Tags: Reich | Tax | Hikes | Wealthy

Reich: Tax Hikes on Wealthy Good for Wealthy and Economy

Monday, 16 April 2012 08:11 AM

Tax hikes on the wealthy wouldn't only benefit the economy, they would benefit the very people slapped with demands to pay more to the IRS each year, says economist and former U.S. Secretary of Labor Robert Reich.

President Barack Obama wants millionaires and billionaires to pay 30 percent in taxes, as doing so would feed the government with revenue it needs to narrow deficits.

A more streamlined government would improve the economy and subsequently, boost demand for the goods and services that would pump up profits at businesses.

That would benefit everyone.

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2012

"Taxes were far higher on top incomes in the three decades after World War II than they’ve been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it’s grown since tax rates on the top were slashed in 1981," Reich writes in his blog.

"Higher taxes on the wealthy can finance more investments in infrastructure, education, and healthcare – which are vital for growth and the economic prospects of the middle class," writes Reich, now a professor of public policy at the University of California at Berkeley.

"Higher taxes on the wealthy also allow for lower taxes on the middle – potentially restoring enough middle-class purchasing power to keep the economy growing. As we’ve seen in recent years, when disposable income is concentrated at the top, the middle class doesn’t have enough money to boost the economy," writes Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.

Many wealthy taxpayers earn investment income, which is taxed at 15 percent, although Obama has proposed that those taking in at least $1 million annually — be it in salary or from investments — should pay at least 30 percent of their incomes in taxes.

The tax plan is dubbed the Buffett rule after Warren Buffett complained the rich pay less as a percentage in taxes than do the middle class, pointing out he pays less as a percentage than does his secretary.

Obama, it seems, also pays less than his secretary.

The White House recently released Obama's 2011 tax returns, which showed an adjusted gross income of $789,674 for the first family, and an effective federal income tax rate of 20.5 percent, CNNMoney reports.

The president's secretary, Anita J. Breckenridge, earns $95,000 a year and paid more as a percentage in taxes, although the White House wouldn't provide an exact figure.

"The president's secretary pays a slightly higher rate this year than the president on her substantially lower income," White House spokeswoman Amy Brundage told CNNMoney.

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2012

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