Apparently not all wealthy people are opposed to paying higher taxes.
According to a March poll by Quinnipac University, 60% of Americans favor raising taxes on those who make more than $250,000 a year.
And, 64% of those who make over $250,000 agree.
More than 70%, including a majority of Republicans, say that people making more than $1 million should pay more.
A subsequent study released last week indicated that over the past half-century, America’s wealthiest taxpayers have seen their tax outlays, as a share of income, drop by as much as two-thirds, while taxes for middle-class Americans have stayed the same at the federal level and increased slightly at the state level. The group that commissioned the study, Wealth for the Common Good, is an organization comprised of high-net worth individuals and business leaders.
“What we found was that after a half a century of Presidents talking about tax cuts and tax reforms that the middle class pay the same as they did in 1960 whereas the richest one percent pay half of what they in 1960. And the richest 400 households pay two thirds less,” said Chuck Collins, an author of the report, co-founder of Wealth for the Common Good, and a senior scholar at the Institute for Policy Studies
According to the study, if the top 400 wealthiest Americans paid 51% in just 2007, they alone would have paid $48 billion. Indeed, Bush-era tax cuts for the wealthy have cost the Treasury more than $700 billion, with all of these billions added directly to the national debt. Retaining the tax cuts will cost the country $826 billion over the next decade.
“What’s happened is we’ve shifted the responsibility off of the very wealthy and global corporations and onto small businesses and individuals and onto future taxpayers, so we’re really not paying our way,” Collins said.
Apparently not all wealthy people think that’s okay.
Over 300 people, along with more than a thousand other Americans, have signed the group’s online petition calling on Congress and President Obama to let the Bush tax cuts expire at the end of this year, Collins said. Unless some change is made, the top tax rates will only rise to 36.9% next year.
“That’s not even a third of the way to what taxes were under Reagan,” he said, which may be why many wealthy people are “ho-hum” about it.
But in this time of recession and rampant budget cuts, he said, many wealthy taxpayers favor a fairer tax system, and financial advisors might want to take note.
“I think there are a lot of people out there who recognize that their good fortune comes from generations of public investments in market mechanisms and infrastructure and society and that they have to pay so the next generation has the same opportunities.,” Collins said.
Financial advisors have a front row seat to some of these dynamics and are part of the culture of aggressive tax avoidance, Collins said.
“But it might be worth professionals having a conversation with their clients,” he said. For one thing, “people like to give to charity, but taxes is the price to pay to live in a healthy civilized society and advisors may find that a surprising number of clients might feel that way.”
Many wealthy clients after all are concerned about their legacies, and many are from the greatest generation. “They have an alma mater feeling towards this amazing economy and the fertile ground we’ve all built together,” he said.
Among Wealth for the Common Good’s recommendations to correct the tax imbalance are letting the tax cuts expire—except for on the middle class; making the estate tax $2 million per person, which would generate $40 billion a year immediately; ending overseas tax havens; taxing financial transactions; creating a 50% tax on those making over $2 million a year; and eliminating the tax preference on capital gains and dividends.
“Our proposals could cut the $1 trillion deficit in half,” Collins said.
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