Monday, the Senate rejected the “Buffett Rule” aimed at achieving greater tax fairness. On Tuesday, millions of American taxpayers — from working people to multinational corporations — closed their books and filed their taxes before deadline.
Wednesday, America’s super-rich laughed all the way back their high-rise office suites and vacation homes as yet another tax year has passed with nothing done to correct inequity in our tax system.
Thanks to Senate Republicans (minus Maine’s own Sen. Susan Collins), Warren Buffett’s secretary will continue to pay a higher tax rate than her billionaire boss. As Maine’s senator, I would support the Buffett Rule and tax fairness generally. Here’s why.
Consider a hardworking couple. Say an electrician and a dental hygienist, both skilled and successful, parents of three kids. The family enjoys a comfortable life but money can still be tight given the costs of education, heating oil and gasoline, and chipping in to help aging parents on fixed incomes. Under our tax system, this family easily could pay a federal tax rate of 28 percent.
Here’s the unfairness: that rate is about twice as much as Warren Buffett and Mitt Romney pay on incomes many times larger.
Many of America’s super-rich earn most of their money through investment — money made moving money. Such “capital gains” are taxed at just 15 percent. This is a major reason Buffett can pay lower tax rates than many ordinary working families.
The old saying goes: The rich get richer. However, when taxation was fairer, the rich paid their fair share and middle-class people and even the poor did better too. For more than a decade now, most average folks have been economically standing still or falling behind. Now the middle class shoulders the tax burden and America goes further into debt.
Certainly, any system that rewards risk and effort will produce varied financial outcomes. In other words, some inequality is to be expected. But when those with money and power rig the rules to create a winner-take-all system, ordinary working people find it increasingly hard to get ahead. The country as a whole loses out.
The Buffett Rule is a step toward fairness. It does not go as far as taxing capital gains as ordinary income as was done under President Ronald Reagan, nor does it set a higher marginal tax rate as was the law under Eisenhower and Nixon. Instead, it simply ensures that people earning more than $1 million per year will pay a minimum effective tax rate of 30 percent, still lower than the current maximum of 35 percent.
Opponents call the Buffett Rule a “gimmick,” saying that it won’t solve the debt crisis. True, but not a fair test. No single measure eliminates the national debt. It will take years to undo years of fiscal irresponsibility. The Bush tax cuts, two wars, subsidies for Big Ag and Big Oil, the Medicare Part D giveaway to Big Pharma — all helped dig the fiscal hole.
Having the super-rich pay a fair share is a good start. Besides, last year’s debt-ceiling debate made plain that congressional Republicans would not vote for an Obama tax overhaul if it was chocolate-coated and gutted half of all federal regulations. We cannot wait for a “super fix” from another “super committee.”
Today, the gap between the super-rich and everyone else is wider than it has been in four generations. America thrives when we share the view that we are in it together. Our national identity, “the American Dream,” is built on the promise of equal opportunity.
Complaints that the Buffett Rule is either too much or too little boil down to something else: Washington lacks courage. Not since presidents named Roosevelt have we told the rich and powerful that they cannot get it all.
The Buffett Rule provides a little tax equity, shows movement toward a balanced budget, and signals that the middle class still matters in America. Let’s hope tax fairness is an idea whose time has come again.
Jon Hinck, D-Portland, represents District 118 in the Maine House of Representatives, where he serves on the Energy, Utilities and Technology Committee. He is a Democratic candidate for the U.S. Senate.
Props to Susan Collins for voting against party lines.
Hoorah my butt ! She see’s the writing on the wall. With the Buffet Rule all but killed due to extremeist GOP’rs and her own State being run on a ‘who’s is bigger’ concept right now, Susie Collins is seeing that unless she starts acting, and voting, on the impact that these issue’s have on her constituent’s then she had better start packing to come home and run the family business with her brother. Add to this is the all but inevitable election of King, and Susie is going to have a hard time defending her voting record when she start’s being opposed by Maine’s other Senator. The days of the smiling ‘stroke’ are gone. Oly saw that coming and she was smart enough to get out in one piece, so far. Now if Susie ever expects to get re-elected, then she had better decide just whose interests she represent’s ’cause from this point on, courtesy of Paulie and Company, it’s only gonna get rougher. And with the Maine GOP’s making a complete ‘Do nothing’ pile of moosepoop out of itself by refusing to participate in the actual legislative process, Susie is gonna have a lot of explaining to do as to why she’s still in the GOP. Leiberman in Connecticut had to go thru this and see where that wound up.
