Senate Republicans last night successfully filibustered the Buffett Rule, a minimum tax on millionaires that the GOP has falsely claimed would actually hit small business owners and “job creators.” The Buffett Rule, the GOP says, is a gimmick that doesn’t raise enough revenue to merit consideration and is simply a weapon of class warfare, not a means to bring about more equity in America’s tax structure.
A new report from Innovation Ohio and the Center for American Progress, however, shows that the Buffett Rule is far from just a gimmick. According to the report, some of America’s wealthiest zip codes — ritzy communities like Fisher Island, Florida and Wyoming’s Teton Village — collectively pay lower effective tax rates than other lower-income communities, even though they are largely populated by millionaires. In seven of the wealthiest zip codes, the report found, 27 percent of residents earn 94 percent of the income — an average of $2.2 million annually — but their combined effective income and payroll tax rate is just 17.2 percent:
In zip codes with far lower incomes, however, the tax rates are higher. According to the report, 99 percent of all Ohio taxpayers live in zip codes with effective tax rates higher than 17.2 percent. The average Ohio taxpayer earned roughly $49,000 in 2008 but paid an effective tax rate of 21.5 percent, higher than the rate in any of the seven wealthy zip codes examined. Two-thirds of Ohio taxpayers live in zip codes where the average income is less than $50,000, but the tax rate is higher than 17.2 percent.
The data is similar in other states — 99 percent of Pennsylvania taxpayers, for instance, live in zip codes with effective tax rates above 17.2 percent.
The report adds to the evidence that the American tax code has grown incredibly benevolent to the richest Americans. Republicans, however, continue to urge lower- and middle-class Americans to “share some of the responsibility” of reducing the nation’s debt, all while pushing for even larger tax breaks for the wealthy.