Billionaire investor Warren Buffett, writing in The New York Times, suggests that the government instill a new tax bracket system for the super rich as a means of stabilizing revenue and creating the kind of “shared sacrifice” that all Americans must endure to see themselves through these dark economic times.
Under current tax bracket systems, the highest annual income bracket tops out at just over $379,000 annually. A very successful small business owner who turns a strong profit might see that kind of income. This business owner would then be taxed at 35 percent. A professional athlete who makes twenty times that amount would also be taxed at the same 35 percent. A billionaire investor like Buffet who makes even more would be taxed at the same rate yet earns perhaps one hundred times more in annual income.
Unfortunately, as Buffett points out in his article, the tax rate for the super rich is often far lower than the IRS stipulated 35 percent. Most Americans earn their money in the form of income. They work and receive money in exchange for their services. The super rich, people like Buffett, do not work in the classical sense. They exchange money for money. They are professional investors, and their “capital gains” are taxed at a laughable 15 percent.
Buffett is not asking to completely restructure the tax system so as to count capital gains as traditional income. He is simply encouraging a revised system of taxing earnings made from capital gains. Additionally, he is only interested in increasing the tax burden on the ultra-wealthy.
His plan would put a slightly higher marginal tax rate on those whose combined income and capital gains exceed $1 million annually. It would include an additional rate increase for those who earn $10 million annually.
Almost every single American will suffer cutbacks on the services they receive from the government as a result of the Obama-Boehner debt deal. Those of us with student loans will see interest rates increased. Homebuyers will find fewer opportunities. Homeless shelters will lose funding. Education benefits will be cut. Unemployment insurance is the on the chopping block. Perhaps worst of all, the elderly and infirm will see cuts to Social Security payments and Medicare.
These are real sacrifices, being faced by more than 300 million Americans.
What sacrifices are the ultra-wealthy being asked to make to help save the economy that made them so rich? Nothing.
The rich should not be stripped of their wealth or put in a tax situation that makes life unmanageable for them, but they should be asked to pay into the collective system that makes them rich. At a time when the rich are getting richer than ever before they are being asked to give less and less back to the communities around them.
Instead of constantly taking from the poor and middle class who already live on the brink, it is time to demand that the people who benefit the most give at least a tiny bit back to the rest. Increasing taxes on investment will not kill investment, and it will not kill jobs. Sensible tax increases have never killed jobs. Senseless tax cuts always do.