With the disclosure by Romney of paying Fed income taxes around 15%,
he has collected his share of attention. While Buffet
pays the same tax rate, he advocates falsely for higher taxes of the
rich. So there are several things wrong with this notion.
First higher tax rates on the rich do not gain more tax revenue, but
less. In 3 time periods lower top marginal tax rates increased
Second, the rich already pay more taxes than any other group.
Third the issue is not taxes on the rich, but spending and a
consistently negative business strategy by liberals.
So the White House is licking its lips on this disclosure by Romney,
as the class warfare campaign is gaining favor amongst the Left.
Too bad that this blame the rich is loosing favor in the general public,
despite NYT’s and other liberal media attempts to tilt issues away from
the core or real ones.
WSJ article on the top taxes paid:
This all-too-conveniently confuses the incidence of a tax with the
burden of a tax. The marginal tax rate on every additional dollar of
capital gains and dividend income from corporate profits can reach as
high as 44.75% at the federal level (assuming a company pays the 35% top
corporate rate), not 15%.
The Congressional Budget Office recently examined the distribution
of federal taxes on various income groups. The report was ballyhooed by
liberals as proof of rising income inequality, but that argument is for
another day. What everyone has ignored is what CBO found about the
relative taxes paid by different groups. And, lo, the rich pay more,
which is probably why the press didn't report it.
The nearby table from the CBO report shows that in 2007 the average
income tax rate paid by the 1% was 18.8%, compared to 4.2% for Americans
in a broadly defined middle class from the 21st to 80th income
percentiles. The poorest 20% on average paid a net negative income-tax
rate of 5.6% because of the checks they receive for tax credits that are
"refundable." These are essentially transfer payments redistributing
income from the rich and middle class to the poor.
As for all federal taxes, CBO found that in 2007 the top 1% paid an
average rate of a little under 30%, compared to 15.1% for middle-income
earners. In calculating this overall tax burden, CBO takes account of
payroll taxes, which moves the rate of the lowest 20% of earners into
positive territory at 4.7%. CBO also apportions to individuals who are
shareholders the tax that corporations pay on corporate profits.
The main point is that the average effective tax rate on the richest
1% is already twice as high as that of the middle class. No matter how
many times Mr. Buffett asserts it, secretaries and plumbers do not on
average pay a higher tax rate or less in taxes than do CEOs.
what the CBO concludes: "Taken as a whole, the federal tax system is
In any event, raising tax rates has not over time succeeded in
increasing tax shares from the rich. When the top income-tax rate was as
high as 70% in the 1970s, the top 1% paid about 19% of all federal
income taxes. At the current rate of 35% the top 1% pay just under 40%
of all income taxes. Liberals say this is because the rich earn a larger
share of income. But when tax rates are lower, the rich have less
incentive to seek tax shelters and more incentive to put their money to
work in income-earning, revenue-producing ventures.
Here is what the CBO concludes: "Taken as a whole, the federal tax system is progressive."