Warren Buffett’s New York Times Op-Ed piece, “A Minimum Tax for the Wealthy,” has created quite a stir. The Omaha, Neb.-based billionaire has railed for higher taxes on what he calls “rich Americans.”
Here’s a snapshot of Buffett’s argument:
“We need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30% of taxable income between $1 million and $10 million, and 35% on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra-rich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.”
1) What’s “Fair?”
Buffett is part of a misinformed constituency that believes high-income earners aren’t paying enough taxes. What do the facts show?
Here’s what the Heritage Foundation’s data shows:
“The data show the highest-earning families and businesses already pay the lion’s share of the federal income tax burden. According to the IRS, the top 1% of income earners—those earning more than $380,000 in 2008—paid more than 38% of all federal income taxes while earning 20% of all income. The top 10% ($114,000 and above) earned 45% of income and paid 70% of all taxes. At the same time, the bottom 50% of income earners—those earning less than $33,000—earned 13% of all income and paid less than 3% of federal income taxes.”
Is increasing taxes on the minority of tax payers who already pay the majority of taxes really fair?
2) Tax increases aren’t a panacea
What kind of impact will tax hikes have on the U.S. government’s balance sheet? Will it reverse Washington’s insatiable desire to spend now and ask questions later? Will it substantially reduce the nation’s crippling $16.39 trillion in longer-term debt?