Letter: Respectful debate continued

In his April 13 letter "Respectful debate needed,” Richard Breaux threw around a bunch of federal income tax numbers without putting them in context. He notes that 1 percent of wage-earners pay 37 percent of the federal incomes taxes while the bottom 50 percent pays about 3 percent. Is he trying to say someone is not paying a "fair share?”

To be in the top 1 percent you have to earn over $380,000 (adjusted income) while the bottom 50 percent earn less than $33,000. In other words, the top 1 percent earn over 10 times as much money as the average taxpayer. When you consider that the bottom 14 percent are in poverty — they don’t pay income tax — that 37 percent to 3 percent comparison is in the ballpark for "fair.”

But the top 10 percent owns 80 percent to 90 percent of stocks, bonds, trust funds and business equity, and more than 75 percent of non-home real estate. When you consider that most of this is taxed in the form of capital gains — a lower rate (15 percent) than the ordinary rate (35 percent) — you begin to see the true disparity. This becomes crystal clear when you see that the top 1 percent pays less taxes as a percentage of income than the next 9 percent simply because they have more capital gains income.

If we want to make the tax system more "fair,” the first thing we should do is eliminate the capital gains tax rate and treat all income as income.

So Breaux is going down the wrong path when he says, "The real debate is how to pay for ... things: More taxes or reduced spending.” The real question is, why do the wealthy not pay their fair share?

J. Mike Hedblom

Redwood City