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Minnesota leads the nation in progress toward tax fairness

Growth & Justice
A Suits index of -1.0 denotes a tax system that is completely regressive, while a Suits index of +1.0 denotes a tax system that is completely progressive.

News reports since the release of the highly regarded 2015 Minnesota Tax Incidence Study have focused on the facts showing that our total state-local tax system has become less regressive. This has been correctly attributed to restoration of higher top-tier state income tax rates in 2013, property tax refund increases, and other changes that contributed to a modest decline in taxes paid by most Minnesotans.

Dane Smith

Digging further into the numbers, it gets even better, from a national fairness perspective.

Over the last two years Minnesota has made more progress than any other state in reducing state-local tax regressivity, according to our analysis of both the Tax Incidence Study, prepared by the Minnesota Department of Revenue, and similar data from other states.

Bucks trend of worsening regressivity

van wychen portrait
Jeff Van Wychen

Our report, “Minnesota’s Progress Against Regressivity,” [PDF] shows what experts have known for a long time: that almost all states have slightly to woefully regressive tax systems. This means those at the top pay a smaller percentage of their income in state-local taxes than those in the middle and at the bottom. And despite the widely acknowledged crisis of growing overall economic inequality, tax regressivity in most states worsened over the last two years. Minnesota was one of just 10 states that bucked this trend, reducing regressivity and climbing from the 16th to 7th least regressive state, the Growth & Justice report shows.

The sobering context, as many have observed, is that Minnesota’s tax system remains regressive, even as households in the very top income brackets continue to capture a disproportionate share of economic growth and an even more lopsided share of assets and wealth. Recent national reports document that this pattern, under way since the 1970s, is not relenting.

To be sure, the overlay of an overall progressive federal tax system lessens this unfairness; however, a progressive federal tax system does not justify a regressive state-local system. Decades of growing income inequality and declining real wages have severely pinched the budgets of low and moderate income families, which in turn have eroded consumer purchasing power, thereby contributing to severe recessions and anemic recoveries for average families, and threatening long-term economic health.

What state and local governments can do

State tax policy alone cannot solve this inequality crisis, which is generally attributed to the dynamics of global capitalism and a technology revolution. But one thing local policymakers can do to reduce the severity of these trends is to enhance the purchasing power of low and moderate income households by reducing regressivity. In addition, state and local governments will be better able to generate the revenue needed to adequately fund schools, roads, and other public services if they are not relying on tax dollars generated disproportionately from families who have fewer dollars to spare, and who are increasingly resentful of perceived unfairness in our tax system.

By concentrating tax increases over the last two years on those households with the greatest ability to pay, Minnesota was able to generate sufficient revenue to restore investments in K-12 and higher education, roads and physical infrastructure, work-force development, and affordable health care and housing care, while at the same time reducing the effective tax rate paid by the majority of middle class Minnesotans.

Minnesota’s marginal rates on top incomes still are not as high as they were as recently as the 1970s. The Tax Incidence Study shows that even after the progress in reducing tax regressivity resulting from the 2013 and 2014 tax legislation, state and local taxes per dollar of income for the top 1 percent of Minnesota households are 12 percent lower than they are for middle-income families.

The wealthiest Minnesotans thus are still paying less in state and local taxes per dollar of income than any other group in the state, while their income and wealth is growing in part because of an enviable system of public investments that puts Minnesota near the top on most measures of business growth, quality of life, and socioeconomic health.

Pending bills could erase progress

Numerous bills currently pending in the Minnesota Legislature could erase this progress. These include proposals to dramatically reduce the state’s progressive estate tax, provide state income tax breaks on Social Security income that would primarily benefit high-income households, and cut the highly progressive renter’s property tax refund.

Tax fairness can’t be the only goal of state policymakers. Stability, revenue sufficiency and economic competitiveness must also be factored in. But Minnesota, which has long had a more progressive tax system than the average state, has fared better than most of those other states on most measures of economic well-being. In 2015 the Legislature should not undo the progress made over the last two years by backsliding toward increased regressivity.

Dane Smith is the president of Growth & Justice, a research and policy organization that seeks a broader prosperity for Minnesota. Jeff Van Wychen is a veteran fiscal analyst for state and local governments, and is a Policy Fellow for Growth & Justice.

