Paris Hilton

<div class='quotetop'>QUOTE(fshagan @ May 9 2007, 05:29 PM) [snapback]438676[/snapback]</div>

Not quite accurate.

At the Federal level, we tax income, rather than wealth. Income from interest and dividends is taxed the same as income from work, with higher levels paying a higher percentage. Except for municipal bonds, which are not taxed, but which pay a lower rate of return, effectively a "tax" for the municipalities. Except that some municipal bonds are taxed if you fall under the AMT. Capital gains are taxed at a lower rate, which is a nice bit of welfare for the rich, but interest and dividends are not capital gains. And if too much of your income is capital gains, you get hit by the AMT and lose the benefit.

At the local level, we tax ral estate, which is one form of wealth, though the wealthier you are, the less of your wealth is likely to be in real estate.

So, although it is true that income is taxed far more than wealth, those of us living off an inheritance are paying taxes on the income generated by that inheritance.

Taxing wealth directly has the problem that a business owner who lives off the income from that business could lose his business in a bad year when income is low, but the value of his business is still high. Sales tax has the disadvantage of falling hardest on the poor, who buy only necessities, as a sales tax raises the cost of those necessities.

However a luxury tax: a high sales tax on unnecessary goods, might be a very good idea.

 

<div class='quotetop'>QUOTE(daniel @ May 10 2007, 10:51 AM) [snapback]439073[/snapback]</div>

Many rich individuals and corporations are able to avoid tax altogether by setting up offshore shells in tax shelter nations like the Cayman Islands. This is not an option for those living paycheck to paycheck.