Last week, the Oracle of Omaha, Warren Buffett, wrote an op-ed piece in the New York Times about raising taxes on the ‘super-rich.’
To start off, here are some amazing statistics about the national deficit:
- Each citizen’s share of the national debt comes out to $46,932.73, so it’s pretty clear that we won’t be paying off this debt anytime soon.
- If Buffett gave his entire fortune ($47 billion) to the IRS, the government would go through that money in about 12 days.
Buffet claims that his tax rate is just 17.4% of his taxable income, a rate far lower than most people reading this article pay, and as he has bragged about time and time again, lower than even the receptionist in his office.
The reason this happens is because of the 15% capital gains tax rate, the rate at which most income belonging to the super-rich typically gets taxed.
Buffett proposed a plan that would leave the tax rates for 99.7% of American taxpayers unchanged. He also advocates continuing the current 2% reduction in the employee payroll tax that was instituted for 2011.
The plan proposes taxing those making more than $1 million a year (236,883 such households existed in 2009) and an additional tax on those making $10 million a year (8,274 existed in 2009).
Those numbers sound pretty reasonable, and while many argued against Obama’s plan of adding a tax to the “rich” making $250,000 or more, it’s harder to argue against a plan that only taxes 0.03% of Americans.
But will Buffett’s plan really help bridge the large gap between the giant deficit we are facing and the income we need to decrease it? Brian O’connell from TIME Moneyland looks into the question and gives us some specific numbers to put to Buffett’s suggestions.
Now, going back to Buffett’s plan, The Wall Street Journal estimated that taxing the millionaires in America would raise about $500 to $600 billion in additional revenues over the next 10 years, which sounds like a lot, but in reality, is about $50 billion a year, just 3% of the annual federal deficit.
So would Buffett’s plan single handledly fix America’s problem? No. But is 3% a good start? Definitely, and if it’s a choice between the rich and the poor paying that 3%, I think the choice is an easy one.