Bar stool economics

[Heywood]

Percent-wise, the rich pay less. A good measure of what should be payed is the percent of the total profit minus cost of living. The riches cost of living is a very tiny percantage of their income. The poors cost of living is a large portion of their income.

I don't even agree with this comment because often the same profits are taxed twice. A rich person(or anyone who owns stock for that matter) can be paying over 40% tax on their share of corporate profits.

I own stock in Intel. For the quarter ending September 27th 2014, Intel's effective income tax rate was about 27% . Then from those profits I am paid a dividend...which is then taxed again!.

Suppose Intel earned $1000. $270 would be paid to the government as tax. That leaves $730 dollars. Now suppose I am the sole share owner(for simplicity sake) and that $730 is distributed to me as a dividend. Up to another 20% of that $730 goes to the government....leaving $584 dollars. From the original $1000 the government took about 41%. I have 416 dollars less than I would have had if the government did not tax at all.

The government takes two bites out of the same pot because it makes it look like they are taxing less than they are. When you pay your dividend tax....you don't feel too bad that your share of a corporate profits are only taxed at 15-20%....but really it is much much higher than that.

Corporations should be taxed only on retained earning. Dividends should be taxed at the individual rate. If we did it this way the nominal tax rate of the rich would be much much much higher.