In his latest tax plan, President Obama has called for wealthy Americans, those making more than $1 million annually, to pay their “fair share” in taxes, or at least pay the same percentage as most mid-income taxpayers. Some see this as merely another attempt to use the class warfare tactic to generate support within the liberal base, while others question whether the president is following his own advice.
Small business owner, blogger and former state senator Jim Bryson posed a few questions on his blog http://riseandstand.com that questioned Obama’s recent remarks on taxing the wealthy.
“'Fair share' is a moral statement,” wrote Bryson. “What is 'fair' to one person is not necessarily “fair” to another. The President is not the first to equate tax policy with a moral standard.”
According to their 2010 federal tax return, Barack and Michelle Obama claimed an adjusted gross income of $1,728,096, the majority of which was made from book royalties. The president earns an annual salary of $400,000 for performing his duties as the nation's leader.
To break the numbers down a bit further, the couple paid $453,770 in federal taxes and gave $245,075 to 36 charities. Using these numbers, the Obamas paid 26 percent of their adjusted gross income in taxes. Could this be what President Obama means as a “fair share” for the nation's millionaires?
Bryson is asking a similar question: “If the ‘fair’ amount is more than 26 percent, why didn’t the Obamas live up to their moral obligation? If it [26 percent] is more than the ‘fair’ amount, kudos to the Obamas for kicking in a little extra.”
”I think a fair tax plan would be a flat tax,” Bryson said further. “That means getting rid of all deductions and getting to where we could file our taxes on a post card or by email. Unfortunately, I don’t see that happening anytime soon. But still, I think if the president is going to talk about taxes, he needs to get specific about ours and his and what is ‘fair.’”
The “Buffett” rule is named after billionaire investor Warren Buffett, who, in a recent New York Times editorial, said that wealthy Americans making in excess of $1 million annually should be taxed at a higher rate than mid-income taxpayers. Buffett complained, saying he was paying a lower percentage of taxes than his secretary.
Critics countered by saying that if Buffett felt that guilty, all he had to do to ease this conscience was to write a check of any size to the U.S. Treasury.
The reality is, millionaires pay taxes at a higher rate than mid-income families and their taxes are a much higher percentage of the overall federal budget. According to the Tax Policy Center, a nonpartisan group, households earning in excess of $1 million pay about 29 percent in federal taxes. They also show that households earning between $50,000 and $75,000 pay about 15 percent in taxes.
Even more interesting is that millionaire households contributed more than 20 percent of the total revenue paid in federal taxes, according to the National Taxpayers Union.
Making the numbers even more difficult to calculate, many millionaire households derive their income not only from salaries, but business income as well. Each are taxed at different rates. After adding long and short-term capital rates and dividends to the equation, the formula becomes even more complicated.
However, the president has found one ally who supports his plan.
"We call on Congress to immediately pass the president's proposal for job-creating investments, to ask the wealthy to start paying their fair share, to focus on the true causes of our long-term deficits, to reject any cuts to Medicaid or Social Security or Medicare benefits and to stop scapegoating federal and postal employees and retirees for problems they did not cause," AFL-CIO president Richard Trumka told the Associated Press.
The 12-member congressional supercommittee that was formed as part of the budget deal this summer will issue their recommendations on revenue and cuts to Congress by November of this year.