When Warren Buffett argued in the New York Times in August that America's richest weren't paying their fair share, many on the right lambasted the Oracle as a clandestine class warrior working on incorrect assumptions. Likewise, when President Obama rolled out his new tax plan last month -- based on the "The Buffett Rule," that the country's millionaires and billionaires shouldn't pay a smaller percentage of their income in taxes than ordinary Americans -- Republicans in Congress denounced it as a job killer.
The nonpartisan Congressional Research Service set out to test both of those assertions, and found each of them wanting. The rich? Many actually do pay less than average Americans. And that tax plan? Unlikely to hurt those small businesses that Republicans say drive our economy.
From the report:
The results of this analysis show that the current U.S. tax system violates the Buffett rule in that a large proportion of millionaires pay a smaller percentage of their income in taxes than a significant proportion of moderate-income taxpayers. Roughly a quarter of all millionaires (about 94,500 taxpayers) face a tax rate that is lower than the tax rate faced by 10.4 million moderate-income taxpayers (10% of the moderate-income taxpayers). Tax reforms that are consistent with the Buffett rule would likely include raising tax rates on capital gains and dividends. For example, the President has proposed allowing the 2001 and 2003 Bush tax cuts to expire for high-income taxpayers and taxing carried interests of hedge fund managers as ordinary income as tax reforms that observe the Buffett rule. Research suggests that these tax reforms are unlikely to affect many small businesses or to deter saving and investment.
You can read the entire study below: