Earlier today the White House’s National Economic Council (NEC) released a “report” titled “The Buffett Rule: A Basic Principle of Tax Fairness.” The NEC “report” is available at this LINK.
In a speech this afternoon, the President renewed his call to enact the Buffett Rule – a minimum 30% tax on taxpayers with $1 million or more in adjusted gross income. The President began his push for a “Buffett Rule” last September 19th when he stated “people making over $1 million should not pay lower taxes than the middle class.” Leaving aside the harmful economic consequences of adopting the “Buffett Rule,” the President is just plain wrong on many of the facts.
On September 28, JEC Republicans released a Republican Staff Commentary that presented information derived from data published by the Internal Revenue Service (IRS) that demonstrated the false premise on which the President’s proposal is based. We are sending you a copy of that document for your use in responding on this issue.
• In 2009, 62.8% of all taxable income for those with adjusted gross incomes in excess of $1 million was taxed at the maximum statutory rate of 35% and another 25.5% was taxed at the long-term capital gains and qualified dividend rate of 15%.
• More than 73% of taxable income for those with adjusted gross incomes at $1 million and up was assessed tax rates of 25% or greater.
• The highest 1% of income earners has not seen their share of the income tax burden decline. And their share of income is essentially the same as it was in 2000.
• Collectively, only taxpayers with incomes greater than $100,000 pay a share of taxes that is greater than their share of income.
• More than half of returns reporting positive income of less than $75,000 in adjusted gross income had no positive income tax liability.
• While the capital gains tax reductions that took effect in 1997 and 2003 resulted in lower average tax rates among the top 400 returns, their share of total income taxes paid actually increased.
• The data clearly shows that the highest income earners are not a stagnant group, but a constantly changing set of taxpayers.
In addition to the information presented in the attached Republican Staff Commentary an example of the “cherry picking” of data by the White House to attack the 2001 and 2003 tax cuts, on page 2 of the NEC report the report notes that in 1995 the average rate paid by the top 400 income taxpayers was 29.9% compared to 18.1% in 2008. First, the White House picked the year in the 1990s with the highest average tax rate. Second, the report conveniently omitted the fact that 65% of the decline in effective rate occurred between 1995 and 2000 under Democrat President Bill Clinton when the effective rate dropped by 22.3%.
See the full report attached below: