Quote Originally Posted by wufwugy View Post
I addressed a lot of this in my response to Bill. Other things:

Income inequality is a meaningless statistic. It tells us pretty much nothing and is misleading. Example: triple all real incomes and you've eradicated poverty while increasing inequality. Or invent something great that increases prosperity for millions and you've increased inequality. Create something that makes one person a billion dollars wealthier and a million people a thousand dollars wealthier, and you've increased inequality.

Tax cuts in higher brackets are tiny relative to the deficit and debt compared to equivalent cuts in lower brackets. The majority of investment capital exists in high incomes and the majority of human capital and labor exist in low incomes. Dollar for dollar, tax cuts to high incomes should have a bigger positive effect on the economy, while cutting restrictions should have a greater positive effect on low incomes.

That said, tax cuts for the wealthy aren't fair. Taxes should be flat. That would make them the most fair. There are a bunch of other benefits that come from that too.

Flat taxes are fair in a country with a relatively even distribution of wealth and income. We don't live in that kind of country. In a country with an extremely lopsided distribution of wealth and income, like our country, flat taxes are essentially arguing in favor of lower taxes on the super wealthy, paid for by higher taxes on the poor.

Lets suppose you've got 2 people, one guy pulls in $20,000 a year, and spends 100% of yearly take income (these are also known as workers who live from paycheck to paycheck). The man's income is so low, he pays no federal income tax. Now a Flat tax implemented. Now he has to pay $2,000 a year in taxes, and has thusly taken a 10% loss in income for his yearly expenses. This will drastically hurt him in his economic situation, that is already limited, and significantly lower his standard of living.

Now we take a guy who makes $2,000,000 a year. He spends 10% per year on his living expenses. He consistently has money left over, that is not used on living expenses. If he pays a 10% tax, he still has $1,800,000 left over, and he only uses $200,000 on living expenses. He will face no reduction in his standard of living under the same tax.

So the one who takes it in the shorts under a flat tax, is the poor, and lower classes, and the middle class. The ones who get a huge tax cut under a flat tax, would be the very wealthy.

This would further exacerbate the income/wealth inequality between the rich and the poor. It kind of reminds me of the economic conditions that lead to the French Revolution in 1780's/1790's France.