Understanding Tax Fairness (and why the Buffett Rule is a distraction)

Article Highlights

  • #Obama has identified is only one limited manifestation of more systemic problems in the #tax code.

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  • 5.1 million households with incomes ranging from $40,000 to $100,000 paid no income taxes in 2009.

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President Obama took to Twitter last week to advertise the fact that 1,470 millionaires paid no federal income tax in 2009. The White House has proposed a “Buffett Rule” mandating that taxpayers earning more than $1 million pay at least 30 percent of their income in federal income taxes. However, the unfairness the Obama administration has identified is only one limited, albeit particularly eye-catching, manifestation of more systemic problems in the tax code.

The president’s focus on a few thousand millionaires who avoided income taxes overlooks the fact that 5.1 million households with incomes ranging from $40,000 to $100,000 also paid no income taxes in 2009. For the 35.8 million other people in the same income range who paid, on average, thousands of dollars in federal income taxes, this is also a significant matter of fairness.

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About the Author

 

Alex
Brill
  • Alex Brill, a former policy director and chief economist of the House Ways and Means Committee, also served on the staff of the President's Council of Economic Advisers (CEA). In Congress and at the CEA, Mr. Brill worked on a variety of economic and legislative policy issues, including dividend taxation, the alternative minimum tax, international tax policy, social security reform, defined benefit pension reform, and U.S. trade policy.

    At AEI, Mr. Brill studies the impact of tax policy in the U.S. economy; the fiscal, economic, and political consequences of stimulus legislation; health care reform, pharmaceutical spending, unemployment insurance reform; and financial innovation and technology.
  • Phone: 202-862-5931
    Email: alex.brill@aei.org
  • Assistant Info

    Name: Veronika Polakova
    Phone: 202-862-4880
    Email: veronika.polakova@aei.org

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