Republicans Getting Buffetted by Taxes
For Republicans on the warpath against Warren Buffett, President Obama's willing poster child for raising taxes on wealthy Americans, this week has been a very bad one. First, new polling confirmed that Americans overwhelmingly support President Obama's jobs plan in general and his proposed gilded-class tax hikes in particular. (On that second point, Republican voters agree.) Then on Thursday, the billionaire called Republicans' bluff and released his $6.9 million tax return and confirmed he paid a lower percentage to Uncle Sam than his secretary. And as it turns out, a new Congressional Research Service study found Buffett's not alone, concluding that a quarter of millionaires in the U.S. pay federal taxes at lower effective rates than a significant portion of middle-income taxpayers. In response, frustrated Republican mythmakers could only accuse Warren Buffett of giving too much to charity.
As Bloomberg News reported, federal tax data show that the need for the Buffett Rule is very real indeed. After IRS data for 2007 revealed that 959 millionaires paid no taxes at all, the new CRS analysis found:
Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million "moderate-income taxpayers," representing about 10 percent of those making less than $100,000 a year, according to the report by the non-partisan Congressional Research Service dated Oct. 7.
The findings put the U.S. tax system in conflict with the so-called Buffett Rule, which says households making more than $1 million annually shouldn't pay a smaller share of their income in taxes than middle class families, says the report, which analyzed 2006 Internal Revenue Service data.
And as The Hill reported, the Buffett Rule is aptly named. Responding to demands from Kansas Republican Congressman Tim Huelskamp that he release his tax return (a disclosure Republican presidential candidates thus far have refused to make), Warren Buffett was only happy to comply:
Buffett revealed in a letter sent to Huelskamp that his adjusted gross income was $62,855,038 last year and that he paid $15,300 in payroll taxes, as reported by CNN Money. He also claimed, as he had in an op-ed previously this year, that his federal income tax bill last year came to $6,923,494, or about 17 percent of his $39,814,784 taxable income.
Finding themselves in a hole, Congressional Republicans continued digging. South Dakota Senator John Thune introduced a bill titled "The Buffett Rule Act of 2011" (S.1676), which makes it easier for those who voluntarily wanted to pay higher taxes to do so. Meanwhile, Buffett's House inquisitor Tim Huelskamp declared the billionaire's response "inadequate" and charged:
"What he does disclose may be accurate, but it is incomplete and it fails to explain how he shelters millions of dollars in income from taxation," the lawmaker said in a statement. "It is unprecedented that we would write an entire law based on one man's anecdotes without actual proof. By sheltering millions of dollars of income from taxation, probably through charitable giving, Mr. Buffett demonstrates that he doesn't trust Washington with his own money either."
The Republican accusation that Warren Buffett is giving too much to charity is certain to backfire (even leaving aside that neither the McCains in 2008 nor the Romneys now have provided the information Huelskamp is demanding from Buffett.) For starters, Buffett with Bill Gates is one of the driving forces behind the "Giving Pledge" by which a growing group of American billionaires promise to give away half of their fortunes in their lifetimes. Worse still, Republican presidential candidates including Newt Gingrich and Michele Bachmann have stated that uninsured Americans should turn to charities for their health care. Most damning, Buffett highlights that Republican positions on taxes and charitable giving have it exactly backwards.
