When a super-wealthy guy like Warren Buffett talks about taxing the rich– in the pages of the New York Times, no less– it gets the rest of the media talking. But that doesn't mean that talk will get things right.
Here's one example from ABC World News (8/15/11):
BIANNA GOLODRYGA (ABC NEWS): Much of Buffett's income comes from capital gains, profits resulting from investments, and they're taxed at only 15%. Buffett's solution, rates should be raised for the 300,000 Americans who make more than a million a year, left alone for everyone else. An additional 1% tax on the richest Americans is estimated to raise $100 billion in extra revenue during the next decade. But tax experts say it's not enough for just the super-rich to pay more.
MAYA MACGUINEAS (PRESIDENT OF THE COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET)
The bottom line is that the fiscal hole that we face is so large that everybody is going to have to be prepared to pay more in revenues in the end.
Nowhere does Buffett propose that his income tax rate should be increased one percentage point. In fact he talks about how his income tax rate is about half of what people who work in his office are paying. His column also talks about how the super-rich get a break on capital gains; as Buffett sees it, when the capital gains rate was 39.9 percent– over twice what it is now– it didn't stop people from investing.
So why is ABC low-balling his call to tax the wealthy? More realistic projections of how much can be gained by rolling back tax cuts for the wealthy tell a different story. Chuck Marr at Center on Budget & Policy Priorities pointed out one way to raise a trillion dollars over 10 years:
Returning the average tax rate on the top 1 percent of taxpayers to its 1996 level of 29 percent could raise about $100 billion a year, or $1 trillion over the next decade.
Chuck Collins and Alison Goldberg note that
Almost 500 high-income taxpayers support the Fairness in Taxation Act, that would increase top tax rates on millionaires, generating an additional $78 billion in urgently needed revenue.
A New York Times story following up on Buffett's column pointed out that
his proposal would put a significant dent in the nation's budget shortfall. Based on projections by the Joint Committee on Taxation, the Congressional Budget Office and the Treasury, the tax increase on all three fronts would generate as much as $500 billion in new revenue over the next decade – about a third of what the Congressional committee is supposed to cut from the deficit.
The ABC report does conclude by pointing out that this $100 billion figure could build 7,000 new elementary schools. But Buffett's actually proposing to raise far more money than that. Why is ABC trying to give the super-wealthy a break?