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Comments (61)

Republican tax increase proposal

"Numerous bills currently pending in the Minnesota Legislature could erase this progress. These include proposals to dramatically reduce the state’s progressive estate tax ... and cut the highly progressive renter’s property tax refund."

In other words, taxes on wealthier people's estates would go down (even after they've died) while the people paying some of them rent on some of those estates would see their taxes go up (to help offset the cost of those estate tax reductions?).

Would someone that identifies with the conservative Republican point of view please explain:

1) how cutting the renter's property tax refund is NOT a tax increase; and

2) why that's a good idea.

And, while at it, please explain why it's a good and beneficial idea to make the taxes all Minnesotans pay more regressive instead of more progressive.

Thanks.

Renters do not own property,

Renters do not own property, therefore they pay no property taxes, therefore any "refund" is really redistribution.

Conservatives do not believe in punishing success.

Rental Tax

Renters don't pay property tax directly, but it's built into their rental cost.

Really?

So rental housing owners do not pass along property taxes to their renters? They somehow all have this silent accord that they just pay those nasty property taxes out of their own pocket? Anyone with even the most elementary understanding of rental; property basics knows that property taxes are paid by those renters and if a property tax rebate is given to the rental property owners their is certainly a distinct probability that the tax relief does not find its way to the actual taxpayer.

The company that produces

The company that produces free-range, tofu fed organic chicken has to pay to have it shipped to the local co-op. Should you get a logistics rebate if you bought some last year?

Rent includes the cost of providing a living space and some profit, no different than any other commodity. These "rebates" are redistribution, which is not what taxation is supposed to be for in a democratic, capitalist system.

Rebates bad, Deductions good.

I'm not sure about the logistics rebate (was there a logistics tax on top of the logistics cost?), but it seems what you're saying is if a renter is able to recover 17% of the cost of his or her yearly real estate investment via a tax savings mechanism called a "rebate," that is a bad thing designed to "transfer wealth" from people that deserve it to people that don't.

But the person that is "providing a living space" in return for "some profit" is absolutely entitled to receive a return on THEIR yearly real estate investment in the form of a tax saving mechanism called "deductions" (on the costs of providing that space to which "some profit" is added). Deductions like these:

Losses: Your losses are fully deductible, and losses of more than $25,000 can be carried over to the following year.

Tenant-Paid Expenses: Expenses your tenant pays for you are considered income. This would include, for instance, an emergency repair on a refrigerator a tenant has to have done while you are out of town. You can then deduct the repair payment as a rental expense.

Repairs: A repair is a deductible expense in the year that you pay for it.

Improvements: The cost of improvements can be recovered by depreciating the expense over your property's life expectancy.

Mortgage Expenses: Expenses to obtain a mortgage are not deductible when you pay them. These include commissions and appraisals. However, you can amortize them over the life of your mortgage; and the portion of your mortgage payments paid toward interest is deductible.

Travel Expenses: Money you spend on travel to collect rent or maintain your rental property is deductible.

Other Common Expenses: Some of the other common expenses you can deduct are: Insurance; Taxes; Lawn care; Tax return preparation fee; Losses from causalities (hurricane, earthquake, flood, etc.) or thefts.

"All in all, there are quite a few types of deductions available to real estate investors and it pays to know which ones you qualify for."

Amen, aye?

But I'm pretty sure you'd say the most important thing to remember is that tax deductions are NOT rebates or transfers or sand in the gears of capitalism, but a completely legitimate way for the Shelter Providers to help defray the cost of their humble humanitarian efforts to help keep the clueless from having to sleep in the rain.

Puzzled

It is puzzling that these folks have a hard time understanding that only the person who writes the check to the government is paying the tax.

Renters do not pay taxes, maintenance, building cost, etc, they just pay for a place to live. And they are free to walk away from those bills per their lease. That and the need for little capital/debt are the benefits of renting.

Whereas the property owner will still be there paying the mortgage, maintenance cost, managements costs, and property taxes.

The landlords in these

The landlords in these scenarios are not renting at a loss. They are renting at a profit. The renters pay more than the value of the home/mortgage on a month-to-month basis, so that that person who does own the home has enough money to pay the property tax, upkeep, mortgage, etc.

