In this time of tight budgets and tough choices, and with income-tax-filing day this Tueday, too many Rhode Islanders are feeling squeezed. To make matters worse, they’re hearing about people making over $1 million a year who are actually paying a lower total federal tax rate than they are. That’s just wrong. Americans deserve a straight deal, but when it comes to taxes, they’re not getting one.
Just look at Warren Buffett, a billionaire investor who has famously revealed that he pays a lower federal tax rate than his secretary does. Mr. Buffett has joined President Obama in calling for a correction to this problem, writing last year that “my friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”
I agree with Mr. Buffett and with the Rhode Islanders I’ve heard from who are fed up with our unfair system. That is why I am fighting to address loopholes in the tax code that let super-high-income Americans pay lower tax rates than hard-working middle-class Rhode Island families. The Paying a Fair Share Act of 2012, which I recently introduced, would ensure that multimillion-dollar earners pay a minimum federal tax rate of 30 percent.
According to the Internal Revenue Service, the 400 highest-earning Americans — earning an average of $270 million each — paid an average of 18.2 percent in federal taxes in 2008. That is the same rate that a single Providence truck driver pays on a $40,000-a-year salary. Forbes Magazine reported last fall that Mr. Buffett’s federal income taxes amounted to just 11 percent of his adjusted gross income in 2010.
Under my legislation, the 30 percent minimum requirement would be phased in for taxpayers earning $1 million to $2 million a year and would be in full force for income above that level. To preserve the tax code’s powerful incentive for charitable giving, my bill would retain the deduction for charitable donations for all taxpayers.
We should celebrate those Americans who do well and earn high incomes. But with all the advantages that come with that high income, paying a lower effective tax rate than middle-class Rhode Island families should not be one of them. That’s just not right.
Polls have shown that the vast majority of Americans support this policy change, as do small-business owners across America who are fed up with the special deals for big corporate chief executive officers. I hear it at my community dinners and wherever else I go. We should listen to our neighbors and to local business owners and end unfair, outsized tax giveaways to the highest-income individuals.
The unfairness of these tax breaks is doubly galling in the face of proposals from some in Congress to put education, job training and support for seniors on the chopping block. I have heard from many middle-class Rhode Islanders who feel the system is rigged against them. I share their belief that if we want a tax structure that is fair, the highest-income Americans should be counted on to pay a fair share.
The Senate will get the chance to stand up for fairness when the Paying a Fair Share Act comes up for a vote tomorrow. This is just one step toward restoring the fundamental notion of fair treatment in our economic system. A straight deal is getting harder and harder to come by as special interests and super political-action committees pollute Washington. By voting for the Paying a Fair Share Act, members of the Senate can show the American people that Congress is capable of doing the right thing to make the tax code begin to work for middle-class taxpayers again.