Why 40 New York millionaires want to raise taxes on the rich

More than 40 New York state millionaires signed a letter proposing new, higher tax rates for the top 1 percent of earners.

REUTERS/Kevin Lamarque/Files
Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune's Most Powerful Women's Summit in Washington, in this file photo taken October 13, 2015. Buffett, chairman and chief executive of Berkshire Hathaway Inc.told CNBC on Monday the firm's ownership of IBM shares could prove a mistake and that he was buying more U.S. stocks overall since the end of last year.

A group of more than 40 millionaires in New York state have written to Gov. Andrew Cuomo and top lawmakers calling on them to consider raising taxes on the state's wealthiest residents to help address poverty and rebuild failing infrastructure.

The letter, a copy of which was given to The Associated Press, proposes new, higher tax rates for the top 1 percent of earners.

Those signing the letter include Abigail Disney, Agnes Gund, Leo Hindery and Steven C. Rockefeller.

The letter goes on to say additional revenue is needed to address child poverty, homelessness and aging bridges, tunnels, waterlines and roads.

Their proposal faces significant political obstacles. While the Democratic majority in the Assembly has its own plan to increase taxes on millionaires, the Republican-led Senate opposes the idea.

In January, Democratic presidential candidate Hillary Clinton (and a former N.Y. senator) proposed a series of changes that would raise taxes on wealthy Americans. 

NPR reports that these are the key points in her proposal:

  • A 4 percent surtax (the campaign calls it a "Fair Share Surcharge"), which has been getting the most attention. It involves taxing all income (that is, not just wage and salary income) over $5 million. That's what makes it a surcharge and not just the creation of a new income-tax bracket.
  • The Buffett Rule — She would require people earning more than $1 million annually to pay at least a 30 percent tax rate.
  • Tightening loopholes that tend to be used by the wealthy. In particular, the Clinton camp points to what's been dubbed the "Romney loophole." That refers to the practice of stashing millions of dollars in IRAs. They also highlight the "Bermuda reinsurance loophole," which has allowed some hedge-fund managers reduce their taxes via insurance companies in Bermuda, as Bloomberg reported.
  • Expanding the estate tax's reach — Right now, the tax applies to estates worth more than roughly $5.5 million. She would take that threshold down to $3.5 million, where the level was in 2009 (but higher than the $2 million level that existed throughout the mid-2000s) and also raise the rate from the current 40 percent to 45, as the Wall Street Journal writes.

in 2011, Warren Buffett, one of the richest men in the country, similarly proposed that taxes on the rich should be raised. 

Mr. Buffett, who is estimated to be worth more than $66 billion, called on Congress to raise taxes on people earning more than $1 million. 

In a op-ed piece in The New York Times Aug. 14. He argued that the tax breaks for the wealthy must be removed.

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," Mr. Buffett wrote. "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."

"While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," Buffett wrote.


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