Industrial Insight

What would be fair for the rich?… | September 22, 2011

http://mjperry.blogspot.com/2011/09/buffett-rule-is-based-on-anecdotal.html

CARPE DIEM

Professor Mark J. Perry’s Blog for Economics and Finance

Monday, September 19, 2011

The “Buffett Rule” Is Based On Flawed, Anecdotal Evidence; National Data Show That “Super-Rich” Pay Avg. Tax Rates 2-3X Higher Than a Secretary

Adjusted Gross Income, 2009 Average Federal
Income Tax Rate (%)
$10,000 to $15,000 6.8%
$15,000 to $20,000 6.6%
$20,000 to $25,000 8.7%
$25,000 to $30,000 9.7%
$30,000 to $40,000 10.0%
$40,000 to $50,000 10.6%
$50,000 to $75,000 11.6%
$75,000 to $100,000 12.3%
$100,000 to $200,000 16.3%
$200,000 to $500,000 24.6%
$500,000 to $1,000,000 28.8%
$1,000,000 to $1,500,000 29.4%
$1,500,000 to $2,000,000 29.6%
$2,000,000 to $5,000,000 29.7%
$5,000,000 to $10,000,000 29.1%
$10,000,000 or more 26.3%
Average 17.8%

Source: IRS Publication 1304 for 2009, Table 1.1

Bottom Line: We now have a proposal for a tax policy – the “Buffett Rule” – based on Warren Buffett’s anecdotal “evidence” of his and his employees’ tax burdens. But that “evidence” seems pretty far-fetched and not consistent with: a) average federal income tax rates available from the IRS, nor b) average tax rates for all federal taxes paid, from the CBO.

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