By now, most Americans have heard of the Buffett Rule. It would ensure that all Americans making over $1 million per year have an effective tax rate of at least 30%. Currently, capital gains are taxed at a much lower rate than income. Since the uber-rich generate a lot of income through investment, they pay a lower tax rate than most of us. The Buffett Rule may sound like common sense, and it polls outrageously high among the American public, but many disagree. Their arguments are flimsy. Below, I will address the top 8 arguments one by one:
8. "The top 1% pay 39% of the total United States tax revenue. The rich already pay their fair share."
This argument uses a statistical sleight of hand to distract from the question at hand. It's become incredibly tiresome to explain why total aggregate taxation is a separate question from percent of income taxed. If you don't understand how statistics work, I recommend Jonathan Chait's excellent explanation. It includes the appropriate amount of condescension.
7. "If Warren Buffett and Bill Gates want to fix the deficit, then they're free to write a check to the Treasury Department."
This schoolyard taunt is yet another distraction from the two central questions: (1) Is our tax system fair? (2) Should the rich share the burden of deficit reduction? Warren Buffett and Bill Gates have both indicated a willingness to pay a higher rate of taxes (should the federal government set the rate higher). Why would they voluntarily pay money to the United States Treasury?
Here's an analagous argument: "If you're so concerned about marijuana decriminalization, why don't you prove it and smoke marijuana in front of a police officer?"
I suspect that – like Gates and Buffett – the hippie would prefer to wait for policy changes before subjecting themselves to a competitive disadvantage like loss of revenue/prison.
6. "Taxing the rich will not solve our deficit problem. We need to cut spending."
This is like arguing the following:
"You cannot clap your hands using only your left hand. Therefore, in order to clap your hands, you must chop off your left hand."
It's nonsensical. You're arguing that because extra taxation doesn't make the entire deficit go away by itself, it shouldn't be a part of a deficit reduction plan. Every reasonable deficit hawk agrees that deficit reduction requires both tax increases and spending cuts. Every savvy politician should understand that for deficit reduction to actually pass with public support, it will requires shared sacrifice from everyone.
Republicans continue to ignore this reality. It almost makes you wonder if they care about deficits at all. Could it be that their only priority is keeping tax rates on the rich at low levels?
5. "Over 57% of Americans don't pay taxes."
Occasionally, people say "federal taxes," but usually you hear this one as simply "taxes" and you rarely hear it as "federal income taxes."
This is incorrect for a variety of reasons. First of all, around 16% of Americans are unemployed and do not pay taxes and another huge chunk are disabled and unable to work. Second of all, every person who earns a salary pays federal taxes thanks to the payroll tax. Finally, most state and local taxes are regressive or flat and hit the poor the hardest. Poorer people pay a significant amount of their income to in sales taxes taxes – particularly in states without income taxation. Warren Buffett probably pays about 0.0001% of his income on sales taxes.
4. "If we tax the 'job creators', they won't create jobs."
Yes, if the top marginal tax rate reaches a certain level, then this will change behavior and discourage work. We are no where near that level. For evidence, see the Clinton tax increase, Bush I tax increase, and Reagan tax increases.
3. "The Laffer curve states that raising taxes decreases revenue and vice versa."
History has generally proven this wrong, but let's say it's true. This is an oversimplification of the Laffer Curve theory. Remember - it's a curve! If we're on the left side of the curve, then tax increases still increase revenue. We're on the left side of the curve.
2. "I make $1,000,000 a year and I run a small business. I don't want my taxes to go up. You're crushing small businesses!"
You have a dreadful understanding of the mechanics of marginal tax rates, deductions, and/or math. It's beyond me how you managed to make $1,000,000 in the first place, though I suspect you inherited that business.
1. Finally: "Taxation is the immoral confiscation of wealth, and therefore, Freedom."
It's impossible to argue with libertarians when they start equating capitalized Freedom with the maintenance of wealth. We are talking about a democratically elected government passing a tax law that withstands judicial scrutiny. If that constitutes a violation of someone's capitalized Liberties, then you should take that up with our system of government or try to make a stronger argument to your fellow countrymen. You're onto something with the use of "job creators". It's very clever. Stick with that.