Washington, DC – With income inequality soaring to a level not experienced in America since prior to the Great Depression, U.S. Senator Sheldon Whitehouse (D-RI) today introduced legislation to prevent America’s top earners from paying lower tax rates than middle-class families. The Paying a Fair Share Act, also known as the “Buffett Rule,” would ensure that multi-million-dollar earners pay at least a 30 percent effective federal tax rate. The measure would reduce the federal deficit by an estimated $119 billion over the next decade.
“We are living through a new Gilded Age, cemented by President Trump’s massive tax giveaway to the wealthy,” said Whitehouse, who first introduced the Paying a Fair Share Act in 2012. “Basic fairness needs to be restored to the tax code. Hardworking teachers, nurses, and police officers pay their share in taxes. The wealthiest Americans who benefit the most from our economic system should not be allowed to exploit tax loopholes to skip out on doing their part.”
The bill is also sponsored by Jeff Merkley (D-OR), Jack Reed (D-RI), Richard Blumenthal (D-CT), Dianne Feinstein (D-CA), Tammy Duckworth (D-IL), Chris Van Hollen (D-MD), Cory Booker (D-NJ), Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), Ed Markey (D-MA), Dick Durbin (D-IL), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Kirsten Gillibrand (D-NY), and Mazie Hirono (D-HI).
In 2016, the highest-earning 0.001% of Americans – making an average of $145 million each – paid an average effective federal tax rate of just 23 percent, far short of the top marginal rate of 37 percent. That is similar to the effective rate paid by the average iron and steel worker or high school special education teacher in Rhode Island, according to data from the IRS and the Rhode Island Department of Labor and Training.
The Paying a Fair Share Act would apply only to taxpayers with income over $1 million, including capital gains and dividends, and would phase in over their second million dollars in income. The bill includes language to preserve the incentive for charitable giving. Directions on how taxes would be calculated are available here.
The “Buffett Rule” is named after Warren Buffett, the legendary investor who has famously lamented that he pays a lower tax rate than his secretary. Former President Barack Obama proposed adding the Buffett Rule to the tax code to ensure that those at the top pay at least the tax rate paid by middle-class families.
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