Here is a fact check from the AP on the often heard rhetoric that the rich don’t pay enough taxes:
President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are.
“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it,” Obama said as he announced his deficit-reduction plan this week. “It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.”
On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office. [Associated Press]
This argument about the rich not paying enough taxes is really annoying me because overall the rich are paying their fair share in taxes. A more accurate argument would be that some of the rich are not paying their fair share just like some people in other income brackets are not either.
If you read the rest of the article it explains how rich people that live off investment income like President Obama’s buddy Warren Buffet who pays only 15% in taxes on that income. If Warren Buffet paid himself a salary he would be taxed at the 35% level. Very few people are wealthy enough to do this and thus the reason why overall the rich are paying their fair share. At the same time the article also points out how 46% of taxpayers pay no income tax after deductions.
It seems to me that to solve the income tax versus capital gains tax problem with people like Warren Buffet is to charge them at a higher level for the capital gains tax if they are paying no income tax. Maybe 20%? As far as people paying no income tax it seems to me that everyone should at least pay something in tax. Maybe there should be a tax reform to where everyone has to pay at least 5% in income tax after deductions?
I also think that letting the Bush tax cuts expire is a good idea when combined with a drop in the capital gains tax to maybe 10%? I think this would cause people to invest money knowing that they are paying less in capital gains taxes to compensate for their increased income taxes?
Anyone have any better ideas other than playing the class warfare card?