The renters, while not directly paying the tax, or directly paying the mortgage, or directly paying for upkeek, are _still paying_ for the mortgage, property taxes, upkeep, etc; so the renter may be paying in, say, 1200 a month, whereas the costs for maintaining that property to the landlord may be 900-1000 a month. What you get from renting, as opposed to purchasing, is the ability to walk away relatively quickly and not being on the hook for major financial liability.

Well, yes they do . . . .

Landlords make sure their costs are covered by the rents they charge. Those costs include property taxes. So yes, renters pay the taxes, just as they pay for the maintenance and management of their homes.
And nobody is talking here of 'punishing' success, just making sure that it is fairly taxed. As a landlord who has also been a renter recently, I am happy to accept that.

Renters pay property taxes

through their payments to owners.
This is standard economics.
Rents tend lower where property taxes are lower.

income limit

Renters only get the credit back if their income is below a certain limit. Above that limit the state doesn't care that part of their rent ultimately enabled the landlord to pay his property taxes. So the fact that the state only seeks to remedy this injustice for low income renters proves it's more about redistribution than it is "fairness" to all renters.

Punishing Success

The Minnesota Department of Revenue (and state law) doesn't agree that renters don't pay property tax:

"Renter’s Property Tax Refund

"Renters may qualify for a Property Tax Refund based on their household income, number of dependents and how much property tax they paid through rent on their principal place of residence.

"For purposes of the renters refund, 17 percent of the rent you paid in 2014 is considered to be for property tax."

http://www.revenue.state.mn.us/individuals/prop_tax_refund/Pages/Renters...

So thanks for your opinion, but you neglected to answer my questions of how cutting that refund rate from 17% to some lower number isn't a tax increase, why that's a good idea, and why you believe (if you do) that making taxes more regressive is better for the majority of Minnesotans than making them more progressive.

Or is that what you meant by "punishing success"?

Speaking of, "Punishing Success," that might make a great title for book about some of the more dubious aspects of real estate, property ownership, its financing, etc. A lot of American individuals and families have become highly successful and accumulated a lot of wealth via real estate transactions.

There's a great example of that you might find interesting and enlightening. It's called, “So That’s Just One Of My Losses,” and it's the first chapter of an article you'll find here:

http://www.theatlantic.com/features/archive/2014/05/the-case-for-reparat...

It does a good job of illustrating the ways in which (real estate) Success and Punishment can go hand in hand.

"For purposes of the renters

"For purposes of the renters refund, 17 percent of the rent you paid in 2014 is considered to be for property tax."

For the purposes of renters refund, the government will consider your rent property tax, even though it's not.

You prove my position. They had to reinterpret the meaning of the word tax to redistribute wealth.

Oh... I see

What you're really saying is anytime there's a transaction involving any form of money (like cash, checks, credit/debit cards) or assets (stocks, bonds, chickens, apartment buildings, carrots, a stack of flat marble rocks - anything that's not considered cash but has some degree of perceived value), a "transfer of wealth" takes place, and that's a counterproductive thing that should not be allowed because it messes with the objective of capitalism.

Thanks for clearing that up.

Wealth transfer

You can tell it is "wealth transfer" because it is dependent on income & # of dependents. Also, I am guessing the actual payer of the property tax is the one writing it off on their taxes, not the renter. Maybe they should just call it housing assistance instead.

"Property Tax Refund based on their household income, number of dependents and how much property tax they paid"

From each according to his abilities

to each according to his needs. - K. Marx

I worked my way up from

I worked my way up from nothing to a state of extreme poverty. - G. Marx.

Congratulations Governor

Thank you for heading us in the right direction.

Good article I hope it gets wider distribution

The Tax Incidence Study gets published every year and is an interesting read to people who like data.

Using the data from I believe the 2013 study and income distribution data for two relatively affluent east side communities Delwood and North Oaks it appears that even there the majority of residents paid more than the state average in all taxes. While their much wealthier neighbors are paying less in percentage of their income in taxes.

This is why the flat tax folks have been pretty quiet. Taxes on the wealthy would rise under that scenario.

I'm not surprised that Mr. Swift and Mr. Tester don't want to pay their fair share of taxes. Those that profit from the system of property, monetary and trade laws that allowed them to make a profit are pretty cheap when it comes to supporting that system.

Renters pay a higher rate than homeowners

Renters not only pay property taxes, market rate apartments are taxed at a higher classification rate than houses are taxed.

