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

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  • #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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Alex
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