October 1, 2001

Dear Editorial Board:

Some say a cut in the capital gains tax would help the wealthiest Americans. What else is new?

Since America's birth tax laws have favored the rich. Prior to 1913, Americans mainly paid excise taxes. Excise taxes are levied on a particular product, e.g., tea. The wealthy knew they didn't drink anymore tea than the average Joe, and by using excise taxes, the wealthy avoided paying their fair share: an amount equal to what they earned and not just on what they consumed.

However, after 137 years, the middle-class caught on, and in 1913 we had Federal Income Tax. But, the tax had loopholes for the wealthy, and basically just taxed the middle-class even more (it made little difference the highest tax bracket was 90% with so many loopholes).

Loopholes such as charitable contributions where a wealthy person could donate an amount of money to a charity of their choice and write-off an equal amount. The middle-class didn't get to pick where their tax dollars went, plus, they didn't get any credit for what they did give. Whereas, the wealthy get their names plastered all over the front of local newspapers, giving praise to Mr. Wealthy for contributing $25,000 to the YMCA.

Loopholes such as Payroll Taxes (a.k.a. Social Security Taxes). In 1936 the politicians got together and said they needed a retirement plan for the old. They came up with Payroll Taxes. But, low and behold, there was a cap on them: you didn't have to pay Payroll Taxes over a certain amount. That way the middle-class paid for most of the benefits the old received.

Loopholes like capital gains and I'm not referring to the taxes on them. The wealthy knew they had much more money than they needed, they also knew it takes money to make money. By allowing company stock to grow tax-free, the wealthy could hold stock (90% of all stock is owned by the wealthy), not pay taxes on the gains and thereby maximize their investment returns. If they did need the money, they had to pay no penalties like the middle-class has to with IRAs, and the taxes they would pay, would be less than the normal rates.

My mother has been reading the Union-Bulletin for 54 years and she knows nothing about what I have discussed. What is it the wealthy and the news media want to hide, or at the very least, not get out in the open?

Sincerely,