This Letter to the Editors was submitted by Will Merickel, a Sophomore at Concordia College.
Recently, President Obama has brought forth a $3 trillion deficit reduction plan that would take around a decade to go into full effect. The deficit reduction proposal would cut benefits toward Medicare beneficiaries and military retirees, raise $1.5 trillion in new taxes on the “super-rich,” and allow the Bush-era tax rates to expire, which would raise taxes on everyone making more than $250,000, not including the new taxes on millionaires.
The president, at a joint meeting of Congress, stated that millionaires should not pay a lower tax rate than their secretaries. Warren Buffett, who claimed that he paid a lower tax rate than his secretary, created this fallacy. Warren Buffett claims he falls under a lower tax bracket than his secretary. He said that he pays only 17.4% of his taxable income, which is less than $7 million out of a $40 million income. Buffett also stated that other millionaires only pay a flat 15%. This is completely false, because the tax rate for people making $1 million to $10 million was 29.5% in 2009. So how does Warren Buffett get away with only paying 17.4%? Besides loopholes and special tax breaks that larger corporations get, you also have to look at Buffett’s main source of income, which is derived off capital gains and dividends. The current tax rate for capital gains and dividends is 15%, but it is scheduled to rise to 18.8% due to the new health care law. Another thing that should be noted is that Warren Buffett only pays himself a salary of about $100,000 as CEO of Berkshire Hathaway, therefore he would have nothing to lose if the taxes he is promoting would go into effect. This would also explain why Buffett pays less than some of his employees in payroll taxes. Buffett is also able to voluntarily donate any amount of his large income to the Treasury Department.
The president and Warren Buffett cannot use the excuse that millionaires pay a smaller tax rate than their secretaries. It is also important to note that if millionaires did pay a larger sum of their income through taxes, the government would see that as an excuse to keep spending more money on failed government programs as well as flat out idiotic government spending bills, such as the $400 billion spending bill that has been proposed by the president. Another important fact to point out is that millionaires often are the people who create jobs and pump money into the economy through spending, savings, investments, and generous donations to charities. It is the rich that will create the most jobs in the modern day economy, and raising taxes will create uncertainty in the market place and halt the entrepreneurial drive that the United States relies on.