It’s Tax Laws, Stupid

The talking heads on the right are busy trying to deny that there is income inequality in the United States.  In spite of all forms of economic evidence that show how the top 1% are enjoying unprecedented growth in income and in wealth while most others are, at best stagnant, and in many cases going backwards.  One reason for this inequality lies in the tax code.  There are over 60,000 pages or rules, regulations, exceptions, deductions, and exclusions in the present tax code.  For over eighty percent of Americans, the need is for less than three pages...the standard deduction, earned income credit, and IRA or retirement accounts.  Most Americans do not use the mortgage deduction because they do not pay that much in mortgage interest.  The same is true for property tax and charitable deductions.  For the top 10 percent that is another story.  Perhaps someone reading this will be kind enough to explain why an individual winning $42 million dollars in a lottery would pay $15,200,000 in federal income tax while Mitt Romney, who reportedly earned $42 million dollars would pay less than $6,300,000.  Of course, Romney would probably pay even less than that since he can afford to pay accountants and attorneys $1 million dollars a year to reduce his tax exposure while the lottery winner will be besieged with scammers who only try to find ways to steal his money.  One thing is certain, while Romney may deduct thousands to feed and care for his horse, any attempt on the part of the lottery winner to deduct the costs of the vet for his dog would find him besieged with auditors from the IRS.  To further reduce Romney’s tax exposures, he can afford to also give a million dollars to legislators that promise to vote on legislation that ensures that Romney only pays $6 million in taxes where Mr. Lottery Winner pays $15 million.  An example of this in action would find one looking at the Walton family of WalMart fame, said to have more total wealth than the bottom 40% of Americans combined.  The Waltons have been reported as spending over $100 million dollars to end the laws taxing inheritance.  While $100 million may seem exaggerated, keep in mind if successful, the Waltons will save $35 billion in inheritance tax.  If they purchase $100 million of Chinese sneakers and sell them at full price in their WalMart stores they would never make a profit equal to $35 billion dollars.  Which goes to prove that when there is a far bigger profit in gaming the tax system than by doing business, there is a sewrious problem with the tax system and with those who are responsible for the legislation that makes up the tax system.