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Buffett Rule Will Raise $50 Billion Per Year, Affect Just 0.08 Percent Of Taxpayers

When President Obama announced his latest vision for the so called “Buffett rule” — a 30 percent minimum tax on millionaires — during his State of the Union address this week, Republicans were quick to criticize it. For instance, Speaker of the House John Boehner (R-OH) derided the proposal as a “political gimmick.” “It’s a smokescreen,” added Rep. Steve Scalise (R-LA).

However, as a new analysis from Citizens for Tax Justice pointed out, the Buffett rule as laid out in the speech could raise up to $50 billion per year to pay down the deficit, while affecting just 0.08 percent of taxpayers:

Citizens for Tax Justice has calculated that President Obama’s “Buffett Rule” would, if in effect this year, raise $50 billion in a single year and affect only the richest 0.08 percent of taxpayers— that’s just eight percent of the richest one percent of taxpayers. […]

To calculate the $50 billion figure, we assumed that there would be a minimum tax that applies to adjusted gross income (AGI) minus charitable deductions. (We’ll call this modified AGI.)

We assumed that a taxpayer with modified AGI greater than $1 million would face a minimum tax of 30 percent of modified AGI. The taxpayer would pay whichever is greater, their personal income tax under the existing rules or this minimum tax.

Obviously, $50 billion by itself won’t balance the budget, but it certainly doesn’t hurt. At the same time, the Buffett rule will aid in correcting some of the problems in the tax code — like one quarter of millionaires paying lower rates than millions of middle class families and some millionaires paying no income tax at all — that have helped drive income inequality up to a level not seen in the U.S. since the 1920s.

 

By: Pat Garofalo, Think Progress, January 27, 2012

January 29, 2012 - Posted by | Economic Inequality, Income Gap | , , , , , , ,

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