Tax Fairness – this is a phrase that you are likely to hear a lot in the coming months. It seems like this is the phrase the the Obama campaign has decided best describes his push to get the Buffet Rule passed in congress. While not my favorite way to frame this issue -I think simply saying that we should go back to the Clinton era tax rates when we had a surplus would work. In fairness, the Buffet Rule does go one further.
Poor People Don’t Pay Taxes – Debunked
Complete BS. People who do not pay Federal Income tax do still pay:
- state income tax
- local sales tax
- state sales tax
- local property tax
- payroll tax
- excise tax
- and dozens of others…
Top 1% Control 42% of Wealth in the US – only pay 37% of Federal Taxes
Victims eh? Sounds like a pretty good deal to me. The simple truth is that if you make more than a million dollars a year, you will be able to afford a great tax lawyer to find ways to pay much less tax (percentage-wise) than those in the middle class. Everything completely legal and (at present) ethical. So, instead of paying between 25-30% like most in the middle class, they end up paying a lot less.
A big part of this is the tax rate on investment income. This is much lower than normal income (like from salary). This is in place to encourage investment, which in turn would create more economic activity. It is for society to decide whether this is worth the cost.
Now would the Buffet Rule fix this situation? Well, you have to admire the simplicity of it (something you don’t get much of from the Obama camp). You make above this much, your minimum tax is this. Probably much more symbolic that realistic, if it comes up to a vote, it will make politicians go on record as for or against it – which, that is pretty much the point.
Buffett Rule Rorschach: 7,000 Millionaires Paid No Income Taxes in 2011 (from The Atlantic)
The White House’s new campaign banner/economic principle is the so-called “Buffett Rule,” which holds that no millionaire should pay a lower effective tax rate than a typical middle class family. Sound sensible, yes? Of course it does. The tax code is progressive and purposefully so. Marginal income tax rates increase with income. The more you make, the greater share of income you pay. Disagreeing with this general principle puts you to the right of a typical Republican.
But the Buffett Rule wasn’t meant to hold up to strict constructionism. “You cannot build a tax code on the principle that no millionaire, ever, should ever have an effective tax rate lower than their secretary,” myAtlantic colleague Megan McArdle wrote this morning. Well, you could, she allows, but you’d have to give the IRS extralegal responsibilities to seize rich people’s income beyond what they owe.
To understand why, consider the 76 million people who don’t legally owe individual income taxes in 2011 (please, please note: does not include payroll, excise, state and local taxes). The vast majority of this group was poor. They didn’t owe individual income taxes because they didn’t owe a lot of money to start, and various exemptions, like the earned income tax credit, wiped out the rest.
But among families making more than $100,000, there were also half a million tax units — enough to replace the population of Tucson, Arizona — that also paid no income tax. Even more surprising, 7,000 millionaires also paid no individual income tax.
Let’s focus on these 7,000 tax payers. I think they help to show why, even if the Buffett Rule is a sensible principle, it wouldn’t be a commonsense law.
for more – click HERE
Below is a message from James Kvaal, National Policy Director for Obama for America.
Here’s a perfect example of the choice in this election:
Right now, some millionaires and billionaires are paying a lower tax rate than their secretaries.
President Obama wants to fix that with the Buffett Rule, which would ensure that people making more than $1 million a year can’t get special deals to pay a lower rate than many middle-class families. It’s an important part of his plan to reduce our deficit, pay for investments in programs to help our economy grow, and make the middle class stronger.
The President, Warren Buffett himself, and hundreds of thousands of supporters think it’s the right thing to do.
When it comes to our broken tax system, Romney is proposing additional breaks for the folks in the very highest brackets (folks like him, incidentally). He’d pay for them by cutting programs that invest in the middle class and help grow our economy, and by gutting Medicare and Social Security.
It comes down to a simple contrast in priorities.
If you believe we need commonsense solutions that ask everyone to pay their fair share to reduce the deficit and invest in the programs that grow our economy and strengthen the middle class, then show it.
Say you’re with the President on this, and that you’d like to see the Buffett Rule passed by this Congress:
National Policy Director
Obama for America
P.S. — After adding your name, check out our new Buffett Rule website to see exactly what the rule does, who’s behind it, and how you can help.