The Buffett Rule is named after Warren Buffett, who stated in 2011 that he believed it was wrong that rich people, like himself, could pay less in federal taxes, as a portion of income, than the middle class, and voiced support for increased income taxes on the wealthy. The rule would implement a higher minimum tax rate for taxpayers in the highest income bracket, to ensure that they don’t pay a lower percentage of income in taxes than less-well off taxpayers.
Meanwhile, in Salem Sen. Larry George and the Republicans are proposing the “Anti Buffet Rule”. That is, select business owners will get a preferred 7% top income tax rate, while any employee making at least $7,750/year, or about $645/mo taxable income, would pay a top rate of 9%.
The 7% rate would apply to the first $10 million in profit for business owners. Why someone making 2, 3, 7, or 10 Million per year needs an incentive to invest in their businesses, I can’t fathom.
The argument that the “average” tax benefit will be about $5,000 is specious. Without providing the basis for that statement, lets do some back of the envelope calculations.
I think we can safely assume that at least 92% of ”small business owners” have a profit of $250,000 or less. Some people say it’s more like 97%. Regardless, If these truly small business persons’ top rate goes from about 9.9% down to 7%, then at least 92% of the small business owners will see a tax savings of just $3,625/year. That means that the top 8% of the small business owners would average over $20,000/year, and the top 1%, those near the $10,000,000 annual maximum 7% rate, would be receiving $290,000/year in tax reductions. At least.
Senator George needs to release the complete study of how much the Warren Buffetts of Oregon will be benefiting from his tax reduction.
If this legislation were about helping struggling small businesses, the 7% rate would be capped at something in the area of $250,000 in profit. But this isn’t about growth, or fairness or double taxation. It’s about two things. First, keeping wealthy business owners in Oregon, and second it’s the Republican ransom for passing tax increases on the rest of us.
Those of us who wanted the Republicans to be tougher on PERS reform should feel betrayed. The Republicans used the PERS reform support they received from the Oregon School Boards, The Chalkboard Project, The Oregonian, and many others, to get huge tax reductions for millionaires rather than more teachers in classrooms.