CWA: Obama's Tax Fairness Plan a Positive Step for Economy

Millionaires Would No Longer Pay Lower Rates Than Middle Class

CWA is praising President Obama's plan to ensure that America's millionaires pay at least the same tax rate as middle-class workers.

"The administration's plan is a positive step toward overall tax fairness and ensuring that the wealthiest Americans pay at least the same percentage of their earnings as working and middle-class Americans," CWA President Larry Cohen said.

Cohen noted that top tax rates for the wealthiest Americans have been cut dramatically over the past 60 years, from above 90 percent to just 35 percent today, with many paying far less.

"Right now, under our skewed tax system, many hedge fund managers pay at a far lower tax rate than their secretaries, for example," Cohen said. "The president's plan is an important step toward economy recovery, by ensuring that those who can afford to pay and support our government's vital service do pay."

Analyzing figures from the Tax Policy Center, Nobel Prize-winning economist Paul Krugman writes on his New York Times blog that 40 percent of taxpayers with incomes between $30,000 and $40,000 pay more than 12.9 percent of their income in income and payroll taxes.

"Meanwhile, 25 percent of people with incomes over $1 million pay less than 12.6 percent of their income in these taxes," Krugman said. "This suggests that there are a lot of very-high-income guys paying a lower tax rate than their secretaries."

The tax comparison between bosses and secretaries was made popular by billionaire Warren Buffett, who for years has called for higher taxes for him and other rich Americans. In a New York Times op-ed, he tells Congress to stop "coddling" the wealthy and "get serious about shared sacrifice."

"I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain," Buffett wrote. "People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what's happened since then: lower tax rates and far lower job creation."