Treasury Secretary Geithner yesterday declined to answer a key question about the president’s proposed “Buffett Rule”: How many millionaires and billionaires pay lower tax rates than middle-income families?
The answer: not that many.
The nonpartisan Tax Policy Center has crunched the numbers and found that Warren Buffett and his secretary are the exception to the rule. For the most part, the wealthy pay a significantly higher percentage of their income in taxes than middle-income workers.
The key numbers: this year those earning over $1 million will pay, on average, 29.1 percent on federal taxes. Those earning between $50,000 and $75,000 will pay 15 percent.
That’s not to say that there aren’t wealthy people who are even better than Buffett at avoiding taxes. In 2009, 1,470 people with incomes over $1 million a year paid absolutely no taxes. But that represents less than 1 percent of those earning over $1 million a year. Raising their taxes may be the fair thing to do, but it will not bring in much revenue.
The Cato Institute has a lovely graph of income tax rates by income earned.
Well, how much revenue can we generate if we take 100% of everything that people making over earn? (Assuming that they keep working solely for the government, of course, which Democrats would assume)
So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation’s debt by 1%. Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent. There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand.
Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion.
George W. Bush’s last deficit, with a Republican House and Senate, was 160 billion. But Obama’s deficits are about TEN TIMES that amount.
But Obama’s current annual budget deficits exceed 1.53 trillion. So taxing the rich at 100% isn’t enough to pay for All of Obama’s spending. That’s how big a hole Barack Obama has got us into.
By the way, Warren Buffett’s blathering about wanting to pay more taxes is a load of garbage. His company is currently in a dispute with the IRS to avoid paying as much as ONE BILLION DOLLARS in back taxes. You would not have heard of this if all you watched was Jon Stewart and Stephen Colbert on the Comedy Channel, or Chris Matthews and Rachel Maddow on MSNBC.