The Three Things You Need to Know About Millionaire Tax Rates
A new report from the nonpartisan Congressional Research Service shows that enacting a “Buffett rule” to ensure millionaires do not pay a lower tax rate than middle-class families would solve a very real injustice in our tax system. Many millionaires pay a much lower tax rate than even the lowest-income Americans. Across the country, there are millions of middle- and low-income families who are paying their fair share in taxes, while millionaires pay far less.
1) One quarter of millionaires pay a lower tax rate than 10 million middle-income Americans. There are about 94,500 millionaires who pay a tax rate of less than 26.5 percent, while 10.4 million Americans who earn less than $100,000 annually pay a tax rate greater than 26.5 percent.
2) There are more than 4,000 ultramillionaires who pay a lower tax rate than 10 million middle-income Americans. Of millionaires who earn more than $5 million a year, 4,400 pay a tax rate of 23 percent or less, while 10 million Americans earning less than $100,000 annually pay a rate greater than 26.5 percent.
3) More than half of taxpayers who earn between $100,000 to $200,000 pay a higher tax rate than 33,000 millionaires and 4,400 ultramillionaires. More than 30,000 millionaires who make between $1 million and $5 million annually pay a tax rate of 24 percent, and 4,400 millionaires who make more than $5 million pay a tax rate of 23 percent. But half of individuals who make between $100,000 to $200,000 pay a rate higher than 24.6 percent.
The fact that billionaire Warren Buffet pays a lower tax rate than his secretary is not the result of a rare trick of accounting. On the contrary, this report shows that a great many millionaires pay a lower tax rate than that faced by the secretaries and janitors who work for them. Implementing the Buffet rule would rectify a problem that is both legitimate and widespread.
Sarah Ayres is a Research Associate in the Economic Policy department at American Progress.
. Thomas L. Hungerford, "An Analysis of the ‘Buffett Rule’" (Washington: Congressional Research Service, 2011)
- Many Millionaires Do Enjoy Lower Tax Rates by Seth Hanlon