Here’s a simple idea on what to do about taxes for the wealthiest Americans:
For those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
Before arguing the merits of this proposal, I should point out something important: it’s not my proposal. No, this is Warren Buffett’s proposal as detailed in his courageous Op-Ed in yesterday’s NY Times, Stop Coddling the Super-Rich.
Some shocking (to me) tidbits from the Op Ed: Warren Buffett paid 17.4% of his taxable income (about $7M) in federal income tax last year, less than the other 20 people in his office – this because most of his income is in the form of “carried interest” rather than (for a regular working Joe) in payroll taxes. This is why, even though the aggregate income of the 400 richest Americans has increased more than five-fold in the last 20 years – from $19.6 billion to $90.9 billion (an average of $227 million in annual income!) – the tax rate paid by this group has dropped over this period from 29.2% to 21.5%.
Of course the tempting headline to write is something like: “FEDERAL TAXES PAID BY THE RICHEST AMERICANS HAVE DROPED BY ONE THIRD IN THE LAST TWO DECADES.”
But that’s exactly the approach that’s not going to work – think of the cries of “class warfare” that would result.
In fact the whole narrative around the budget stalemate in Washington is completely stuck, and part of the reason is because we have no shared language to talk about this problem. Republicans talk about “raising taxes on the rich” and “killing jobs,” while Democrats, at best, talk about the super-rich “paying their fair share” and about “increased revenues.”
I wish there were more talk of solidarity. A close friend of mine in Tokyo shared that almost no one is turning on their air conditioning in the wake of the Fukishima nuclear plant disaster. Can we not have the same sense of shared purpose around turning around the U.S. economy – the crisis is real, millions are out of work, people have gone from spending six months looking for a job to, now, more like two years. (Buffett: “While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.”)
How long until we turn the budget conversation from one about divvying up a fixed pie to one about collectively solving this problem? And why is it so hard to talk about the notion that the wealthiest should not, on average, pay a lower percentage of their income in taxes than should middle class Americans?
As Warren Buffett said, “I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them…My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”