25 Percent of Millionaires Pay Lower Taxes Than 10.4 Million Middle-Class Americans

Discussion in 'Politics' started by Hardball_Refuge, Oct 14, 2011.

  1. Hardball_Refuge
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    Hardball_Refuge Member

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    This is interesting. According to the info below, there aren't all that many millionaire business owners, therefore the effect of the so-called Buffet Rule on job creation would be negligible. As an aside, the tax rates have been pretty low for years and many business owners seem to be sitting on capital rather than creating jobs anyway...
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    Report: 25 Percent of Millionaires Pay Lower Taxes Than 10.4 Million Middle-Class Americans
    by: Tanya Somanader

    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.

    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.

    Originally published on ThinkProgress
    http://thinkprogress.org/economy/2011/10/13/342705/report-25-percent-millionaires-lower-taxes/
     
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    Last edited: Oct 14, 2011
  2. bigrebnc1775
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    bigrebnc1775 Diamond Member

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    Link espesially from think progress.
     
  3. Hardball_Refuge
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    Hardball_Refuge Member

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    I didn't have enough posts to insert a link but I do now, so I'll go back and edit it. Also, here's a short article from Bloomberg corroborating the info:
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    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.

    The findings put the U.S. tax system in conflict with the so-called Buffett Rule, which says households making more than $1 million annually shouldn’t pay a smaller share of their income in taxes than middle class families, says the report, which analyzed 2006 Internal Revenue Service data.

    The Buffett principle was proposed by President Barack Obama in September after billionaire Warren Buffett, the 81- year-old chairman and chief executive officer of Berkshire Hathaway Inc., said it was wrong that he paid taxes at a lower rate than 20 other people who worked in his office.

    Obama has said the Buffett Rule should be a guiding principle of efforts to reform the U.S. tax code.

    The Buffett maxim and broader proposals by Obama and Democrats to raise taxes on the rich have been criticized as “class warfare” by some congressional Republicans.

    Voluntary Tax Payments

    On Oct. 5, Louisiana Republican Representative Steve Scalise introduced H.R. 3099, the Buffett Rule Act of 2011, which would authorize the IRS to print a box on tax returns that filers may check if they want to voluntarily pay more tax.

    Earlier this month, Senate Democrats proposed paying for Obama’s $447 billion jobs package with a 5.6 percent surtax on individual incomes exceeding $1 million. The jobs plan was sidetracked by the Senate yesterday after falling short of the 60 votes it needed to advance.

    Yesterday, Buffett declined the request of a Republican congressman to swap tax returns and reiterated his pledge to publish the form if other billionaires would do the same.

    The Congressional Research Service report found that, on average, millionaires paid federal tax at a 30 percent rate, while moderate-income taxpayers, defined as those earning less than $100,000, were taxed at 19 percent.

    The overall average, though, “obscures a great deal of variation,” including the finding that 25 percent of millionaires pay lower rates than 10 percent of moderate earners, the report found.

    The findings “would be considered a violation of the Buffett Rule, but not to the extent alluded to by Mr. Buffett,” the report says.

    Payroll Taxes

    The report says moderate-income taxpayers bear the brunt of the Social Security payroll tax because it applies only to the first $106,800 in wages.

    The tax is set at 12.4 percent, split equally between workers and employers. The portion of the tax that employees pay was temporarily cut to 4.2 percent in last December’s tax bill. Obama’s jobs plan proposes another temporary measure that would reduce the employee share to 3.1 percent and cut an employer’s share to 3.1 percent on the first $5 million of payroll. An additional 2.9 percent tax for Medicare is levied on all wages.

    In addition, the report says, a significant portion of millionaires derive income from dividends, capital gains or carried interest, all taxed at 15 percent. Ordinary income is taxed at rates ranging from 10 percent for low earners to a top marginal rate of 35 percent.

    The report found that a relatively small proportion of 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,” the report says.

    The findings of the CRS study are similar to an analysis last month by the non-profit Citizens for Tax Justice, a labor- funded research group based in Washington.

    ‘Buffett Rule’ May Be Broken by 25% of Millionaire Taxpayers, Study Finds- Bloomberg
     
    Last edited: Oct 14, 2011
  4. bigrebnc1775
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    bigrebnc1775 Diamond Member

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    Buffett owe one billion in back taxes nothing he says is viable
     
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  5. Zander
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    Zander Platinum Member

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    Individuals that earn over $1,000,000 per year pay an average of 24% in Federal taxes
    a middle income earner who makes $60k/year pays an average of 6%
    that is 4x more - isn't that progressive enough??

    The top 1% pay 40% of all federal income taxes, the bottom 50% pay nothing.


    Stop whining
     
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  6. Hardball_Refuge
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    Hardball_Refuge Member

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    -The Report is from the Congressional Research Service, not from Buffett. I seems to me you are putting up a straw man...
     
  7. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    I was looking at the tax tables too thinking the same thing.

    I believe that the person from the first post is confused as to the difference between personal income tax rates and capital gains taxes.


    But...still...lets assume the premise in the first post is true and provide a crazy example.

    A guy making 50,000/year is paying 30% tax rate...that is $15,000
    A guy making 1,000,000/year is paying a 5% tax rate that is $50,000


    It all depends on how you want to observe the numbers ;)
     
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  8. Hardball_Refuge
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    Hardball_Refuge Member

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    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.
    -I'm not whining, I'm just posting what the CRS reported. It seems as if the facts might be making you uncomfortable?
     
  9. bigrebnc1775
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    bigrebnc1775 Diamond Member

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    I think the liberals are bitching about the percent difference now that you put it out that way.
     
  10. American Horse
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    American Horse AKA "Mustang"

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    If they pay on unearned income as capital gains or as interest or dividend income, or if they deduct large parts of their income for foundations which go to worthy charities, then yes a lower percentage rate, but many multiples more than the ordinary middle class American.
     

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