In a New York Times’ op-ed today, billionaire investor Warren Buffett urged Congress to increase taxes on the wealthy, declaring that the mega-rich had been “coddled long enough by a billionaire-friendly Congress.” Buffett called for an immediate increase “on taxable income in excess of $1 million” and an additional increase “for those who make $10 million or more.” Asked for his thoughts on Buffett’s request during his rounds at the Iowa state fair today, the latest GOP presidential candidate Gov. Rick Perry (TX) seemed to agree that higher tax rates would not impact millionaires and billionaires but fell back on the GOP position that a higher tax rate would “devastate” small businesses:
PERRY: I just think that new taxes are not the answer right now. If I had — I don’t know what he’s worth — $80 billion or $30 billion or whatever it is, he’s never going to spend all his money so taking money away from Warren Buffett isn’t going to affect anything. But, it’s the $250,000 folks who they’re trying to tax who’s the small businessman that’s getting devastated in this.
Perry is right to second Buffett and fellow billionaire Bill Gates’ conclusion that a higher tax rate on millionaires and billionaires would not really “affect anything.” After all, millionaire tax rates have “plunged over the last two decades. As a percentage of their incomes, millionaires are now paying about one-quarter less of their income to federal taxes than they did in the mid-1990s.” What’s more, only 321,000 households have incomes over $1 million. The current tax cuts give these 300,000 wealthy Americans more in one week than it takes to fund a children’s nutrition program for an entire year.
Perry, however, is indisputably wrong to claim small businesses will be “devastated” by such a tax increase on the wealthy. As the nonpartisan Center on Budget and Policy Priorities notes, fewer than 2 percent of small businesses claim an income in the top two income brackets (roughly making more than $250,000 annually). Indeed, a “substantial percentage” of small businesses are actually in the lowest tax brackets. 34 percent are in the bracket that are not subject to income taxes at all because their incomes are too low. And as TP Economy editor Pat Garofalo notes, if a small business owner is actually taking home $1 million per year in income, the individual “ought to be taxed like anybody else making that much.”
Perhaps this is why 63 percent of Americans want Congress to increase taxes on wealthy Americans. For their part, Buffett notes that many of his “mega-rich” acquaintances “wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.”