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What's the point of the Buffett Rule if most millionaires already pay higher effective tax rates than almost everyone else?
April 16th, 2012
03:06 PM ET

What's the point of the Buffett Rule if most millionaires already pay higher effective tax rates than almost everyone else?

FROM CNN's Jack Cafferty:

As the Senate debates the Buffett Rule - guess what?

Most millionaires are already paying higher effective tax rates than almost everyone else.

Named after billionaire Warren Buffett, the proposal would mean millionaires pay at least 30% of their income in federal taxes.

But CNN Money reports that while many millionaires pay an effective rate of less than 30%, they still pay a higher percentage than most others.

For example, the tax policy center estimates that counting federal income and payroll taxes, the average effective federal tax rate for people making between $40,000 and $50,000 was 12% last year.

Those making more than $1 million pay more than 20%.

The difference is even bigger if you look only at income tax liability. Middle income groups have an effective tax rate of 3.2% while millionaires pay 18.9%.

Sort of throws cold water on President Obama's argument that the Buffett Rule would be some sort of exercise in fairness.

Under the current rules, a highly paid executive would be taxed at 35% while a millionaire who earns the majority of his income from investments would be taxed at 15% on long-term capital gains and dividends.

The White House argues that the Buffett Rule is aimed at millionaires who can structure their income to minimize their taxes - you know, people like Mitt Romney.

Also, it's worth noting while the Obama Administration runs annual deficits of more than $1 trillion, the Buffett Rule would add less than $5 billion per year to the national treasury. Chump change.

Here’s my question to you: What's the point of the Buffett Rule if most millionaires already pay higher effective tax rates than almost everyone else?

Tune in to the Situation Room at 5pm to see if Jack reads your answer on air.

And, we love to know where you’re writing from, so please include your city and state with your comment.

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Filed under: Buffett Rule • Taxes • Warren Buffett
What does it mean when you have to work 107 days just to meet your tax bill?
April 4th, 2012
02:45 PM ET

What does it mean when you have to work 107 days just to meet your tax bill?

FROM CNN's Jack Cafferty:

With less than two weeks to go until taxes are due, think about this:

It's estimated Americans need to work 107 days just to earn enough money to pay their taxes.

A research outfit called The Tax Foundation says Americans will spend an average of 29% of their income on federal, state and local taxes in 2012.

That's more than what an average family spends on food, clothing and housing combined.

Nationally, the so-called Tax Freedom Day arrives April 17, which just happens to be the same day taxes are due.

But it comes earliest in states like Tennessee, Louisiana and Mississippi. Tennessee is the earliest at March 31.

States with higher average incomes - like Connecticut, New Jersey and New York - aren't free of their tax burdens until later in the year. Connecticut is the latest at May 5.

It goes without saying that not every situation is the same, but a lot of people are fed up with our current tax structure.

Billionaire David Rubenstein calls America's tax system a "disgrace."

The co-founder of the private equity firm Carlyle Group says the government needs to change the law if they want the rich to pay more in taxes. Rubenstein adds that he's paying what he's supposed to pay under the current law - and it's unfair for people to say he's not kicking in his "fair share."

President Obama has been calling for the rich to pay their "fair share" in taxes. He wants to change the law so that people who make more than $1 million pay at least a 30% tax rate.

Here’s my question to you: What does it mean when you have to work 107 days just to meet your tax bill?

Interested to know which ones made it on air?

FULL POST

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Filed under: On Jack's radar • Taxes
Where is America headed if nearly half of us pay no federal income tax?
February 23rd, 2012
05:00 PM ET

Where is America headed if nearly half of us pay no federal income tax?

FROM CNN's Jack Cafferty:

The Republican Party resembles a circular firing squad.

Republicans may manage to lose an election they could win - against a weakened incumbent in a troubled economy - which is why many in the party are dissatisfied with the state of the GOP race for president and the remaining candidates.

There's Mitt Romney, who's been running for six years, has all the money in the world and still can't get the party to line up behind him. Newt Gingrich seems to have done himself in after a couple of spikes of momentum. Ron Paul has rabid supporters, just not enough of them to make a difference.

