To embed this post, copy the code below and paste into your website or blog.
View the original article here
In his nightly note, BTIG's Dan Greenhaus digs into the "Buffett Tax" and some math on the deficit.
First he notes that over the next 10 years, estimated deficits are estimated at around $6 trillion.
Then he looks at what socking it to the rich actually gets us.
Conclusions. It doesn't get us THAT far towards balancing the budget, but it's not nothing.
The below table breaks down actual tax return data from the IRS from 2009, showing how many returns were filed at each income level, what their taxable income was, what tax they paid and what percentage of the total income tax they paid. The first thing that should jump out when looking at this table will explain why the President focuses on individuals making more than $200,000 (but less than $500,000); they pay more than 20% of all income taxes. Those making more than $200K but less than $1,000,000 pay 30% of income taxes. Focusing only on higher income brackets would ignore a significant amount of taxable income at the $200K+ level.
Nonetheless, if we add up the $1,000,000 and above categories, we get taxable income of $623.6 billion that resulted in $177.5 billion in income tax paid, a rate of less than 28.5%. If we were able to somehow change that tax rate to say 35%, an increase of more than 7 percentage points, the income tax paid in 2009 would have been over $218 billion or an increase of a bit less than $41 billion. If we were able to do this over ten years, the U.S. would have extra income of $410 billion. All from raising taxes by seven full percentage points on those making income over $1,000,000.
Unfortunately, $410 billion is "only" about 7% of the deficit we expect to incur over the next ten years. That is not an inconsequential portion but considering the debate surrounding hiking tax rates by any amount, let alone generating an increase sufficient see a seven percentage point increase in taxes paid, as well as the negative consequences such a sharp adjustment would engender, this hardly seems to be the “only” place to go to achieve debt reduction.
View the original article here
Image: APSixteen of France's wealthiest individuals have mimicked Warren Buffett's call for an "exceptional tax levy" on the wealthy to help their country manage its debt burden. The announcement—published on the website of magazine Le Nouvel Observateur this week—surfaces just ahead a planned announcement by French President Nicolas Sarkozy on new austerity measures meant keep budget deficits under control.
Tension has been high ever since rumors circulated that France could lose its treasured AAA rating. Austerity measures are already expected to cut taxes on the rich.
According to WSJ, a public call for such a levy may be intended to paint a more positive picture of "les riches." Billionaires—in particular, L'Oréal heiress Liliane Bettencourt—have recently come under fire for attempting to evade tax collection.
Here's the English translation of their public appeal (via WSJ):
We, chairmen of companies and business leaders, business men and women, finance professionals or wealthy citizens, call for an exceptional levy that would target France's richest taxpayers.
This exceptional tax should be calculated in a reasonable way and designed so as to avoid undesirable effects, such as capital outflows and an increase in tax evasion.
We are aware of the fact that we have benefited from a French model and a European environment which we are attached to and which we want to help preserve. This tax is not a solution in itself: it must be part of a wider reform of the tax system, encompassing spending as well as tax receipts.
At a time when rising public debt and deficits are threatening France's and Europe's future, and when the government is asking everyone to show solidarity, we feel we must contribute.
A full list of signers is available here.
Please follow Europe on Twitter and Facebook.To embed this post, copy the code below and paste into your website or blog.
View the original article here