Really

Please provide an example of one renter who has written a check directly to a government entity for property tax. If you are not writing the check directly to the government, you are not paying the property tax.

Renters are paying for a space to live in for a period of time, no more no less.

Once renters choose to commit to a mortgage, a big down payment, property maintenance, filing fees, property insurance, etc by buying/committing to a property, then they can enjoy the fun of paying property taxes.

In fact I just wrote out my Spring $2,200 check, have the renters you know done this?

Excellent Point

The renters actually subsidize those of us who live in homesteaded property. We ought to thank them, not begrudge the lower income earners among them a bit of their money back.

Same Answer

"the overlay of an overall progressive federal tax system lessens this unfairness; however, a progressive federal tax system does not justify a regressive state-local system"

As we have discussed before, the Federal taxes make the Total tax situation in the USA progressive in most cases.

Aiming to make the MN Tax flat to progressive may seem good to folks like the authors. However the reality is that MN is competing against the other states for retirees, businesses, etc, so comparing to the idealistic flat line is pointless. The big question is where does MN compare to the states we are competing with? If we are too high on a relative basis, money will move out of state.

The irony is that then folks like the authors will blame the people and companies for not being willing to pay their fair share, instead of looking in the mirror and acknowledging that their policies caused the action.

MN Tax Progressivity

The article is begging the question (in the classic sense--meaning you are assuming the answer--tax progressivity = good--without even considering the question==are you sure--how do you know)

Who says 'progressivity' is either good or 'progress', or even MORAL for that matter?

Two mistakes in logic:

1) At some point the idea of just 'paying your way' has to enter into the calculation. Those who make more don't just pay more, they pay a h3LL of a lot more, and...
2) They benefit a WHOLE lot less on the 'benefit' end of whatever it is that government does.

Try Again

Previously, I tried to get this crowd to weigh in on what is FAIR in their opinion with little luck. (Total Taxation: Local, State, Fed - Cash Benefits) My readers narrowed in on 2 or 3 as being FAIR, whereas many here seem to support 4 with their comments.
http://give2attain.blogspot.com/2015/03/what-is-fair-tax-credit-welfare-...

1.Fair would be if we took the total cost of government, divided it by the number of adult able bodied citizens. And each adult then paid their fair share of the bill. (ie Dues concept)

2.Fair would be if total cost of government was divided by the total income of every adult able bodied citizen. And each citizen paid their fair share of the bill. (ie Percent of Winnings to the House Concept)

3.Fair would be if total cost of government was divided by the total income - some base living cost (~$25,000?) of every adult able bodied citizen. And each citizen paid their fair share of the bill for every $ they make above the base living. (ie Percent of Winnings above Base Cost to the House Concept)

4.Fair would be if taxes and credits/programs were set to reduce the net income and wealth gap
between the adult able bodied citizens. This means high income and wealthy people pay significantly higher rates than other citizens in attempt to attain a fair society.(ie Equalization concept)

Progress

"Just paying your way" doesn't work when the person you want to pay doesn't have any money. Some guy making $20,000 a year to support his family is already struggling to pay rent and has to decide between food on the table or medicine for the kids. Chances are he's working several jobs in order to string together a forty hour work week, none of which provide health insurance, sick time, or retirement funds.

Asking him to pay more in taxes or fees is untenable as the money simply isn't there.

Contrast that with candidate #2, who lives off of $80 million in investments. He can hire people to reduce his tax profile, which is already at a lower rate because it's investment income instead of derived from a job. He can afford to buy the best health care anywhere in the world, has never missed a meal in his life, and is financially secure from the day he was born. His only worry about paying a couple of extra percentage points in taxes is whether he can afford the new apartment in Paris or if he'll have to wait six months for the next trust fund payment to come through before he pulls the trigger.

If you tax one of those groups more, which decision is moral and why?

T3

$20,000 man pays <$6,000 in taxes and gets back >$10,000 in benefits. (ie work tax credit, child tax credit, reduced cost healthcare, food assistance, etc)

$80 million man pays >$500,000 in taxes and gets none of the above cash back benefits, since they phase out at higher incomes.

The $500,000 is used to pay for many of the benefits of the first man. Personally I think this best choice is to cut government spending so we can reduce the taxes on the $20,000 man like the Bush tax cuts did.