And of course, Rick Santorum, the current flavor of the month - who has a history of controversial comments, including about Satan, and lost his own U.S. Senate seat in Pennsylvania by double digits.

It's no wonder that some Republicans are still looking for a savior.

A new Quinnipiac poll shows that New Jersey Gov. Chris Christie is the top choice of Republicans if there winds up being a "brokered convention." Christie - who gets 32% support - is followed by former Govs. Sarah Palin and Jeb Bush at 20% and Indiana Gov. Mitch Daniels at 15%.

One of the reasons that a lot of people like Christie is because he's such a straight talker. Most recently, he told Warren Buffett to "just write a check and shut up." Gotta love it.

Christie is a Romney supporter who insists he's not interested in running himself. Too bad. You could put the Christie-Obama debates on pay-per-view and retire the national debt.

Other Republicans who might still jump into the race include Wisconsin Rep. Paul Ryan, Florida Sen. Marco Rubio and former Arkansas Gov. Mike Huckabee.

Here’s my question to you: Where is America headed if nearly half of us pay no federal income tax?

Interested to know which ones made it on air?

FULL POST

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Filed under: Taxes • United States
Should the payroll tax cut be extended yet again?
FILE PHOTO: President Barack Obama signed the payroll tax bill on December 23, 2011.
February 13th, 2012
03:14 PM ET

Should the payroll tax cut be extended yet again?

FROM CNN's Jack Cafferty:

160 million Americans could see their paychecks shrink at the end of the month - if Congress doesn't strike a deal on the payroll tax cut. This is the same cut they extended for only two months at the end of December, and those two months are just about up.

The payroll tax cut reduces how much many Americans pay into Social Security on their first $110,000 in wages.

Instead of paying in 6.2%, they've been paying 4.2% for the past year and two months.

For someone making $50,000, this tax cut is worth almost $1,000 per year. Significant money. Of course it's money we don't have, but that's never stopped the government before.

Just this afternoon, Congress inched one step closer to making a deal.

House Republicans now say they're willing to extend the payroll tax cut for the rest of this year without offsetting it with spending cuts elsewhere - something they weren't willing to do last week.

Can you tell it's an election year?

Republican leaders also say the measure could be voted on as soon as this week.

Lawmakers only have a little over two weeks to go before February 29, and they're scheduled to go on recess starting next week. They certainly deserve some more time off since they get so much done while they're in Washington.

Meanwhile the deadline could come even sooner, as many employers need to cut their first March-dated paychecks well before the last day of February. If Congress doesn't make a deal by the middle of this week, payroll processors will have to change their systems to reflect the higher tax rate.

Here’s my question to you: Should the payroll tax cut be extended yet again?

Interested to know which ones made it on air?

FULL POST

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Filed under: Taxes
Is a 30% tax on millionaires a good idea?
January 30th, 2012
03:22 PM ET

Is a 30% tax on millionaires a good idea?

FROM CNN's Jack Cafferty:

President Obama's proposed 30% tax on millionaires would only be a drop in the bucket when it comes to solving this nation's deepening financial crisis.

The White House isn't too interested in talking about the impact of the so-called Buffet rule.

And here's why: Tax experts suggest the additional tax on the wealthy would raise about $40 billion a year in revenue. That's less than 1% of what the government spent in 2011.

$40 billion is nothing compared to the more than $1 trillion annual deficits the Obama administration is running - or the national debt which now exceeds $15 trillion.

Republicans say the plan is nothing more than a political charade. One congressman tells Politico that the president wants to "pit one group against another so he can raise more money to spend on a bloated government."

In his State of the Union address, President Obama suggested it comes down to tax cuts for the wealthiest or investments in everything else, including funding for education, medical research and the military.

President Obama's senior strategist, David Axelrod, said on Meet the Press yesterday that in order to solve the deficit, "everyone's going to have to give a little and that includes people at the top." What about cutting spending or the size of government?

Meanwhile a new Gallup poll shows Americans are divided on whether our economic system is unfair. 49% agree with the president that it's unfair while 45% say it's fair. However, a majority - 62% - say the economic system is fair to them "personally."

This could make President Obama's re-election strategy of giving everyone a "fair shake" a tough sell if most Americans think the economic system is fair as is.

