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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (50117)	3/21/2012 7:57:11 PM
From: Hope Praytochange	5 Recommendations Respond to of 71588

Rich Would Skirt 'Buffett Rule,' Report Shows By JOHN D. MCKINNON Millionaires likely would find legal ways to avoid paying higher taxes under Barack Obama's proposed "Buffett Rule," a new congressional estimate finds. The proposal—spelled out in Mr. Obama's State of the Union address—would impose a 30% minimum tax rate on those who make more than $1 million a year. It is named for the billionaire investor Warren Buffett, who advocates higher taxes on the very wealthy. If you think the proposed Buffett Rule would serve taxpayers, think again. WSJ's John McKinnon joins Mean Street with details of a new study casting doubts about the proposal that would do away with the Alternative Minimum Tax. Taxpayers' likely efforts to sidestep the rule's effects mean it would raise about $47 billion in extra revenue over the next decade, according to a new estimate by the nonpartisan Joint Committee on Taxation. a congressional advisory body that functions as the official scorekeeper for legislation affecting government tax revenue. That's less than some outside experts had expected and a relatively small amount compared with the size of federal budget deficits, which are running at more than $1 trillion a year. By contrast, the administration proposal to end the Bush-era tax cuts for high earners—defined as couples making more than $250,000—would raise about $850 billion over the next decade. Mr. Obama also wants to limit the value of many deductions for families making more than $250,000, raising an additional $584 billion over the decade. The White House hasn't released an estimate of how much money the Buffett proposal might raise, and it didn't respond to a request for comment on the committee's conclusions. It has emphasized the idea's importance as a way to make the tax system fairer. At a news conference this month, Mr. Obama called on Congress to pass the Buffett Rule, "so that we don't have billionaires paying a lower tax rate than their secretaries." He added that "if we're serious about paying down our deficit, it's as good a place to start as any." The Tax Policy Center, a nonpartisan think tank (a joint venture of the Brookings Institution and the Urban Institute), estimated recently that the Buffett Rule would raise about $114 billion over a decade. Sen. Orrin Hatch (R., Utah), who requested the committee's estimate, termed the Buffett Rule "a dog that just won't hunt." The committee found many millionaires would find ways to avoid the rule, mostly by cutting back on stock sales and other transactions that produce capital gains. Capital-gains income is taxed at relatively low rates—well below the Buffett Rule threshold of 30%—so earning a high percentage of capital-gains income would tend to make a household subject to the proposed minimum tax. "We project taxpayers respond to increases in marginal and average tax rates by reducing their realization of capital gains," the committee said. Wealthy people also are likely to speed up asset sales so that they would occur before the new minimum tax goes into effect. That would reduce the government's projected tax take by about $6 billion for 2014, the committee's analysis suggests. The top 1% of households—with average pretax income of $1.9 million—paid federal individual income taxes at a rate of about 19% in 2007, the latest year available. The middle fifth of households—with average income of $64,500—paid federal individual income taxes, which exclude Social Security and Medicare taxes, at a rate of about 3.3%.