Why We Need a Buffett Rule
Seven Convincing Reasons
SOURCE: AP/ Shuji Kajiyama
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In recent months President Barack Obama articulated a fairness principle known as the “Buffett Rule,” named after billionaire investor Warren Buffett, who disclosed that he pays a smaller percentage of his income in federal taxes than his secretary. The Buffett Rule holds that no millionaire should pay a lower effective tax rate than middle-class families.
On February 1, Sen. Sheldon Whitehouse (D-RI) introduced the Paying a Fair Share Act of 2012. The bill would turn the principle behind the Buffett Rule into a rule of the U.S. tax code, requiring that all households with incomes above $1 million pay at least a 30 percent minimum tax rate (with a phase-in for incomes between $1 million and $2 million).
Here are seven compelling reasons why we need a Buffett Rule.
1. The incomes of the top 1 percent have skyrocketed over the past three decades, nearly quadrupling and leaving middle-class incomes far behind. Rising inequality has meant that the very rich have captured an outsized share of the country’s economic gains.
2. During these same years, tax rates on millionaires dropped sharply as a result of the Bush tax cuts and successive rounds of tax cuts on investment income (capital gains and dividends).
3. A large number of millionaires are now paying lower taxes than millions of middle- class Americans.
4. While many at the top continue to pay lower taxes than those below them on the income scale, the entire burden of deficit reduction falls on investments and services for the middle class.
5. The Buffett Rule would raise significant amounts of revenue to address our budget challenges, while affecting a tiny percentage of people who can easily afford it.
6. The Buffett Rule enjoys broad, bipartisan support.
7. And that’s because the rule would restore fundamental American values.
Seth Hanlon is Director of Fiscal Reform at the Center for American Progress.
- Ronald Reagan, Father of the ‘Buffett Rule’ by Seth Hanlon and Michael Linden
- Issue Pulse: Support for the Buffett Rule
- Many Millionaires Do Enjoy Lower Tax Rates by Sarah Ayres
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