The time to show political courage is now and it’s not just in tax policy or being a professional finger-pointer. It’s way past time for our elected official’s to stand up for who they’re elected to represent, not who shoves pile’s of cash into their re-election campaign coffer’s or jumps on the Grover Norquist bandwagon for fear of being labeled a ‘dirty spending liberal’. Spending on investment isin’t just spending. It’s investing and that’s what always drives the economy, politics be dammed ! And investment is what the country needs. That the GOP wants a guaranteed return just shows me that the GOP is missing the other half of the free enterprise concept, namely risk of investing. And that’s where Due Dilligence comes in. That the GOP wants to skip this whole process and go straight to profit’s tells me that someone needs to go back to their Economics 101 class and re-read their text’s. Keynes, Friedman, even Adam Smith all knew these principle’s. Someone needs to go back to school !
If the super rich just laughed their way back to their abodes, satisfied with their current low rates of tax, that would be tough to take while we build a debt that will be shouldered by our children and grandchildren. what is mind-boggling is that they will ask for further breaks, and even more mind-boggling, there will be low and middle income taxpayers commenting here that the rich should keep their tax cuts and deserve more.
-Not until we figure out how to pay for what we spend and make the tough choices with regard to how we cut that spending.
How about cutting subsidies to oil, big ag, and job-exporting corporations before we attack social security and medicare – earned benefits that millions of Americans need to get by. Next, ax the bush tax cuts and institute reforms like the buffet rule as first steps to balancing the budget.
You would only create enough revenue to pay the interest on the debt for a very short period of time. Spending has to be brought under control. We need to stop with all this election year class warfare.
I have often found that people that want to cut “subsidies to oil” don’t know what they actually are.
Do you?
Because there is none, the subsidies are actually taxes they pay…..
Close. The biggest subsidies the oil companies get is accelerated depreciation on failed/ sub par old drilling rigs and associated equipment.
Normal depreciation might be 7 or 15 years depending. But suppose an oil well fails or ends its serviceable life before then? All that now useless equipment can be depreciated immediately when taken out of service.
By the way lots of companies have this tax accommodation, its just sounds better if you call the ones Oil gets a “subsidy”.
You hit the nail on the head.
Buffett rule? Buffett owes 350 millon in taxes that he is fighting in court right now. Why doesn’t he want to pay his fair share
A low tax rate on dividends is fair.
I pay tax on the money I earn. I use what is left to buy a stock.
In order to pay a dividend, a c-corporation must have taxable earnings. Only after they pay corporate income tax can they send me a dividend.
Then the government wants more tax paid on that dividend.
Three times the government confiscates my property. The only pig at this trough is the government.
As for capital gains, any asset bought and sold within a year is treated as ordinary income. Only assets held for a year or more are subject to the 15% rate. And this was done for a reason…. to encourage long term investing. Investing is good for the country. Besides, much of the so-called gain on long-held assets is merely price appreciation due to inflation. Yet the tax system treats the entire gain as if it were money in your pocket.
That is such specious reasoning. By the same rationale, we shouldn’t be paying taxes on anything outside of income. I mean, I pay taxes on my income, the land developer paid corporate income taxes, so why should I then pay property taxes? It is the worst kind of class warfare I have seen. You pay on the dividend because they become INCOME to you. Unearned income at that. If anything they should be taxed at a significantly higher rate.
It’s not the federal government collecting your property tax. That’s a local town level tax.
If you tax dividends at a “significantly higher rate” then what incentive does an investor have to tie up his money in the investment? The reason the Buffet Rule would never go into effect is because economists, and most members of Congress, know there is a tipping point where punitive taxation affects behavior–in this case investment in the business sector would decrease if capital gains are taxed at a too-high rate.
Economists know that the tipping point is a tax rate of 50-70%. I suggest we put tax rates back to where they were when Reagan left office and get rid of the offsets and loopholes. Granted that is far higher than the 15% tax rate many of our wealthiest enjoy, but their free ride is over. In response to your argument that people won’t invest… I disagree. They might not invest in Wall Street in as great of rates, but they will invest in their local communities.