Here’s my question to you: Is a 30% tax on millionaires a good idea?

Interested to know which ones made it on air?

FULL POST

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Filed under: Taxes
Should tax increases be used to pay for President Obama's jobs program?
September 13th, 2011
06:00 PM ET

Should tax increases be used to pay for President Obama's jobs program?

FROM CNN's Jack Cafferty:

President Obama's plan to pay for the $447 billion jobs bill with higher taxes is dead on arrival.

Republicans are pushing back - insisting that tax hikes are off the table.

The White House says congress should pay for the jobs bill by putting new limits on itemized deductions for the wealthy... that includes deductions for home-mortgage interest, state and local property taxes and charitable donations.

In this case - "wealthy" means individuals who make more than $200,000 a year and families who earn more than $250,000 a year.

President Obama also wants to end tax breaks for oil companies and corporate jet owners... and cut out a tax break for investment fund managers.

The White House says all these tax changes would raise $467 billion over 10 years.

But Republicans aren't hearing any of it when it comes to higher taxes.

And that's not all they don't like... they've also rejected new stimulus spending on road projects, teacher salaries and school construction. they say anything that smacks of another "stimulus bill" ain't gonna happen.

On the other hand, Republicans like the president's proposal to give more generous tax breaks to small businesses... and the idea of pulling back burdensome government regulations.

So far, President Obama is selling his plan to pay for the jobs bill as a single idea. But realistically, there's no way that will ever get through a divided Congress.

Republicans say certain parts of the plan should be considered individually.

Here’s my question to you:
Should tax increases be used to pay for President Obama's jobs program?

Interested to know which ones made it on air?

FULL POST

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Filed under: President Barack Obama • Taxes
June 6th, 2011
05:56 PM ET

Should American wealth be redistributed by taxing the rich?

FROM CNN's Jack Cafferty:

More than a hundred conservatives in the House sent a letter to House Speaker John Boehner and Majority Leader Eric Cantor Monday setting strict guidelines that need to be met in order to get their vote to support an increase to the debt ceiling. These lawmakers are concerned Boehner and Cantor will not push hard enough for spending cuts when they meet with Vice President Joe Biden on Thursday.

(L to R) House Majority Leader Eric Cantor (R-VA), House Speaker John Boehner (R-OH).
(L to R) House Majority Leader Eric Cantor (R-VA), House Speaker John Boehner (R-OH).

Specifically, they're asking for discretionary and mandatory spending cuts that would cut the deficit in half next year. Good luck.

For all the tough talk coming from Republican lawmakers about cutting spending and reducing the deficit, they refuse to give in on one issue - raising taxes, mostly on the rich. Such a move would of course raise revenue at a time when we're facing a $14.3 trillion national debt, but it would also anger wealthy Republican donors. Can't have that.

According to a new Gallup Poll, Americans are split over whether to raise taxes for the rich.

Forty-seven percent of Americans believe the government should redistribute wealth in this country by raising taxes on the wealthiest citizens. Forty-nine percent disagree.

When you break it down by party affiliation, the percentage of Democrats who are for raising taxes on the wealthy is just about equal to the percentage of Republicans against raising taxes.

Seventy-one percent of Democrats support redistributing wealth while 26% are against it. Just 28% of Republicans support a plan to tax more heavily the richest Americans while 69% do not.

When it comes to independents though, it's split. About 43% support redistributing wealth while 53% do not.

Here’s my question to you: Should American wealth be redistributed by taxing the rich?

Interested to know which ones made it on air?

FULL POST


Filed under: Taxes
May 9th, 2011
05:00 PM ET

Should raising taxes be more of a priority than cutting spending?

ALT TEXT

(PHOTO CREDIT: GETTY IMAGES)

FROM CNN's Jack Cafferty:

Americans are paying the smallest share of their income in taxes since 1958 - about 23.6% - according to new analysis from USA Today.

During the 70's, 80's and 90's, Americans spent about 27% of their income on taxes. If we were paying that rate now, $500 billion in additional taxes would be collected each year. Yes, $500 billion. That's about one-third of this year's federal deficit.

Now, conservative groups are quick to point out that this fall in tax revenue is due to a weak economy and not just lower tax rates or tax breaks. Deficit reduction advocates disagree. Either way, you gotta wonder what this country could do with an extra $500 billion dollars right about now.

