Tax on Rich Not Enough To Address US Debts
August 22, 2011 Taxation in USA
Increasing the tax liabilities on the USA’s wealthiest citizens would not do much to address the country’s debts, despite the idea having big name backing from Warren Buffet and Barack Obama.
Over the last week media commentary has been rife with discussion over a recent proposal by the internationally acclaimed investor Warren Buffet for the US to instate greater taxes on the country’s wealthiest taxpayers. However, new analysis published by the Tax Foundation on August 21st shows that the idea has been overhyped.
If Warren Buffet’s suggestions were followed, then, according to the author of the research, they would only serve to decrease the nation’s debt by no more than 1 percent at best. If the marginal tax rates on earnings above USD 10 million are increased to a hypothetical 100 percent, the national deficit would only drop by 12 percent and the national debt would fall by 2 percent.
In order to eliminate the nation’s debts only through tax measures on the ultra-rich, the government would need to instate a 100 percent effective tax rate on all American taxpayers with annual incomes exceeding USD 200 000.
Last week Warren Buffet called for new taxes to be instated on individuals earning in excess of USD 1 million per year, and even further taxes on those with incomes exceeding USD 10 million per year. Warren Buffet also called for the government to remove any tax breaks for those earning between USD 1 million and USD 10 million. The cumulative tax measures proposed by Warren Buffet would bring the effective marginal tax rate for the wealthiest American taxpayers to 50 percent. The idea already has the backing of President Barack Obama.
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