I am willing and ready to go back to a 70% marginal rate as it was Pre-Reagan if you put back all the loopholes Reagan got rid of. There were far more what you call loopholes then than now. I’m all for it. I’d make a fortune.
that’s faulty logic. you could raise the rate on gain and it would not hurt incentive. the rate on gains should be the same as the rate on income. If I make my income off gains and pull in $20,000/year, I shold be in that tax bracket. If I make $2,000,000 in gains I shold be in that income tax bracket. Otherwise it is saying that investment risk is some how more important than labor. your logic is faulty because people still invested prior to 1980 and did quite well. many hedge fund managers may lose a zero off their annual income but i won’t lose any sleep over that.
Isn’t it strange that no Democrats or Establishment Republicans dare mention the need to cut entitlement spending and eliminate government waste. Why is that? All they want to do is raise taxes. Why is that? Because spending other peoples’ money buys them votes and keeps them in power. They couldn’t care less about the American people or America, as long as they line their pockets and stay in power.
In November things have to change. If the incumbents remain in power, American is doomed.
Those have been cut immensely and there are talks about even further cuts. You sound misinformed.
Misinformed? Did he mention cutting comments?
Entitlement spending has not been cut. You will need to provide evidence of that. I can’t speak for cutting government waste for certain but spending in 2008 was $2.9 trillion in 2011 $3.36 trillion.
Entitlements are way up, thanks in part to Obamacare. Government has expanded greatly through the massive increase in czars, homeland security, GSA, and Congressional staffs and funding. The only cuts that are being proposed are from Republicans in the House of Representatives through over 30 bills that have been tabled by Obama’s right hand man, Sen. Reid, in the Senate.
I am not misinformed.
Untrue, simply untrue. Obama’s proposals include cuts beyond what was included in the trigger cuts from the failed super committee discussions. You are misinformed.
Obama’s proposals were voted down nearly unanimously. He knew they would be voted down, but he needs the false fodder for his re-election bid. All smoke and mirrors. Obama refuses to even mention cuts unless he’s lying about the Ryan budget proposal, which, by the way, freezes spending instead of cutting it. But, to a Progressive like Obama and his followers, freezing spending is a cut. Go figure.
But now you’re changing your claims. You are misinformed. You’re throwing whatever mud you can and seeing what sticks. Go figure.
I didn’t change anything.
“The only cuts that are being proposed…” then “Obama’s proposals were voted down”
So, yes, you are changing your claims. He did propose cuts. And, yes, you are throwing whatever mud will stick because if he made no proposals, you’d criticize him for not making proposals. It’s the damned if you do, damned if you don’t sort of thing. It just clearly demonstrates that your disdain for the President and liberals alike has little to do with the actual issues at hand.
Mentioning the need for cuts and proposing politically motivated and meaningless cuts are two different things. Obama is campaigning around the country, on the taxpayers dime, I might add, neglecting any mention of the need for cutting government spending or entitlements. All he’s talking about is the evil rich, paying a fair share, Romney, and the Ryan budget proposal. And he’s lying about all of the aforementioned subjects.
I have no disdain for the President. He’s the way he is because of his upbringing, his progressive education, and his left-wing beliefs. He honestly believes he’s doing what is right. Unfortunately, he’s wrong. His policies are inflicting massive damage to this country. And it is his policies that I have a problem with.
Now, after changing your claims, you’re trying to change the subject.
You crticized the President saying only Republicans are proposing cuts, and then you criticized the President for proposing cuts that he knew wouldn’t pass. I’m sure you believe you’re an honest and truthful person, but you’re not. You do have disdain for the President if you’re willing to fault him for things he’s not even doing.
7000 who made over a million dollars last year paid no federal income taxes.
Lets see the proof.
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3056
How do you suppose that was accomplished? Any idea?
Loopholes that the Democrats are proposing we cut.
Do you have any ideas what the biggest “loophole” is for those 7,000?
BTW The Democrats would not dare touch this “loophole”. Care to take a guess what it might be????
Last hint, then I can easily claim you have no idea what the reason is.
