Two views on taxing the 'rich'

Regarding "Obama budget plan: Tax the rich" [News, April 14]: "Rich" is a short, one syllable word that conveniently helps the misinformed and liberal politicians with their class-warfare arguments.

Our president has done it again. He states that the "rich" or the "wealthy" have to pay their fair share. Under the current tax system the "wealthy" already work 50 percent or more of their time for the federal and state governments. If the president were to use "high achieving, hardworking individuals" instead of "rich," it would take more space in the newspapers and not have the same shock value.

Few people inherited their wealth. The vast majority of those "rich" people did not cut class in high school, did not do drugs, studied hard and did their homework. They also borrowed a lot of money to pay for graduate school. Still, some think the "rich" should pay more in taxes only because they took advantage of the freedom this country bestows upon all of us to improve our lives.

The 16th Amendment to the U.S. Constitution, which gave Congress the power to set and collect income taxes, was a plan to raise revenue for a growing country. Sadly, politicians use it to redistribute income, and they use the envy in many of us to accomplish that goal. Too bad the non-achievers prefer to take rather than try harder.

Dan Martin, Babylon

Editor's note: The writer is a certified public accountant.
 

Does the public really know how well the wealthy have done over the last half century? In 1960, the top bracket of $400,000 was taxed at a marginal rate of 91 percent. By 1987, the top tax rate was dropped to 38.5 percent on taxable income over $90,000, and finally, in 1988 it was lowered to 28 percent on income over $29,500.

At that point, the graduated tax system was effectively dead, replaced by various credits and higher exemptions for the poor, while cutting all sorts of deductions for the middle class. Then in 1993, the rate was increased to 39.6 percent on income over $250,000, eventually dropping again to the current 35 percent on income over $357,700.

And how did the middle class fare? In 1960, a middle-class worker paid Social Security tax on the first $4,800, at the rate of 3 percent (there was no Medicare tax). Today, a middle-class worker pays 7.65 percent: 6.2 percent for Social Security on the first $106,800, and 1.45 percent for Medicare, with no income cap.

The rich pay the 7.65 percent on only a portion of their income, so that their effective rate comes close to that of the middle-class employee the more they make. Add to that the changes that were made to the estate tax for the rich, and you can see that they have done very well indeed. The current recession, the huge deficit and the continuing demands of the war on terror -- for which a special war tax has not been levied -- certainly justify the rich doing a little more.

Rony Kessler, Franklin Square

Editor's note: The writer, a certified public accountant, is past president of the Nassau Chapter of the CPA Society.