The Buffet Rule Is Not Unfair

Alicia Badilla By Alicia Badilla, 19th Sep 2011 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

Why the new Buffet Rule is 100 percent, unexceptionably beyond the shadow of doubt, a fair shake for the alarming majority American taxpayers.

What is the Buffet Rule?

By Alicia Badilla - Mon, Sep 19, 2011 8:01 PM

The Buffet Rule is the new term coined by President Obama referring to the idea that rich people should pay as much percentage wise in taxes as poor people. It came from a conversation with Warren Buffet and how he continues to make the point that the tax code permits him to pay a lesser percentage of taxes than his secretary does.

I recently read an article on written by John Carney where he makes the argument that the Buffet Rule is unfair because it would hurt those poor families who have a $250,000+ per year combined income and it would tax them an estimated 9.4% of their likely net worth. Nothing against John, I enjoy his material very much and he is among the best over at CNBC but I have to say, I laughed out loud when I read his article. I think CNBC editors may underestimate how smart people are starting to get with this internet thing we all have now.

His argument was that in this same scenario you have many more Americans who make $40,000 per year and pay an estimated %50 of net worth in taxes. And because it would make only a marginal difference to the rich people in terms of their overall tax to net worth rate not coming anywhere near the %50 that Buffets secretary pays then the ideology of the Buffet Rule is flawed. Must be joking John? Let me guess, you are one of those 3% that files more than 200k in taxes.

Here are some facts:

*88% of returns had an AGI of less than $100,000.
AGI stands for "adjusted gross income" and is total income with a few deductions. For the typical person, the deductions would be for things like student loan interest as well as contributions to retirement accounts and health savings accounts. This amount will be smaller than total income, and this is what is used in the IRS statistics.

*Les than 3% of returns claimed more than $200,000 as AGI (or about3.9 million returns out of 140+ million total IRS returns)

Fair is defined in the dictionary as being free from bias, dishonesty, or injustice.

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author avatar deepa venkitesh
20th Sep 2011 (#)

good share.

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