I am dying to know…what is it?
Any investment income from State and Municipal bonds is by law Federal Income tax free. In other words every time a State or Municipality sets out a bond issuance to build a bridge, highway, public school, or anything else through a bond the profits are Federally Tax exempt.
The Doctrine of Mutual Reciprocity established by a Supreme Court
Decision in 1895 determined that a level of government can tax only the
interest of its own issues. This
means that interest on state bonds can
be taxed at the state and local level, but not by the federal
government. By the same token, interest on bonds issued by the federal
government is taxed by the federal government but exempt from state and
local taxation.
There are other ways to drive “earned income” to zero as well, investing in low income public housing is one example.
In other words if that money was to be taxed. The rate of interest needed to build a school would be the same as market rates and the cost to get it done would multiply.
Thank you for teaching me something I didn’t know. Every day is a new opportunity to learn…I hope others appreciate your intelligent input as well–but don’t count on it.
Exclusion for employer health insurance and care. the mortgage deduction is second
Individual “loopholes” will obviously have the biggest impact because there are a lot more individuals than corporations. No politician will commit suicide and get rid of these loopholes. It would simplify things but it’s a hard sell even if tax rates would drop considerably and people would still end up paying the same % in taxes.
I’m in favor of getting rid of all tax loopholes and deductions, setting a progressive rate and making sure everyone pays in something. Right now we have lower income workers who pay nothing into the pot and extremely high income workers who
manage to pay some of the lowest overall rates. A simplified system gives transparency. I do not see how this is a conservative or liberal issue.
The writer is a liberal hack. The top 10% pay 90% of the bill and they do it by paying super high taxes on there income. They paid a way higher rate on there income then the secretary they pay to work for them. They invest what they already paid taxes on and pay 15% on there investment, getting whacked twice on the same money. This hack would have you believe they don’t pay enough when in reality they shouldn’t pay a dime on investments. Hopefully his Secretary thanks the rich folks they work for, poor folks certainly didn’t pay her.
It depends on what you count as income. If you don’t count the vast majority of the money they receive for doing nothing as income, you are absolutely right. Now in terms of the top 10% and the income taxes they pay, I have a suggestion, if they don’t want to pay it, let them swap income with someone who pays less.
Okay, let them swap income…but you would also have to swap the job you do to earn the income. I doubt the low income person would be able to do the job the high income person is doing. People get paid high incomes for doing jobs that require a high level of skill, knowledge, experience and commitment.
I, personally, am much too lazy to ever become really rich….
Great, less work for more money… I think most Americans would take that offer. Most of the 1% get there by what their parents did, not by what they do. In terms of skillset for most of them the only skill they have is schmoozing their own friends.
If you really believe that the 1% got there by just inheriting wealth and schmoozing friends, you have a very unrealistic and fanciful view of life. I know that I could not do the job that Warren Buffet does; I could not have invented the pc that Bill Gates turned into billions; I couldn’t stomach being the CEO of Cargill, or Monsanto–even if I could do the job, which I couldn’t.
I could, however, flip burgers, wait on tables, be a secretary, a teacher, a landscaper, a car salesman, a retail associate–to name a few of the lower paid opportunities out there.
Bill Gates got to where he is by going to a private school that had access to one of the first mainframe computers (one of his classmates fathers worked for the company). He then sold nothing to IBM for a quarter of a million dollars (it later became DOS) and then went and bought it from a friend who went to the same high school who developed it for $15k. Doesn’t seem like much work to me.
The thing is Gates didn’t sell it to IBM. He used something else that was marketable. That made him Billions and made life for you and me better. That’s even before he contributes billions to charity.
This comment disgusts me.
What are you reading in my comment that affects you that way? I don’t understand.
I think, maybe, you are continuing to believe that I equate wealth with personal worthiness. I don’t. Not at all. I am in no way saying that a millionaire is somehow a more valuable person to society than a plumber, or a stay at home mother, or a teacher, to list a few of my favorite peoples. I am just saying they make more money, and there is a reason they make more money.
I personally just don’t walk around equating a person’s work ethic and level of intelligence to how much money they have. I don’t walk around telling people who make less than me, I could do what you do. I think that’s disgusting.
It’s not a work ethic I am talking about. The statistics are clear. College educated people earn more money than high school graduates. People with more experience in a field earn more than newcomers to the field. People who work long hours earn more money and advance faster than those that don’t.
I don’t tell people who make less than me anything. I told you, I make next to nothing in my job. I only listed the jobs that I happen to know I could do, because I have done them in the past–well, I actually never did flip burgers for a job or sell cars.
You can’t be serious. That’s a terrible attitude to have. So now money directly correlates to a person’s worth and work in society? Incredibly inaccurate. All industries have different pay grades and compensation levels. That’s fact.
If you mean individual worth in society, then no, money does not say a thing about it. I, after all, am thegreatwandini, but I am as poor as a church mouse.
If you mean does money directly correlate with one’s level of education, amount of skill and knowledge in a field, years of experience, and willingness to work long hours then, yes, I am saying that.
Is my terrible attitude related to my laziness??
You said you would doubt a low income person could do a high income job. That’s saying that wealth is tied to worth, skill, etc. Do you think someone from Wall Street could install plumbing in the building he works in? I doubt that. Every field has unique knowledge and skill requisites. There is no direct correlation between income and how hard or smart a person works.
What you have said is inaccurate and it’s not what America is about. Those with more money aren’t better than those with less money. Those with more money aren’t automatically smarter and harder working. You thinking that is what your terrible attitude is related to.
I never said what you claim I said! Never. I said nothing about worth in a personal sense. I spoke only of income and job.
Of course there is a direct correlation…but not between what you say: how hard or smart a person works and income. Waitresses work very hard, and a good one better be smart–but even a really good waitress is not going to become a millionaire on just waiting tables. But I digress.
The direct correlation is: one’s level of education, amount of skill and knowledge in a field, years of experience, and willingness to work long hours with higher income level.
I completely disagree with you.
A man is only worth the sum of his possessions.
~~~~ From the Ferengi Rules of Acquisition
I’m not what I own.
Good thing. Go buy a sense of humor.
Yeah, taxing the rich some more will do the trick. It isn’t
the amount of taxes, it is the SPENDING that is the problem.
These thieves in DC could have every dollar everyone makes
and it wouldn’t be enough. They want to make it “fair”, change
the tax laws. Eliminate every deduction for EVERYONE, including
businesses. And the article basically blames Bush. This admin has spent
more in a couple of years than Bush did in 8 and has done nothing but
try to appeal to the sheep in making them feel good about going after
the evil rich folk. Why isn’t there outrage from the sheep for what has been
wastefully spent in the past 3 years? They want to take subsidies from oil
now. How about they stop giving susidies to solar companies and green
businesses that are doing nothing but going bankrupt? If it is a subsidy for
a failure they love it and just wee wee it away. Stop the spending and you
fix the problem. Taxing the rich a little more is just a ploy to get the masses
up in arms and make them think it will benefit them. In reality it does
nothing.
Why wasn’t there outrage from the sheep for what has been wastefully spent in the eight years before this administration. We can stop the spending and won’t even come close to fixing the problem. Drop the max tax rate to 25% and increase the capital gains tax to 25% and see where that takes us. For those who say that increasing the capital gains rate will hurt the job creators, then where are all of the jobs that those job creators should have come up with in the last ten years? I work in an industry that deals with many wealthy people and I can’t think of one of them that employs more than a handful of employees and they make their income moving other peoples money around. No job creation there. The companies that they invest in aren’t hiring anyone either.
Oh there was outrage about what was being spent by the last admin
too. And as for increasing the max tax rate on capital gains…you mean
you want to tax those poor elderly retirees who live on what they were
able to save and invest? So you really think taxing a certain group will
bring in tons of money? Then please tell us where this enormous amount
of money will be spent? Is this going to make the so-called poor rich? Or
do you think it may be squandered like OTHER administrations as well
AS THIS ONE will do? How about we lower EVERYONE’S tax rate period.
As for the jobs, you basically said the “wealthy” employ people whether it’s
one or a few, they DO employ people. Isn’t that where most of the jobs are from,
the private sector? Maybe we should just do away with the private sector and
let the govt run everything? As for hiring, who in their right mind wants to hire
not knowing what they will be taxed, what Obamacare will really cost them and
without knowing what new regulations they will have to fight. Yes, Bush spent
like a drunk but Obama makes him look like a tightwad.
