[Karma Police]

It depends on what you mean by "punish." If it's punishment to have to pay taxes, then everyone who pays is being "punished," not just the rich. There seems to be the view that the rich pay much more in taxes than regular people. Let's take a look at a couple of examples, using round numbers:

1. Middle Income Wage Earner with $80,000 Income (not rich)

In 2005, the marginal income tax rate applicable to ordinary income of an unmarried individual with taxable income between $53,500 and $115,000 was 28%. In addition, such an individual would bear employment taxes of wabout 15% (employee and employer portions). So, the total tax on this person's income was around 43%.

2. High Income Executive with $1,000,000 Income (rich)

In 2005, the marginal income tax rate applicable to ordinary income of an unmarried individual with taxable income above $250,000 was 35%. However, such an individual would bear employment taxes of only 2.9% (employee and employer portions) on wage income over about $90,000. So, for the first $90,000 or so, he would pay tax at a combined marginal rate of around 43%. For amounts over 90,000, he would pay tax at a combined marginal rate of no more than 38%, which is significantly less than the 43% rate paid by the middle income worker.

The super-rich taxpayer who does not work for a salary pays a 35% rate on ordinary income and a 15% tax on capital gains and dividend income, which are not subject to employment or self-employment taxes.

A husband and wife can make an unlimited amount of money and never pay any gift or estate taxes during their lifetime. If the estate tax applies, it doesn't affect the person who created the wealth, but only reduces the wealth received by heirs, who did nothing to create it.

From the heir's perspective, it hardly seems like "punishment" to receive $10 million for doing nothing instead of $20 million for doing nothing.