The tax code has been skewed to favor the super rich.
An example: Capital Gains.
Capital gains are capped at 15% - the lowest tax bracket, even for those in the highest tax brackers, for securities held over one year. This makes cap gains effectively a regressive tax, as the most affluent get to make money off their investments and are taxed at a much lower rate porportionately to their income. It's not fair.
With only one college level course in economics, I'm no expert, but one would think that encouragement of investment and specualtion tends to increase volatility in prices of certain commodities, such as gas and oil, too.
When Democrats take back control of the House and Senate later this year, some of these distortions need to be reversed.
Specifically the changes made lowering the Capital gains tax rate by 5%, done in May 2003 should be rapidly phased out, specifically for the higher tax brackets. All rates, except for the lower income brackets, should be increased for for speculators. I don't know how much that would add back into the tax revenue stream, but I'd have to imagine it would be many billions, right there.
Next, the unbroken SSI system needs to be 'fixed'.
Right now, this 'tax' is a regressive forced savings system: it disporportionately effects those with lower income levels.
We keep hearing how the SSI system is supposedly going 'broke', which is a bald faced lie. The amount of money coming into the system today is more than adequate to fund the outlays. What should be 'broke' is the Federal Government hand, that is constantly in the cookie jar of the SSI trust fund, stealing from it.
To prevent outlays from exceeding input into the system {projected in 2030 or 2040, depending upon who you listen to}, a number of simple changes could 'fix' this.
Raising the retirement age, increasing the SSI tax rate and other such 'adjustments' could accomplish this, but more radical change is required to make this a truly progressive 'tax', something it has never been.
It's about time this change was made, and I'd love to see these two steps happen.
First off, the cap at $90K needs to be taken off: everyone should pay into the SSI system. However, the maximum allowable benefit schedule should be set to phase out as income increases. So, people that make more than $90K/year will put into the system, and but get diminishing returns; tapering to zero perhaps at income levels greater than $250K/yr or so.
Secondly, income from interest, dividends, distributions, sales of stock, property and real estate, which are all exempt from SSI tax should be included. Why should speculators and the rich be free from investing the overall welfare of the nation's working people?
Many advantages are immediately apparent: the SSI tax rate would drop dramatically, which would help the low and middle class workers. The system would be flush with tons of income.
It's time that those who don't work for a living, speculators, day traders and rich fat cats pay their minimum fair share. Personal tax exemptions need to be increased: those making below a realistic poverty wage level {about $20K for an individual, $35K for a family of 4}, should not be subject to any tax at all.