There’s been a lot of buzz about Obama wanting to reform the tax code for those that make a million bucks or more a year. The idea here is that if you make more money, you should pay more taxes than the less financially fortunate. This might seem like common sense but it hasn’t actually worked out that way.
The 30% marker is the first real detail Obama has offered since proposing the so-called Buffett Rule last September. That rule is a guideline intended to ensure that the very wealthy don’t pay a lower percentage of their income in taxes than anyone in the middle class.
Warren Buffet, the billionaire investor, has repeatedly asserted that he pays a lower percentage of taxes than his secretary.
This has continued to be news with the Presidential race heating up. Mitt Romney has been pressured to release his tax returns and it has been reported that the millionaire pays about 15%. While it is no secret that most of these Presidential candidates are more than financially set, the idea of tax reform to make things more “fair” is a hot topic.
How is it possible that the rich can pay less in taxes than the middle class?
Warren Buffet, for example, makes a lot of money from investments, which are taxed at a lower rate than wages. Second, the Social Security tax applies only to the first $106,800 in wages. That means Buffett’s secretary likely owes that payroll tax on most if not all of her income, while Buffett ends up owing it on a very small piece of his income.
“Middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward,” Obama said.
Of course, revising the tax code is a complicated affair.
Obama’s administration wishes to use the Buffet Rule as a guiding principle in tax reform but how they plan to do that is yet to be defined.
“We’re not going to give the Congress a detailed proposal for how to meet that specific principle now because there’s lots of different ways to do that,” Treasury Secretary Tim Geithner said Monday.
According to CNN, not all rich people oppose such a tax reform.
“I think it’s fair,” hedge fund manager George Soros told CNNMoney’s Poppy Harlow at the World Economic Forum in Davos, Switzerland. “There are a lot of people like me … in the 1% who feel this is appropriate.”
As for the charge that Obama is pursuing class warfare? “Well, that’s what my fellow hedge fund managers are saying,” Soros said. “But I think it’s because they don’t like to pay taxes.”
Nobody wants to pay more taxes but, good lord, we see how broke the country is and we do have to find ways in which to lower the deficit. Perhaps if the rich were having the daunting task of coming up with a budget for the government, they might have to look at things differently.
Give us your comments! What do you think about the 30% rule? Even though the details aren’t ironed out yet, is the underlying idea a good one? Perhaps rich people like Warren Buffet are good enough to speak out about this because they see it as unfair or out of whack?
All I know is, if I was Buffet’s secretary, I probably would be annoyed that I pay a higher percentage of taxes than my billionaire boss.