A Fair Tax Code

Rich people pay the lions share of the taxes in the US. They don't just pay the most money, they pay the largest percentage of their income.

Then again they have a lot more money.

This could then lead to the question, Which is a Better Measure of financial Inequality: Wealth or Income?
In fact the real difference in wealth is not seen by comparing the yearly income of the to top 10% and the bottom 10%- its when you compare the "NET WORTH" of those two groups. The net worth difference is more than `10 times as great as the income difference.The bottom 60% of households possess only 4% of the nation's wealth while it earns 26.8% of all income. This means that the rich pay a larger percentage of their income then the bottom half, but they pay a smaller percentage of their wealth. It is this reality that in large part is responsible for why the "Rich keep getting richer"

If we put aside income and focus on the distribution of wealth,the research points to two quite different views of the amount of inequality in American society.
"Ultimately, we are interested in the question of relative standards of living and economic well-being. We need to examine trends in the distribution of wealth, which, more fundamentally than earnings or income, represents a measure of the ability of households to consume."
Alan Greenspan, Former chairman of the Federal Reserve Bank

It it easy to see why any question regarding the "Fairness" of any tax plan, is colored by the discussion of Wealth vs Income. Based on income, it is easy to make the point that the wealthiest Americans don't just pay the most money,they pay the largest percentage of their income, often while using the least amount of government services. Switch the discussion to talk about net wealth and the lower half see a system that favors the rich and one in which they are forever "Loosing ground". As property values increase, those who own property see their net wealth rise, where as those that do not, see the dream of home ownership get pulled further out of their reach.

From my own perspective, we have seen the foolishness of communism. The Soviet Union proved that if you try to eliminate the rich, you will not be able to distribute their wealth among the poor to make everyone "Middle-class", you just make everyone poor. Take away the incentive to achieve a higher standard of living, and you kill the goose that lays the golden eggs. The fact is, we need rich people.

For a country to prosper financially it needs the following:

1. A stable government.
2. A population that believes they have a vested interest in the country's success.
3. Insurance companies to protect both commercial as well as personal assets.
4. An educated work force.
5. Leaders that realize that it's the private sector that creates wealth and
Policies that provide conditions for that private sector to thrive.
6. Intellectual Property rights must be honored.
7. Taxes have to be enough to pay for the expectations of the citizens including
the infrastructure to be competitive in the global market- but low enough the
the majority of money is the control of the private sector.

Sure it helps if the country has a large amount of national resources, however Israel has created a standard of living dramatically higher than Saudi Arabia, and did so with out oil.
In fact there are many other conditions that can help or hurt the chances of any country's economy, but the seven above are critical.

So we need a tax system that levels the playing field enough to provide for a basic standard so even the poorest can maintain a reasonable standard of living, and feel vested in America; yet keeps enough wealth in the hands of the wealthy so as to provide conditions for the private sector to thrive and grow.
The truth is it can be very difficult to get that balance right.

Larry Lubell
www.UrbanInsuranceAgency.com