THE STUDY APRIL 10, 2012
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In remarks today, President Obama reiterated his support for the “Buffett Rule,” the idea that millionaires should not a pay a lower share of their income in taxes than middle-class families do. The Senate is taking up a bill that enforces that rule, though it’s not expected to go anywhere before the election, and Republicans have denounced it as a political ploy that would hurt small businesses and destroy jobs. What would the impact of that legislation be?
A 2011 report from the Congressional Research Service argues that Buffett Rule-style reforms are hardly the disaster-in-waiting that Republicans imagine them to be. The study estimates that about one-quarter of all millionaires pay a smaller percentage of their income in taxes than moderate-income taxpayers (with adjusted gross incomes under $100,000) do. That’s about 95,000 people. And to make their tax payments satisfy the Buffett Rule, lawmakers would probably have to raise taxes on long-term capital gains and let the Bush tax cuts finally expire. In some corners, these proposals have been met with doomsday warnings, but again, the CRS says there’s little to worry about: “Research suggests that these reforms are unlikely to affect many small businesses or to deter saving and investment.”
3 comments
Surely higher rates will change the conduct of the rich. Romney will put more of his money into an offshore account. Years ago, before Reagan, dividends were taxed at a top rate of 70% and earned income maxed out at 50% (Plus FICA) . Now dividends max out at 15% and earned income maxes out at 35% (Plus FICA and Medicare). After Reagan's 1986 Tax Reform Act, there was no special lower capital gains tax rate. Now there is. Higher rates, lower rates, stupid Bush rebates -- we have had good economies with higher rates and crappy economies with lower rates.
- Nusholtz
April 10, 2012 at 5:50pm
The Buffett Rule isn't a serious policy proposal, it's a stunt, and it deserves about as much attention as Pippenger gives it, which is two short paragraphs. The danger for Obama and the Democrats is that, with the Bush tax cuts expiring at year-end, Romney most likely will submit a tax reform proposal (cut both tax rates and tax expenditures) that appeals to the American sense of fairness, a proposal that lots of VSPs will support, and which will make the Buffett Rule look like the stunt that it is. I hope I'm wrong, but if 2010 is a guide, Obama will come up with nothing. [No, I don't support a Bowles-Simpson version of tax reform, which is the type of reform I suspect Romney will endorse, mainly because it is a recipe for endless deficits because, while tax expenditures grow like kudzu, tax rates, once cut, require special dispensation from God to increase. But it does appeal to the American sense of fairness, even if in practice it won't achieve it.]
- rayward
April 11, 2012 at 7:40am
End the tax system. Declare the United States a theocracy, call the system of paying for public expenses, tithes, make everybody pray to get paid or welfared, and we will all live happily ever after in Heaven. By the way, religion is the ultimate Ponzi scheme. Nobody ever returns to complain there is no "there, there."
- skahn
April 11, 2012 at 11:25pm