2008 record      


Taxes: A new IBD/TIPP poll finds most back President Obama's soak-the-rich Buffett tax rule. But they also want dividend and capital gains taxes kept low to encourage investment and growth. Problem is, you can't do both.

The IBD/TIPP survey found that 55% of Americans think investment income should be "taxed at a lower rate than wages." Even 38% of Democrats believe this. And, not too surprisingly, 65% of investors concur.

They're right. Investment earnings already get taxed at the corporate level at 35% before they can be distributed as dividends. And capital gains aren't indexed for inflation. Both tax provisions end up penalizing investments rather than encouraging them.

Obama's own Economic Recovery Advisory Board pointed to this problem, noting in a 2010 report on tax reform that a number of OECD countries have made changes to their tax code to avoid double-taxing investment income.

The problem is that in the very next breath, the public says it wants to tax the rich more.

In fact, 64% say they support Obama's so-called Buffett Rule, which would create a new alternative minimum tax for millionaires, forcing them to pay at least 30% of their income in taxes. Incredibly, 42% of Republicans support the Buffet Rule and, even more incredibly, 63% of investors do.

Just one minor hitch. You can't keep investment taxes low and soak the rich at the same time. The simple truth is that the rich account for most of the investments made in this country, and returns on these investments comprise a far larger share of their incomes. Just ask Warren Buffett himself, or Mitt Romney.

The richest 400 Americans get just 8% of their income from wages and salaries while 65% comes from capital gains and dividends, according to IRS data. Among those making $250,000 or more, the share of taxable income coming from investments averages about 20%.

For families earning $50,000 to $100,000, investments make up less than 3% of their income.

Here's another way to look at it: Although the $250,000-and-up crowd accounts for less than 2% of tax returns, it accounts for 65% of all the taxable capital gains and dividends.

The bottom line is that it's simply impossible to cut taxes on investment — which most agree is needed — while satisfying Obama's lust for class warfare.

The other problem is that the Buffett Rule won't do anything to close the yawning budget deficit or lower the nation's $15 trillion debt. Over the next 10 years, it would bring in all of $47 billion, equal to 0.4% of the projected deficits. And that assumes the rich don't take steps to avoid the new rate, which is laughable.

The White House itself has admitted that the Buffett Rule "was never our plan to bring the deficit down and get the debt under control," saying instead that it's all about fairness.

But we don't need to bring fairness to the tax code. The tax code already is, by any reasonable measure, abundantly fair. The richest 1% pay more than a third the nation's income taxes, while the bottom half pays little or nothing at all.

What the IBD/TIPP poll really points to is the lousy job the mainstream press has done to educate the public about this issue. Instead of providing the facts and letting the public make knowledgeable choices about tax policy, they media have happily cast themselves in the role of Obama propagandists.


{jb_bluebox}Q:  On the topic of taxes, generally speaking do you support or oppose establishing a minimum
federal tax rate of 30 percent on American households making one million dollars a year or more?
Would you say you...{/jb_bluebox}

43%  Support Strongly
21%  Support Somewhat
13%  Oppose Somewhat
15%  Oppose Strongly
7%   Not sure

{jb_bluebox}Q:  Some people say investment income such as dividends should be taxed at a lowerrate than wages
because profits from investments have already been taxed once at the company level and a lower rate
would encourage investment that can fuel job growth. Others say it is unfair to tax capital gains
at a lower rate. Which do you prefer?{/jb_bluebox}

55%  Investment income should be taxed at a lower ratethan wages
35%  Investment income should be taxed at the same rate as wages
10%  Not sure

{jb_bluebox}The Poll was conducted from April 27 (Friday) to May 4 (Friday), Sample Size: 910 adults 18+ nationwide, Margin of error - plus/minus 3.3 percentage points.{/jb_bluebox}
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