Sorry in advance for the long post, but there are a couple of things that aren’t quite right about your tax breakdown here.
The first thing applies to rich and poor alike, but it’s that our income isn’t taxed at one rate. So a person making 100K isn’t taxed on all of it at 24% Their first 11K of that is taxed at 10%; 11K-47K is taxed at 12%, 47-100K is taxed at that rate, and so on. So when I said Eisenhower had a top individual tax rate of 90%, that didn’t mean the government took 90% of someone’s income, I just wanted to point that out. It would just be that last top sliver of income that’s taxed that way.
The second one is a big one, and that’s that you assumed all income is treated alike. What I mean is, we middle class folks get most of our income from wages, and those are taxed at higher rates than income from capital gains, which is where the rich get their income. Thing is, capital gains—gains from stocks, bonds, investments in high end art, or whatever—aren’t taxed until they are sold, at which point a person would pay the capital gains tax on the amount that it appreciated. This is why you see billionaires only take a modest salary. Bezos had no salary at Amazon; Musk’s at Tesla is just 80K. Sometimes a rich dude will work for a $1 salary. This isn’t because they are virtuous and humble, it’s too avoid paying taxes on those wages. Instead, they take their millions and billions in company stocks and things like that, which they don’t pay taxes on unless they sell.
But the rich don’t sell; they instead use those assets as collateral to get low-interest, tax free loans. They use those loans to fund their lifestyle, and simply pay the interest payments. They can do this over and over; next year when those assets grow another 100 million or whatever in value, they can use that growth as collateral for more tax free loans. They do this forever, just a sort of pyramid scheme of loans, reinvesting some of that money, using those gains to get more loans, and never paying taxes on any of it until they die. We call this the “buy, borrow, die” cycle, and Kamala campaigned on
ending these tax avoidance loopholes. Now when these rich dudes die, capital gains tax goes away, and is replaced by estate tax—but these can be avoided too, by doing things like setting up irrevocable trusts and other things.
Apologies for rambling, but it’s important to realize that while the rich pay a lot in taxes (and should), they don’t come anywhere close to paying their fair share. Not even close.
I don’t think the middle class need to pay more taxes(unless we’re getting something for it, like universal health care or whatever). We need to close the loopholes that allow the super rich to avoid paying their fair share. Economists estimate that would generate an additional 1.8 TRILLION dollars per year. That’s basically the DOGE’s goal, right? Eliminate 2 trillion in waste? We should also end the BILLIONS in government subsidies that companies like Boeing, SpaceX, and Starlink receive. That’s the real waste, and that’s the best way to attack it.
Here’s the problem with attacking it the other way. The federal budget it around 6.5 trillion per year (insane, I know). Almost 4 trillion of that is mandatory spending: Social Security, Medicare, Medicaid. Americans paid into that, and it’s not an option to cut those. That leaves us 2.5-2.7 trillion in discretionary spending—that’s our money to help FL when hurricanes hit, or CA when wildfires hit, or foreign aid to Israel when Hamas attacks, or whatever.
The bottom line is that it we can definitely find some waste and cut it, but it is simply not possible to cut 2 trillion that way without absolutely gutting programs that middle class, lower income, and seniors need. It just isn’t possible.
What Trump and Musk are actually doing is scrounging for any funds they can find to fund the massive tax cuts they plan to give themselves, ending anything their businesses may have financial conflicts of interests with, and hitting back at targets they don’t like such as media outlets that may criticize them.
