Today is April 29, the anniversary of the passage of the “People’s Budget” in Britain in 1910, the first budget in history with the intention of taxing wealth to redistribute it.
- Oregon Initiative...
Last night, President Obama said that American needs a new tax system, but one that is only for people who make more than $1 million in a year. According to Obama:
"Tax reform should follow the Buffett Rule. If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you're earning a million dollars a year, you shouldn't get special tax subsidies or deductions."
Basically, the President is proposing a new "Super Alternative Minimum Tax" of 30 percent for anyone making over $1 million. So if your income is above $1 million, you have to pay 30 percent of your income in taxes, even if that income came from capital gains or dividends, which is normally taxed at 15%. Like the regular Alternative Minimum Tax - which was enacted in 1969 to prevent a handful of millionaires from paying less on their taxes but now impacts over 3 million Americans - this new Super AMT would reduce any deductions that might reduce your effective tax rate below 30 percent.
Tax Foundation economists estimate that the Buffett rule is equivalent of raising the top marginal rate from 35 percent to 44 percent. In other words, the average effective tax rate for millionaires is 25 percent. So, based on the current amount of deductions millionaires take, in order to raise their effective tax rate to 30 percent you would have to raise the top marginal tax rate to 44 percent. On a very static basis, we roughly estimate that this policy would raise $40 billion, assuming that taxpayers don't change their behavior. Compared to a $1.1 trillion deficit next year this is a drop in the bucket.
There are lots of unanswered issues here:
These are only a few of the issues the While House has not addressed - or simply overlooked - in their zeal to tax the rich.
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Today, the Tax Foundation released our new research on Initiative Petition 28 in Oregon, entitled “Oregon Initiative Petition 28: The Threat to Oregon’s Tax Climate.” If adopted, Oregon would rank worst in the nation on...