 100 times or more in actual dollars in taxes than the average middle income earner, but he has actually made probably 1,000 times as much income. Which he exploits through the deliberately convoluted income tax deduction scheme the wealthy have paid our Congress (nearly all of whom either are already or become wealthy in office, incidently) to thrust upon the lower income earners. Ergo, unfair.

Warren Buffet a couple years ago made the point his secretary paid a far far larger percentage of her income in taxes than he did himself. Ergo, unfair.

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*** “It’s alright to have butterflies in your stomach. ***
********** Just get them to fly in formation.” ***********
********************* Dr. Rob Gilbert ********************
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When I read her columns, often I think that she’s oversimplifying, or just plain wrong. Granted, she’s usually right, but her answers don’t exactly make me jump up out of my chair and say “OMG she is the smartest person ever!”. Often my reaction is “meh. I could have given a better answer than that one.”

Specifically on the tax issue, she has her own perspective and she (apparently) doesn’t want to consider the validity of other perspectives. It comes down to what you think is the way things SHOULD be.

I’ve heard income tax compared to a bunch of men going to a restaurant and splitting the bill for the meal in some rather strange way, like there’s 10 men who all ate the same meal and the total bill is $100 but five of them pay nothing and four of them pay $8 and the 10th man has to pay $68 blah blah blah. But the person who wrote this little drama is assuming right from the start that progressive taxation is unfair and they created this narrative to illustrate their point. I could just as easily create a narrative which proves the exact opposite, like in my story it wouldn’t be 10 adult men, it would be two infants, a teenager, a paraplegic veteran in a wheelchair, a pregnant woman who just lost her job, a middle-aged husband and wife who are both school teachers, a retired couple, and a recent college graduate who has never had a job but just inherited $80,000,000 when his rich uncle died. Now tell me if you think it’s totally fair that the infants should have to pay for their own meals. Or the vet. Or if they can’t pay, tell me you think they shouldn’t be allowed to eat. Do you think it would be fair to ask the rich guy to pay most of the bill? What if I told you that all 10 people are members of the same family, would that change your answer?

If you ask me, it is totally fair to let people who are struggling pay very little and people who have more than they need pay a lot. And given that the one-percenters control such a huge fraction of the money, it only makes sense that they would end up paying a huge fraction of the taxes. If you asked me “Is it true that the rich pay very little tax?” I would answer “That depends on your definition of ‘very little’. If ‘very little’ means a smaller total than what the average person pays, then no. If ‘very little’ means a smaller fraction of their income than what the average person pays, then maybe. If ‘very little’ means an amount so small that it is not a hardship for them to pay it and losing that money has no effect on their standard of living, then yes it’s true, the rich pay very little tax.”

I like my answer better than Marilyn’s. At least I admit that there’s more than one way to look at the question.

So, you want to get rid of the current method of distributing wealth (hard work/brains/luck combo) and replace it with what?

You want it even? No thanks, incentives increase human activity/output.

You want to shift more towards luck, like a random distribution regardless of your effort?

Maybe just give it out based on IQ?

The Master himself says that vos Savant is not wrong and coming from Cecil that’s high praise.

It is almost impossible to tax wealth. Neither we nor any other country do it. It’s relatively easy to tax income and transactions, so those are the two areas typically taxed.

The complaint of the rich, so to speak, is not so much that they pay most of the taxes (although that’s true) but that taxation is not a very productive way to generate a more wealthy society for any level–even the lower levels of socioeconomic status.

A reminder may be in order that businesses pay taxes, and then the distributions they make to business owners and employees are taxed a second time, when they become income. This double taxation is what keeps many business owners from bothering to get taxed as C corps in the first place. As a rule of thumb (particularly in heterogeneous societies) high rates of business taxation have simply caused potential business to establish themselves elsewhere, or move profit centers and money elsewhere. It turns out it’s kind of tricky to just take money from other entities by legislative fiat and keep those entities within the community of recipients for the putative tax haul.

(See New York’s recent ads about not taxing new businesses in the hope that businesses will return there, for example)

AKA–“Trickle-Down” Theory.

Which, as we now know, does not work.

Of course, trickle up didn’t do all that well for the socialists, either.

But in any case, it’s very very difficult to tax wealth, and therein lies the tax rub, in my opinion.

I could have a billion dollars in the bank, show a net loss of income for the year, and not pay a dime in taxes…and it’s not very hard to show net losses.

Wouldn’t property taxes be a tax on wealth?

“So, you want to get rid of the current method of distributing wealth (hard work/brains/luck combo) and replace it with what?”
Not sure I’m willing to let that pass without at least a mild challenge. “For certain values of luck” as some would say here.
Wealth is, as I understand it, also very frequently/much more likely to result from inheritance than a Horatio Alger scenario. “Cite?”
I found we’ve at least touched on the topic before: http://boards.straightdope.com/sdmb/showthread.php?t=600669

MODERATOR COMMENT:
Gösta: (Back in what is now Post #10): Since there was already a thread on this topic, I’ve merged your thread into this one. Hope you don’t mind, it helps keep a topic together.

She doesn’t understand imaginary numbers, she rejects proof by contradiction, and she doesn’t believe in hyperbolic geometry (or something, it’s generally had to tell what she actually means, and it’s not because she’s smarter than us mere mortals).

She’s probably most famous for getting attacked for her solution to the Monty Hall Problem, where she was more-or-less right, although there I think much of the confusion comes from the fact that the problem isn’t really properly defined, and you get different results based on what assumptions you make. But even there, she just made her assumptions (and solved the problem correctly under those assumptions), but if you disagree with her assumptions and make your own, you are just categorically wrong.

I have very little respect for her, if you can’t tell.