President Obama’s “Buffett Rule” is aimed at ensuring that wealthy Americans pay their fair share in taxes. As it stands today, a wealthy individual can take advantage of preferential tax treatment of investment income and various tax loopholes to drastically lower his or her tax rate and effectively pay lower taxes than middle-class families. To prove the point behind his namesake, billionaire Warren Buffett revealed to Republicans yesterday that he made more than $62 million last year while only paying a 17 percent tax rate.
It is not surprising that Republicans like GOP candidate Mitt Romney who slam the Buffett Rule as “class warfare” simultaneously benefit from the same sort of preferential treatment. In fact, a new report by the non-partisan Congressional Research Service finds that 25 percent of the nation’s millionaires have a lower effective tax rate than 10.4 million middle-class Americans:
About 25 percent of millionaires in the U.S. pay federal taxes at lower effective rates than a significant portion of middle-income taxpayers, according to a legislative analysis.
Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million “moderate-income taxpayers,” representing about 10 percent of those making less than $100,000 a year, according to the report by the non-partisan Congressional Research Service dated Oct. 7.
In direct conflict with a favorite Republican talking point, the report also found that very few business owners are millionaires and “played down the impact of higher tax rates on job creation.” “The small share of taxpayers with small-business income in the millionaire category suggests that tax reform policies designed to ensure adherence to the Buffett Rule will affect few small businesses,” it said. This bolsters the claims from economists and business owners alike that higher tax rates on the rich make “zero difference” in hiring.
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Numerous polls continually show that Americans support raising the tax rate on millionaires. But rather than raise the rates on those who should pay their fair share, Republicans respond with even more tax increases on the middle class. “Class warfare,” indeed.