This report comes as President Obama plans to meet with Democrats and Republicans separately over the next few weeks to talk about reducing the deficit. Senate Democrats will go to the White House on Wednesday, followed by Senate Republicans Thursday. House Democrats and Republicans will come in the "next few weeks."

Back in December, a deficit reduction committee created by the president recommended cutting spending and eliminating tax breaks to trim nearly $4 trillion from the deficit over the next decade. So far those recommendations have been largely ignored. President Obama came out with his own plan last month that calls for $2 in spending cuts for every $1 in tax increases.

Republican Congressman Paul Ryan has his own 10-year, $4.4 trillion plan that calls for spending cuts and the overhaul of Medicare but doesn't mention raising taxes. We're still waiting for a third deficit reduction plan from the so-called Gang of Six a bi-partisan group of six senators - we're still not sure what that will look like.

Here’s my question to you: Should raising taxes be more of a priority than cutting spending?

Interested to know which ones made it on air?

FULL POST


Filed under: Congress • President Barack Obama • Spending • Taxes
April 18th, 2011
05:00 PM ET

How should income tax laws be changed?

ALT TEXT

People waiting in line at a downtown Manhattan post office April 15 to file at the last minute. (PHOTO CREDIT: GETTY IMAGES)

FROM CNN's Jack Cafferty:

Today is the deadline to file your income tax return, three days later than usual because of a federal holiday.

And despite this country's dire financial straits, the very rich are paying a lot less in income tax than they did just twenty years ago. The IRS tracks 400 households with the highest adjusted gross incomes each year. In 2007, the average federal income tax rate that group paid was just 17 percent. In 1992, it was 26 percent. Over that same period, the average tax rate for all taxpayers dropped to 9.3 percent from 9.9 percent.

What's more is according to the Tax Policy Center, 45 percent of U.S. households - a total of about 69 million - will pay no federal income tax. In fairness, most of those 69 million households still pay other taxes like state and local income taxes and property and sales taxes too. Two thirds of that group pays payroll taxes - many pay more than they get back on their federal return.

Most of the households in the group that doesn't pay federal income tax earn less than $50,000 a year. But about 5 million make between $50,000 and $1 million a year. The secret is in the tax breaks, on everything from having a child to going to college to paying your mortgage. According to the IRS, the tax code currently has a total of $1.1 trillion in credits, deductions and exemptions. That comes to an average of about $8,000 per taxpayer.

But that could change. House Republicans want to eliminate tax breaks and lower overall rates. The President has said he wants to do away with tax breaks too.

Here’s my question to you: How should income tax laws be changed?

Interested to know which ones made it on air?

FULL POST


Filed under: Taxes
December 16th, 2010
06:00 PM ET

Could you pass an IRS audit?

FROM CNN's Jack Cafferty:

If you're scrambling to do some end-of-the-year tax planning, you might want to consider this:

The Internal Revenue Service increased the number of returns it audited by 11 percent this year - that's according to the Associated Press.

The tax agency was most likely to target wealthy taxpayers and big businesses; but it also audited more charities and other tax-exempt groups.

In total - the IRS audited more than 1.58 million individual returns; up from 1.43 million the year before. Officials say it's the highest rate of individual audits in the last decade.

And, that translates to more than one percent of individual returns that were audited. But the richer you are, the more likely you are to get audited:

Those making more than $1 million had an audit rate of more than eight percent; and people making more than $200,000 had an audit rate of more than three percent.

As the country struggles to come up with a solution for our skyrocketing national debt, "tax reform" is a phrase we hear more and more often.

Undergoing an IRS audit is only a slightly bigger nightmare than making your way through our ridiculously complex tax code.

The problem with tax reform is there's a powerful lobby in Washington representing tax lawyers, accountants and money managers who will probably fight any effort at reform tooth and nail.

So for this year, you better get it right the way it is.

Here’s my question to you: Could you pass an IRS audit?

Tune in to the Situation Room at 6pm to see if Jack reads your answer on air.

And, we love to know where you’re writing from, so please include your city and state with your comment.


Filed under: Tax Returns • Taxes
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