The top 1% of earners pay over 20% of all income taxes. The top 10% of earners pay 70% (yes, 70%) of all income taxes. Last year, the bottom 45% of earners paid 0 (yes, ZERO) income taxes. These are facts.
It is also an established fact that the US has the most “progressive” (ie taxes the wealthiest the most) tax system in the world, yet leftist radicals like Hinck would have it even more lopsided.
Of all the problems facing this country, made far worse by the Obama Administration, too many rich people is not one of them. No sale, Jon.
Hmm, well my Fiance and I are in the bottom 45% of earners and we paid in over $5600 in income taxes last year… so something tells me your numbers are wrong. Maybe if we are counting Senior citizens and children in the bottom 45% your numbers may be correct.
If you’re truly in the bottom 45%, and you paid that much in taxes, then you need to have them redone, because you got screwed.
EJ, it is a simple matter of what you count. To get to the totally bogus number brandied about on Right Wing Web-sites you have to count Children under the age of 18 and Senior Citizens. Children age 0-14 are 20.2%. Senior Citizens over the age of 65 are 12.8%. Notice that doesn’t include stay at home mothers children 15-18 or college students.
I’ve looked through many tax charts and haven’t yet seen one that include children 0-14 in the calculations.
The stats are based on IRS number of TAX FILERS, those who file a tax return, regardless of age.
http://www.ntu.org/tax-basics/who-pays-income-taxes.html
Another source:
To put it in numbers, according to the analysis, the top 1 percent of
earners account for 20.3 percent of total personal income in the United States
and pay 21.5 percent of all federal and state taxes.
The middle 20
percent of households earn 11.6 percent of US income and pay 10.3
percent of taxes.
The lowest 20 percent account for just 3.5 percent of
income, and pay 2 percent of all taxes.The numbers were reported by Citizens for Tax Justice,
a research group that supports progressive tax rates, and drawn from
calculations by the Institute on Taxation and Economic Policy.
Another site, again its number of tax filers.
http://www.politifact.com/ohio/statements/2012/mar/06/jim-renacci/jim-renacci-says-top-50-percent-pay-nearly-all-inc/
yes dannyboy but that top 1% have about 35% of the net wealth in the country. that is the definition of a regressive tax system.
So your response would then be I was talking about income taxes. In that case you are right, we do have a progressive income tax system. However, income generated from labor does not tell the whole story of where the money in our country is.
I find it funny that modern conservatives liken themselves to the founding fathers while at the same time support regressive tax policy that favors what the founding fathers feared most of all, the establishment of a monarchy.
Right…the founders were screaming to have taxes increased. That’s why they fought the Revolutionary War – because they weren’t being taxed enough!
Your “regressive” tax policy is a straw man. No one is asking for that – what conservatives favor is a fair tax system – one in which all pay the same rate. That’s why conservatives favor a flat tax that eliminates loopholes and treats everyone fairly.
Mr. Hinck, when you start with misrepresenting facts, I find it hard to even give your argument a chance in my broad political mind. Your so-called family example is way off. I would assume that such a family in Maine might bring in about $100,000 per year–because you said they are both “skilled and successful”. (You actually put them in the 28% bracket, which is for income over $142,000 in 2012–I think that is overestimating the Maine economy).
At my level of income, the couple would pay a 25% income tax on income over about $70,000–most of their income will be taxed at the 15% rate. But, you have not allowed for the power of deductions and child tax credits. For three children, at $100,000 income, they would see a $3000 credit–taken directly off their tax liability. The couple probably has a mortgage, gives to charity, the electrician most likely has multiple business deductions if he is self employed. It is very likely that this couple would pay far less than a %15 effective tax rate on their income.
Now, I know msally will get on me for saying this, but I am just a lowly English major…not a financial genius. But I know horse pucky when I see it, and I’m not stepping into your barnyard. If the voters of Maine vote for you, they are choosing to vote for either an incompetent, or a… well, I won’t say liar, but you are certainly not being straight with your constituents. You may think that is okay, because your goal is to help the poor and to be “fair”, but I don’t buy it. The ends do not justify the means.