Last year my federal tax bill—the income tax I paid, as well as payroll taxes paid by me and on my behalf—was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income—and that"s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent. If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine—most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It"s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are also hit with heavy payroll taxes. Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack.
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn"t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country"s finances. They"ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It"s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country"s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from turning into hopelessness. That feeling can create its own reality.
Job one for the 12 is to cut down some future promises that even a rich America can"t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get. But for those making more than $1 million, I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains.
My friends and I have been spoiled long enough by a billionaire friendly Congress. It"s time for our government to get serious about shared sacrifice. The author implies in the first paragraph that ______