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To: thames_sider who wrote (12568)	5/9/2002 8:51:50 PM
From: TimF	Respond to of 21057

"How does "reducing taxes benefit the rich at the expense of the poor"....????" Shift from income tax to sales tax (VAT) - disproportionate benefit to those who can afford to shop abroad, and/or earn enough to save (so do not need to spend all income just to survive), Thats a benefit to the rich at the expense of the poor from having a larger percentage of the tax be from VAT. I don't think KLP's question was about shifting the tax, bur rather actually reducing it. and/or can use the particular ability of the rich to evade taxes - as they do, worldwide... Rich people will try this whatever the tax rate but they are more likely to make the effort if tax rates are high. Lowering the tax rate reduces the amount of tax cheating because the return from cheating is lower while hassle and expense is not. I'm in top decile. OTOH, I pay ~45% (somewhat under 1/2) overall, covering all taxes and other unavoidable government/local charges. I thought it would be higher. The UK has a reputation for having higher taxes then the US and I am not in the top decile, but if you add my federal income tax, state income tax, property tax, personal property (car) tax, sales tax, social security tax (including medicare and including the employer's contribution), gas tax, phone tax, ect. I probably pay over 50%. The rich (say, earning $5M+/year) pay nearer ~15% becasuse they have all kinds of havens, shelters, etc, have the accountants to find these, and don't spend most of their available income each year anyway... I don't think the effects of the tax shelters is quite that large here. The rich in the US pay a larger percentage of their income in incomes taxes then the non rich. Also if they don't spend the money right away then they either spend it later (and pay tax at that time) or pass it on to the next generation and taxes are probably paid then. Tim