Tax Wealth the Same as Work: The Buffett Rule Makes Tax System More Fair

The Buffett Rule, named after billionaire investor Warren Buffett (below), would reduce the number of millionaires who pay a lower effective tax rate than many middle-class Americans.

Read a Briefing Paper on the Buffett Rule from the Keystone Research Center and PA Budget and Policy Center

Read a Press Release

Some wealthy households are able to take advantage of tax expenditures and loopholes to pay less of their income in taxes than many middle-class Pennsylvania families.

The Buffett Rule is designed to correct for this fundamental unfairness, which has been built into the tax code over the last several decades. The Pay a Fair Share Act (S. 2230) would require taxpayers with incomes over $1 million (after deducting charitable contributions) to pay a tax rate of 30%.[1] The goal is to reduce the number of millionaires who pay a lower effective tax rate than many middle-class Americans.

Many taxpayers with incomes of $1 million whose income is derived primarily from work — wages and salaries —have an effective tax rate the same, or higher, than middle-class families. The tax code has preferential tax rates for investment income[2], which significantly reduces the effective tax rate for taxpayers whose income is largely, or primarily, from investments rather than wages.

Read a Briefing Paper on the Buffett Rule from the Keystone Research Center and PA Budget and Policy Center

Read a Press Release

Endnotes

[1] http://www.govtrack.us/congress/bills/112/s2059/text

[2] Long-term capital gains and stock dividends are taxed at no more than 15% and are exempt from payroll taxes.