Criminy

The guy worth 20,000 pays 30% in taxes. The guy worth 80,000,000 pays 0.62% in taxes. Clearly, Richie Rich needs a tax cut.

Actually

I assumed the guy "worth" $80 million earned ~$2.5 million and government cost him ~20%.

I assume the $20K paid 30% but received 50% back in cash benefits, so government him -20%.

And they both get to drive on the same roads, go to the same schools, etc.

I have no problem with the wealthier person paying more since they have the money. However to say that option 4 is FAIR is beyond my understanding.

Actually

In few worlds would a person making 20k annually be driving on the same roads as the person making 2.5 million annually. 20k annual means you probably don't even own a car, or if you do, you are driving it around NE or Frogtown, whereas the millionaire is driving his Porsche Cayenne around Dellwood. They also don't send their children to the same schools.

Actually... North Oaks Edition

North Oaks would have been a better example, as no-one earning 20k annually could afford to live there, and the roads and police are private.

Point missed!

We have a numerous levels of police fire military, laws etc, etc: A form of insurance against death and or destruction, if you have more to lose wouldn't it be fair to pay as the "free market" would define it; higher insurance premiums?
Folks just don't like the higher premium, but are good with the greater protection. Kind of like wanting better roads and not wanting to pay for them either.

Okay

The wealthy person pays $500,000 and the poor person gets an extra $4,000.

I think the wealthy person is paying a higher premium.

Good...

The wealthy person can easily afford it. In a civilized society, that's fair.

We Agree

We agree, yet many commenters here continue to express concerns that the wealthy are getting off too easy. That is why I think Option 4 is what many here are looking for in FAIRNESS. Thoughts?

The wealthy are not paying

The wealthy are not paying their fair share, either in taxes, or in wages, regardless of what words are capitalized.

Fair

Please define what you think would be FAIR?

Well JA:

That appears to be what this entire discussion is about "What is fair" looking back to 40s, 50's, 60''s,70's
Reference 1.
" Incomes grew rapidly and at roughly the same rate up and down the income ladder, roughly doubling in inflation-adjusted terms between the late 1940s and early 1970s.
The income gap between those high up the income ladder and those on the middle and lower rungs — while substantial — did not change much during this period.

Beginning in the 1970s, economic growth slowed and the income gap widened.

Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly.
The concentration of income at the very top of the distribution rose to levels last seen more than 80 years ago (during the “Roaring Twenties”)."

Source: Center on Budget & Policy priorities

Reference 2: Preamble to the constitution: (The "why" it was written)

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

Conclusion: When the balance of wealth gets too far out of balance that part in the preamble called "insure domestic tranquility" & "promote the general welfare" comes into play, interpreted from this end it means we don't want to repeat history, storming of the Bastille, Insurrection, street riots, labor riots at the turn of the last century like in the middle east.

http://en.wikipedia.org/wiki/List_of_incidents_of_civil_unrest_in_the_Un...

However it appears that the conservative position is, dam the objectives full speed ahead lets rip this country apart from end-to end, regardless the price. We will look just like Somali at this pace. (Great place no taxes no government and lots of guns).

Yep we are all sure that would never happen here! Kind of like 911?

Back to Top

I am commenting at the start to give us more space.

Capitalized

JE: That was great!

Why brag about the Bush tax cuts?

All they accomplished was to increase the debt and saddle the Bush administration with the worst job creation record of any modern president.

It also

It also gave a great deal of tax relief to poor and middle class people. Just a reminder.

Not really.

they significantly reduced the rates for the top tier and capital gains, fueling more income inequality. The rate of income always increases to the top 1% when tax rates are decreased.
According to the tax policy briefing book, their data clearly shows a marked tax advantage to the upper quintile
Just a reminder that your idea of "great deal" is entirely subjective.

http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/ig...

Leave it to so-called "conservatives"

to consider a regressive tax system to be punitive to the wealthy.

Also leave it to them to pulling a "reverse Godwin" (ie, calling people Communists) when they lack any coherent argument.

If a person doesn't grasp the concept of marginal utility and how that relates to the economy, any discussion of taxation will remain opaque.

Fairness

Any votes regarding which option is FAIR?

