More on the Buffett Rule and Class Warfare

September 21st, 2011 at 2:59 pm

The NYT has a useful piece on this principle that millionaires and up shouldn’t face lower taxes than the middle class.

Key points:

–as an ever-increasing share of the growth has flowed to those at the top of income and wealth scale, changes in tax policy have generally served to lower their tax burdens.

–these tax policy changes have been particularly significant for wealthy households with income from non-labor sources, like capital gains and dividends.  From the article:

Recent Treasury Department data gives a more detailed look at the group of taxpayers the administration is aiming at. In 2009, 238,000 households filed returns with adjusted gross incomes of at least $1 million. One-quarter of them paid an effective federal income tax rate of less than 15 percent, the data shows, and 1,470 paid no federal income tax at all.

–thus, in the interest and both fairness and the need for revenues to support critical government functions, advanced economies can no longer afford to support tax structures that allow the wealthy to shelter so much of their income.

There’s a powerful graphic documenting how 9 to 28 percent of households with incomes above $1 million pay federal income taxes that amount to less than 15% of their income (bottom panel), and the top end of that range—28%–refers to households with incomes over $100 million.

(Source: NYT–link above)

Now that right there is some serious class warfare.

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6 comments in reply to "More on the Buffett Rule and Class Warfare"

  1. Tyler says:

    If liberals vociferously advocate raising taxes and increasing spending, they are going to be labeled “Tax-and-Spend Liberals”.

    Jim Webb thinks it would be “terrible” to raise income taxes on anyone right now, and I tend to agree with him.

    If we’re going to make the tax code progressive, which I support, perhaps we should wait until after 2012.


    • perplexed says:

      Instead lets start now and make them retroactive to 1980. Give the money to single moms and the homeless and then they’ll be “the job creators;” this way, jobs will actually get “created”.


  2. pjr says:

    To me a powerful argument in favor of raising rates at the top is that the promises of politicians and many economists who recommended both the Reagan and Bush II tax cuts were worse than empty, and the cuts that they implemented need to be repealed. We experienced the direct opposite of “trickle down,” economic growth, and job growth from these tax cuts on the so-called job creators.


  3. perplexed says:

    Its time to get past the ideology and face up to how much damage this wealth and income concentration is doing to the country. The shortfall in demand this causes is a tax on the poor and employed the magnitude of which could be as large as the entire output gap.

    Let’s give the wealthy the ability to lower their own tax rates. There is no reason we can’t tie our marginal tax rates to our Gini coefficient and let them keep us in a reasonable range for wealth concentration that is good for the country as a whole. This will tie the incentives (at least the tax incentives) of the wealthy to the success of the country. If they know their tax rates will increase as they continue to leave the rest of the country behind, perhaps they’ll make decisions that benefit all of us instead increasing their after tax wealth at a cost to everyone else. Next time they want to move jobs offshore, dismantle regulations, or destroy unions, maybe they’ll think twice if they know their taxes will rise in order to offset the cost of the damage they do. As the rest of the country becomes more wealthy, they too would benefit from the lower rates as well.

    For a great explanation of the effects of taxes on wealth concentration check out http://nontrivialpursuits.org/Tax_Policy.htm


  4. Tom Cantlon says:

    But the graphics still show a very progressive tax system which is not accurate. It show many at the top paying 30 or more percent while those at the bottom mostly pay less than 15%. That may be true of fed income tax but that’s the flaw with looking just at that. Add in payroll and other taxes and it changes. Add in typical state and local taxes which are extremely regressive and you have what’s documented and graphed in http://www.ctj.org/pdf/taxday2009.pdf. If all we focus on is fed income tax and how much the wealthy are paying we’ll end up flattening it, and then the real picture, the total picture, will go from bad to worse.


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