White House Rebukes Tax Claims

September 27, 2011 Taxation in USA

Wealth Taxes in USAWASHINGTON – The White House is attempting to clear up a shroud of misinformation and confusion regarding potential wealth taxes, having released a communiqué that aims to clarify details regarding the impact of the proposed changes.

In a communiqué published on the White House blog on September 25th the White House communications director Dan Pfeiffer set out to rebuke false claims made by those who oppose a potential tax on the country’s highest earners.

According to the statement, the administration of President Barack Obama is not intending to instate a new tax on millionaires, but, instead the proposed rules for taxes on the wealthiest American taxpayers must be incorporated as an integral part of ongoing tax reforms to discrepancies in the tax system.

According to the communiqué, some political and media pundits have repeatedly and misleadingly claimed that the wealth tax would be unfair to the rich, as, according to them, nearly 70 percent of all federal income taxes are already collected from the top 10 percent of wealthiest Americans. According to the White House, these figures are misconstrued, as they fail to take into account payroll taxes, which are paid by every employed individual in the USA. Payroll taxes are only applicable to incomes earned from employment, and not earnings from capital gains or investments, meaning that they are more targeted at middle and low income earners. Additionally, payroll taxes are not applied to incomes above USD 106 800. If payroll taxes are included into cumulative tax payment calculations, the top 10 percent of US taxpayers only hold 50 percent of the national tax burden.

The author of the communiqué also highlighted that some opponents to the proposed wealth tax have claimed that adding more taxes to the wealthiest American taxpayers is also unfair because nearly 46 percent of all households pay no federal income taxes at all. The White House replied to the statement, saying that excluding payroll taxes in such calculations is also particularly misleading, and pointed to recent research by the non-partisan Tax Policy Center, which showed that nearly 82 percent of Americans pay either income or payroll taxes. Of those who do not pay taxes, 10 percent are the elderly, and 7 percent consist individuals with incomes below USD 20 000 per year.

Photo by Barack Obama