Fair Taxation

The "40s, 50's, 60''s,70's" are somewhat pointless today. Most of the countries in the world were recovering from WWI and WWII which meant American products and services were in high demand worldwide, American's believed strongly in "Buy American" and were willing to pay more for the product and service which supported higher wages and unions, etc

Then came the late 70's when the other countries were fully recovered and ready to compete aggressively, and the American citizens gave up "Buy American" and aggressively pursued "Buy High Value/Low Cost" no matter which American jobs were sacrificed. To make this worse: global shipping, communication, logistics, etc costs and delays plummeted which made off shoring and foreign companies more competitive.

Regarding your "Keep the Peace" rationale, I agree that it is pragmatic however I don't think it describes FAIR. It is somewhat like paying the "mob for protection". The mob isn't really doing anything to justify the payment, they just insist that you pay or else. From what I see here, it looks like you support option 4. Use taxes as needed to keep the wealth differential at an an arbitrarily chosen FAIR level.

One addition

"We will look just like Somali at this pace. " DW

Please note that our trend is towards more revenue collection and government spending, not less.
http://graphics8.nytimes.com/images/2013/01/16/us/politics/16fivethirtye...

Conservatives just want to stop and reverse somewhat this problematic trend. I don't see any of them recommending that the USA go back to the 1920 tax/spend rates.

Point Missed!

Not my keep the peace point :The "founders/framers" keep the peace point. The preamble is near on 250 years old!. Don't agree with it, don't think it describes fair, are we picking and choosing what we should and should not abide by that the framers/founders laid out?

Arbitrary? Tax code is written into law by the wealthy protectors. Back at you, the rich have the wealth, you are arguing that poor folks have the upper hand on rich folks? If so why do the rich folks have all the $? Who is screwing who? Scoreboard 100-0 and the complaint is the 0 folks are cheating!

Yes very familiar with history and economics. We can start another complete dialogue on cause and effect. Blame the greed of the unions or the greed of the capitalists, environmental policy, special tax laws for the capitalists, regardless, the capitalists won!

A reference point 50.60,70's was provided, don't like it, provide a new one. that supports the position that rich folks are getting screwed on taxes.

Mob for protection? They are called political contributions, and the rich mob is getting great protection from their political "Congressional" enforcers. See the allowable usury rates lately? 228% +++++, right to the point of special tax exemption treatment for the wealthy. The focus of the discussion "What is fair"

Fact: Poor people are poor because they have little-no wealth, rich people are rich because they have lots to unbelievable wealth. Sorry its not the other way around. Is there agreement on the definition of poor and rich?

Interesting Perspective

As I said, it seems you think the Option 4 is FAIR. You would set rates even more progressive than they are today on those who are successful / wealthy so that more money can be given to those who are unsuccessful/ poor. Personally I think that is punishing good behavior even more and rewarding bad behavior even more is going to yield bad results for the future of America, but I have been wrong before. I think the founding Fathers were more Capitalistic than you think.

As always point missed and dodged the question

Is the objective of this United States to create a country with class's of Dukes and lords (Super rich) that control more or less the commerce income distribution of the country?

You believe existing tax laws are fine, Blood and sweat income taxed at 15-30%, money changer income taxed at 15% or less?

I believe the tax laws are corrupt: Which means, today, we punish the poor for good behavior and are rewarding the rich for bad behavior. If we are punishing the rich "Why do they have all the wealth?"

Check that Preamble again: "A more perfect union"

Why do they have all the wealth

If we are punishing the rich "Why do they have all the wealth?" The "Rich" have the "Wealth" because they are roughly the same thing. One is used to define the other.

If some guy named Bill Gates had not created a little world changing company, he would not have had much wealth. If that guy from Omaha named Warren Buffett had not been really good at picking and making companies successful, I could see him punching a clock at a local company.

Now the big question is why do most lottery winners not have much wealth after a couple of years?

The reality is that people and families who are wealthy know how to save, invest, work, learn, add value, say no to themselves, etc.

Now I agree that the capital gains rates could maybe be higher, however remember that investment money can move elsewhere as taxes rise. And the alternative minimum tax law drives up the rate for the wealthy.

A more perfect union

I forget to address this, must be the jet lag. I am sitting in my hotel in Shanghai right now thinking about your comment. Personally I think the USA is a "more perfect union". It does a good job with carrots and sticks.

"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. " Benjamin Franklin, On the Price of Corn and Management of the Poor, November 1766

OK Nice response JA

Now comes the tough part: How do you suggest we do the leading? Rightly don't think you will find much disagreement from most anyone.

