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US PRESIDENT BARACK Obama has laid out a case for imposing a minimum tax on America’s wealthiest people, which would see those earning $1 million or more annually pay at least 30 per cent of their income in taxes.
Obama has called on US citizens to pressure their member of Congress to support the so-called “Buffett Rule”, named after billionaire and philanthropist Warren Buffett who has called for a tax on the country’s wealthiest.
Buffett has pointed out that he pays a lower tax rate than his secretary, due to preferential tax treatment for capital gains and dividend income.
Speaking at Boca Raton, Florida, Obama said:
The share of our national income going to the top 1 per cent has climbed to levels we haven’t seen since the 1920s… The folks who are benefiting from this are paying taxes at one of the lowest rates in 50 years.
Chairman of the White House council of economic advisers Alan Krueger also argued in favour of the Buffett Rule recently, the Washington Post reports, saying:
At a time when the market is driving more income into the hands of the highest-income earners, that’s a time when it’s easier for the top income group to bear higher income taxes.
The proposed tax would increase US tax revenue by up to $47 billion (€36 billion) over the next decade, according to estimates by proponents. Taxpayers would be permitted to deduct charitable contributions under the new system.
The proposal has been criticised by Republican presidential-hopeful Mitt Romney, who is instead advocating the lowering of the tax rate for those with the smallest incomes in order to allow small businesses to grow, reports the Financial Times (free subscription required).
The Senate is scheduled to consider the proposal today.
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Hope Enda or at least one of his well paid special advisers reads this.
Decreasing income disparity and increasing the size of the middle class is definitely a positive move for society.
Sounds great! Now why can’t we do that!
Dopey comment of the day. Our tax system already taxes millionaires at a marginal rate of over 40%.
Is that 40% PAYE or 40% of what is voluntarily declared?
And what of our patriotic tax exiles? Do they pay a marginal rate of 40%?
Barack Obama, the Muslim Communist Fascist is trying to introduce communism into America, taking away our freedoms! Vote GOP, and make the poor people pay for everything!
On a serious note, isn’t a 30% tax rate a little on the low side? Isn’t 41% the higher bracket here?
It’s a start, Fiachra. Yes. Sounds low but at least moves are being made in the right direction.
What are people on about?! Why don’t we do what Obama wants to do? We have a 55% marginal tax rate on earnings over 35k! We also have a minimum effective tax rate of 30%! We’re taxing MORE than Obama wants to. Bloody Lefties.
Marginal tax rats are irrelevent, effective tax rates are what counts:
“ALMOST HALF OF people making more than €1million a year paid less than 30 per cent tax, new figures from the Department of Finance reveal.The statistics show that the very highest earners tend to pay tax at a rate well below the standard band.
Almost all (90 per cent) of those earning between €100,000 and €250,000 paid less than 30 per cent tax.”
As you can see there is scope to introduce a third tax band and tighten up loopholes.
Fair enough re your comment, King Thorgest. However, not all people who comment are “bloody lefties”. As for me, I am as far from being a “bloody leftie” as u can get. There is scope for a 3rd rate of tax to make it fair for all. As someone who is one of the many “guys in the middle”, I am fed up to the back teeth with being squeezed & squeezed til there is no more left to squeeze out of me & my contemporaries. Painting all with the one brush here is wrong. As Too Truelft writes, there is scope to tighten up loopholes & give the guy & gal in the middle a break.
To Enda & Co – take note, please.
This hasn’t a hope of going anywhere. Unlike Europe, most Americans believe people are entitled to keep what they earn, and that success isn’t a bad thing. Watch as he fails to even get it through the Democrat controlled Senate.
Recent Gallup poll found 60% of Americans are in favour of this.37% against
@John
Isn’t that a good thing?
John, have you ever stopped to question why the USA has one of the most divided and dysfunctional societies in the developed world? Precisely because the wealthy don’t contribute proportionately while the working and middle classes get hammered. It might work well for businesses but what right wing economists fail to realise is that we live in a society first and foremost and not an economy.
@Mark
You’re correct that they don’t contribute proportionally but the solution could be to lower the taxes on the middle class and poor (they tax their dole in America). Now as for right wing economics. Well a disproportionate level of taxes messes up incentives to work, so arguable you can say that good (low level) tax system is good for the economy.
A similar move here, coupled with doing away with tax breaks and subsidies towards pension contributions etc, would easily net enough money to cover the new anglo taxes such as the household charge. For example, NOBODY whose income is above 100,000 is going to the poorhouse if a third rate of tax is introduced directed at them specifically. But rather than do something reasonable like that, FG/Labour have decided to hit our most vulnerable.
Well said
It’d be great if Ireland followed suit. Top tax rate to drop approx 20%!!!
Where do I sign up, and where do I get my refund?
Obama supports warren buffet… The man who who is being sued for tax evasion… And Obama who has 39 of his advisors that have being avoiding paying tax also… Obama is 2 faced
So true, says he wants to make America a better place. While still taking massive donations from the banks and refusing to take them on. Its a political move, nothing meaningful…
Approximately 800,000 of the lower paid workers in Ireland pay almost no income tax at all.
Surely that is unfair. Surely it is unsustainable. Surely the lower paid should pay their fair share too.
Is not being on the dole “contributing” ???
Brace yourself for a handbagging there, Gavin !! I think u are right. It’s an imbalance at the other end of the scale. However, people on low wages have very little spending power for their Euro compared to someone over the E100k scale. A balance has to be struck somewhere along the line. Everyone needs to contribute something & it needs to be proportional to one’s means. For what it’s worth.
I am all for big earners paying more taxes in this country and the system of subsidies really needs to be looked at. I’d just like to put Obama’s 30% rate for high earners into context for here. If you are a so-called high earner in Ireland today you are actually paying somewhere along the lines of 52%. This figure is reached if you include Income Tax, PRSI and USC.
I applaud the sentiment of those on this page who are calling for Enda to follow suit, but the figures speak for themselves. I would advocate for a 3-tier system with a re-drawing of the bands to favour those on lower and middle incomes, and upping the max rate to 51% for income above €100000.
In re-drawing the bands I would not foresee bringing anybody currently outside the tax band (on very low income) being brought into tax band.
If you want people who earn more to pay progressively more then have a thing called a ‘percentage’. If you want it fair then have everyone pay the same percentage of their wage above a basic minimum of say 10k. Its called Flat Tax. It’s Fair and Progressive. I think 25-30% would do it. But unfortunately Flat Tax is not Punitive and doesn’t satisfy the Militant Envy that fuels the current class war in Ireland.
That’s a very high rate, we could probably survive with a flat tax of around 15%. or lower. As you say, though, it’s not punitive and will not satisfy those who think the Buffett Rule tax is brilliant because it punishes “the rich”, even though it doesn’t even make the tiniest dent in the deficit.
But, whatever, we can all sleep a bit easier knowing “the rich” can only take eight holidays this year instead of nine.
Most people dont understand the difference between marginal tax rates and effective tax rates, so if somebody that does would like to explain the difference to us, it would be very much appreciated.
In simple english, the effective tax rate is the amount of tax you pay out of euro and the marginal rate is the amount you pay at a certain level. ie. If you get paid 10,000 per annum and you have tax credits of 5,000 and you pay 20% on everything over that rate, the marginal rate is 20% on €5,000 ie. €1,000. The effective rate is actually 10% as for every euro earned you paid 10c in tax (1,000 divided by 10,000) hence the higher the marginal rate at lower levels is meant to increase the effective rate for higher earners.
have your say