By: Dr. Lynn Reaser
Q: Is President Obama’s proposal to raise taxes on millionaires and billionaires good public policy?
A: No. Millionaires and billionaires should not pay lower tax rates than others, but they generally do not. They now pay an average of about 25% of their income in taxes versus about 7% for households earning $40,000 to $50,000. Even increasing their average tax rate to 35% would generate at most about $72 billion, which would make only a modest dent in a deficit running $1.3 trillion… Many wealthier households do benefit from larger share of their incomes in dividends and capital gains taxed at the 15% rate. However, that income is currently “double taxed” as corporations pay a 35% on profits before it is distributed to shareholders. Good public policy calls for total tax reform.