Been to many countries as well: How about Pakistan? Story I got watching the kid drag his mangled legs across the street (palming one hand in front of the other), the kid probably was born with good legs, but his father broke them, that way he would get a job as a beggar! Acceptable?
(I'll leave, Cairo, Thailand, Philippines etc. eye opening experiences off)

"Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants."
Ben Franklin

Seems old Ben had a quote for everyone!

Third World

So how did we jump to third world horror stories?

As I said, personally I think the USA is a "more perfect union". It does a good job with carrots and sticks. To just give more money to poor people that live on American soil just because they live here seems like you want to just give them free carrots and eliminate the sticks. Probably not a very good way to encourage them to work to excel.

By the way, I am a big fan of encouraging people to volunteer and donate. (ie Give2Attain) By the way, I am in Beijing now.

Easy

Unless of course we are ranking poverty on a scale of 1-10.

The point was: What is the leading that was suggested? What is the actionable step? What is the encouragement, all the things that are going to change these folks way of thinking, life styles? Comparatively speaking what is being done that's wrong, how much is too much, when do you take kids away because of poor parenting skills, since you are in China, what is too much dictatorial and what is not enough, presume you have also been to Singapore, easier, ~ 4.5 M people, but still a strong fist, China much more difficult, much stronger fist. That continues to be the discussion,
"What's fair and reasonable" Question is: Do we put these folks on a City payroll, county, state, if private payroll and no skill or no job, leave the family in the street? Leave them on a piece of cardboard outside the hospital emergency door? Do we have "Tax" financed charity, or do we take the chance at contribute what you think is right? Like Pakistan.

And how do these decisions tie back to the founders intentions i.e the preamble?

Good Questions

Not sure. However taking more from the successful, and giving it to the unsuccessful with few or no requirements on them to perform or improve in some way is definitely not the answer.

Continuing to let women/couples have more children than they can afford/support, funding their irresponsible choices with other people's money, etc is definitely not the answer.

My Conservative readers really disliked it when I said that we should have the teachers grade Parents. Then have their taxes or benefits adjusted as needed, or social servises should be able to intervene based on that grade.

Indeed, there are some

Indeed, there are some studies out there that show that the Bush tax cuts resulted in a 1.6 trillion dollars lost from federal revenue (I know it didn't take me long to spend the approx 70 bucks I got back).

" According to CTJ, the Bush tax cuts that were passed up through 2006 (the 2001 and 2003 cuts as well as other smaller cuts in 2004, 2005 and 2006) ended up costing the Treasury approximately $2.1 trillion in foregone revenue from 2001 to 2010. CTJ claims that if you add interest payments, that number goes up to around $2.5 trillion. These numbers were calculated using CTJ's ITEP model. From what we could tell from their methodology paper, they assumed no feedback effect that would generate additional revenue. With that caveat, there is no reason to doubt these numbers."
http://taxfoundation.org/article/how-much-did-bush-tax-cuts-cost-forgone...

Others argue that it actually damaged income by about 6.6 trillion dollars.

"According to an analysis by Pulitzer-Prize winning reporter David Cay Johnston, formerly of the New York Times, the Bush tax cuts, touted as a harbinger of prosperity by the Republican Party, actually robbed each American taxpayer of $48,000 in pre-tax personal income during the twelve years of their existence, for a total of approximately 6.6 trillion dollars...
...Of the total national increase in income in 2012 over 2009, an astonishing one-third went to just 16,000 households, and almost 95 cents of each dollar went to the top 1 percent, while the bottom 90 percent lost ground."
http://www.dailykos.com/story/2014/07/11/1313326/-Report-Bush-Tax-Cuts-G...

Yes, I know it's the Daily Kos.

This was a response to Jason

This was a response to Jason Myron's post above.

Must not have had kids

I think I got $3,000 per year off my tax bill. Here is a Forbes published view:
http://www.forbes.com/sites/peterferrara/2012/12/06/why-america-is-going...

I was 20. And I thought the

I was 20. And I thought the Bush tax cuts were stupid then, too.

No wonder you like the Bush tax cuts. You got 'free stuff.'

Good Idea

Technically I didn't get any "free stuff", I just got to keep more of what was already mine as did most people in my income level and below. As the Forbes article notes.