- Feb 10, 2010
- Reaction score
- In some grass near you
Andrew Fieldhouse: In Favor of Progressive Taxation and a Balance Approach to Budgeting
Looking to millionaires, and to high-income households generally, for more revenues is an appropriate response given recent trends in income and tax policy (see the EPI Issue Brief "The facts support raising revenues from the highest-income households" for a full discussion). At 17.4%, Warren Buffet's average tax rate is equal to the average rate for households with earnings between $50,000 and $75,000 in 2007, indicating that his average rate is less than many of these middle-income households. Average income tax rates typically peak between $1 million and $2 million in adjusted gross income, and then fall as households collect a greater share of income from capital gains and dividends, currently taxed at a 15% rate.
Buffet's call to Washington to "stop coddling the super-rich" could be directly answered by ending the preferential tax treatment of investment income over work income. More than half the benefit of preferential capital gains treatment goes to the top tenth of one percent of households, according to the Tax Policy Center. Reinstating higher tax brackets for millionaires would also help: the income cutoff for the top marginal tax bracket for married joint filers has fallen precipitously from roughly $3 million in the early 1950s (adjusted to current dollars) to $1 million in 1970, to $379,000 today.