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The Buffett Rule Asks the Wealthiest to Pay Their Fair Share

The average tax rate paid by the very highest-income Americans has fallen to nearly the lowest rate in over 50 years, and many pay a lower tax rate than millions of middle-class families. President Obama has proposed the Buffett Rule, which would make sure that no household making more than $1 million pays a smaller share of their income in taxes that middle-class families pay

Nearly one-quarter of all millionaires (about 55,000 individuals) pay a lower tax rate than millions of middle-class families. Warren Buffett has famously said that he pays a lower tax rate than his secretary, and he agrees that isn’t fair. To reform our tax system, which is currently tilted in favor of very high-income households, President Obama has proposed a basic principle of tax fairness called the Buffett Rule.

And, using the average tax rate to tell the story actually, like in the chart above, masks the fact that some high-income Americans pay extraordinarily low tax rates. A full 22,000 households that made more than $1 million in 2009 paid less than 15 percent of their income in income taxes. And the top 400 richest Americans—all making over $110 million a year—paid an average of 18 percent of their income in income taxes in 2008, but one in three of them paid less than 15 percent.

It is these high‐income taxpayers that the Buffett Rule is meant to address by limiting the degree to which they can take advantage of loopholes and tax expenditures. For middle class families making less than $250,000 a year—families for whom tax rates have barely budged in the last 50 years—taxes should not go up.

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