by Lawrence Meyers

Actually, the above applies to Republicans, too.  And to people of any ideology.  I just used to the headline to get you involved in this discussion.  If you wish to be intellectually honest about what you believe, you must always ask yourself if the information you rely upon to make those decisions is accurate.  

For the record, I am unaffiliated with any party.  I got into an argument last night with a blogger of (very) modest notoriety over tax policy.  I’ll call him Morris Moron.  Amazingly, Morris was not only wrong, but wrong on every single statement he made.  

Why is this important?  Stick around.  First, however, let me get his facts straight.  Here’s what Morris Moron said:

1) “Those who make $250,000 a year pay less in taxes than those making $100,000, and you are delusional and a liar to argue otherwise.  This is simple fact and not even open to discussion or argument”.

A simple glance at the 2007 Tax Rate Tables shows that the more money you make, the higher percentage of that money you pay in income tax.   It takes a 5th grade education to realize that the amount paid goes UP as income goes UP, not the other way around.   Go ahead.  Choose any two numbers.  The higher one always pays more.

Now, it occurred to me that maybe Morris intended to say that the 250K  folks take more itemized deductions than the 100K folks, pushing their TAXABLE income down to a point lower than that of the 100K folks.  Well, that’s a lovely thought, but not only is anybody going to have a hard time coming up with $150,000 in legitimate tax deductions, but even if they did, there’s this thing called the Alternative Minimum Tax.   It kicks in if anybody tries to take so many deductions that they end up paying less than 26% of their total GROSS income.  In other words, no matter how hard a 250K person tries, they’re still going to pay about $55,000 in income tax.   The 100K person with NO deductions still only pays $17,000.Morris is still wrong under this scenario.

2) “It’s no secret that…the middle class pays taxes disproportionately to their total income …you’re not paying your fair share and it’s insulting to insinuate otherwise” Nope.  Go do a search online and you’ll find that every single source puts the tax burden of the top 1% of income earner paying between 37% and 40% of all income tax, while the top 5% (which includes income earners over $150,000) paying a whopping 60% of the total tax burden.  

3) “Middle class folks…don’t have all the tax shelters that other folks have…” I asked him to point out these alleged shelters because I’ve been trying to reduce my taxes for years.  Here’s what he came up with:

4) “There are plenty of ways for those above 250K to “hide” their money…in annuities, IRA, or CD’s”Uh, no.  Annuities and CD’s are products purchased with after-tax income.  The money used to purchase those has already been taxed and, furthermore, provide no tax break.  They are simply investments.  As for the IRA, it is ONLY deductible if you earn less than about $80,000 annually.   Some people may indeed have 401K plans which permit up to $45,000 of annual income to be put into a retirement account.  So in that respect, I guess you could say that the money is not taxed — until retirement.  At that point, all earnings on that income are taxed.   At best, those withdrawals may occur at a time when the earner is at a lower tax rate than when the money was earned, but that is hardly guaranteed.   

5) “If you have income of 250K+, then you have access to a real IRA which is untaxable up to a certain amount annually.”False.  All earnings from traditional IRA’s or other retirement plans are taxed upon withdrawal.

6) “Earnings may be taxable on CD’s and annuities, but the base amount is not, and is therefore sheltered from tax”.What part of “after-tax income” don’t you understand?  Those products were purchased USING money ALREADY taxed!!! And finally….are you ready for the big one?  Drumroll, please….. 

7)  “You’re not talking to someone who is financially ignorant. Don’t insult my intelligence”.Given that I just dismantled all of his arguments with publicly available information that is, in fact, not even subject to dispute or discussion, it seems to me that Morris Moron is in fact financially ignorant, delusional, and a liar as well.  

Of course, I tried to point all these things out, but he refused to engage me, most likely because his ego is tied to a rigid ideological stance.  He is controlled by his ego, rather than by independent thought.  So, this brings us back to my original point.  Morris is a big Obama supporter.   Good for him and good for Senator Obama.  

The problem is that one of many reasons Morris supports Obama is because of the way Morris believes tax policy works.  And he’s 100% wrong.Now, this certainly doesn’t entirely invalidate Morris Moron’s basis for supporting Obama.   But given that he is basing part of his support on a completely flawed analysis of income and tax policy, one must wonder WHAT ELSE he is mistaken about?   What other views does he hold dear that are based on a complete misperception of the real world?  So we must ask ourselves to check and re-check what we believe and why.  

The mind is a terrible thing to waste.  Morris Moron is wasting his in deference to ideology.  Don’t be a Morris Moron. 

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