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· April 16, 2012

New Release: Tax Fairness and the “Buffett Rule”

For Immediate Release:  April 16, 2012                       Contact:  Dale Butland, 614-783-5833

Tax Fairness and the “Buffett Rule”

                  IO Report Finds Middle-Class Ohioans Pay Higher Effective Tax Rates Than Some of America’s Richest People

Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, issued a report today which finds that average Ohio taxpayers are paying higher effective federal tax rates than some of the nation’s richest people.  IO also urged Congress to pass the “Buffett Rule” so that “everyone pays their fair share of taxes and the game is not rigged in favor of the wealthy.” The report, as well as additional tax information by zip code, may be accessed at www.innovationohio.org. The “Buffett Rule,” which ensures that the richest Americans pay a tax rate of at least 30%, is incorporated into Senate Bill 2230 and will be voted upon in the U.S. Senate later today.  The “Rule” is a tax reform championed by President Obama and named for legendary investor and billionaire Warren Buffett, who has spoken out against the unfairness of his paying a lower tax rate than his secretary. IO’s Report is the result of an analysis of federal tax data done by Innovation Ohio and the Center for American Progress in Washington, D.C. Among the finding’s highlights are:
  • In seven of the wealthiest zip codes in America, which include such exclusive destinations as Fisher Island in Florida and Wyoming’s Teton Village, taxpayers earn an average of $2.2 million per year, and pay a combined (income and payroll) effective tax rate of just 17.2%;
  • 99% of Ohioans live in zip codes where the average combined tax rate is higher than 17.2%;
  • In 2008, the average Ohio taxpayer earned an average of just over $49,000, but paid a total effective tax rate of 21.5%;
  • Two-thirds of Ohio taxpayers live in zip codes where the average income is below $50,000, but tax rates are above 17.2%;
  • 63% of Ohio taxpayers live in zip codes where the average tax rate is higher than it is in any of the 7 “ritzy” zip codes that are among America’s wealthiest.
Said IO President Janetta King: “Our study confirms what many Ohioans already suspected: thanks to an incredible array of loopholes, exemptions, deductions and preferential rates for certain kinds of income, many of our nation’s wealthiest people are paying lower tax rates than middle class families. “The concentration of wealth in America today is outrageous enough without compounding it further by asking bus drivers, teachers, police officers and secretaries to pay higher tax rates than millionaires and billionaires. Enough is enough. We urge Congress to pass the Buffett Rule, and we believe an overwhelming majority of Ohioans agree.” Added IO Communications Director Dale Butland: “The tax rate disparity is even more shocking when considered alongside the staggering income inequality that exists in America today. As hard as it may be to believe, the richest 10% now control two-thirds of the nation’s wealth, and just 400 people control more wealth than the poorest 100 million Americans combined. According to the CIA, income inequality in the United States is now greater than it is in countries like Yemen, Uganda and Mongolia. “Nor are things getting better.  In 2010, all income growth went to the wealthiest 10% of households -and 93% of that income growth went to the richest 1%. The gap between the rich and the rest hasn’t been this pronounced since the Gilded Age. Enacting the Buffett Rule isn’t a panacea. It won’t balance the budget all by itself or solve every economic problem.  But asking the wealthiest among us to pay a tax rate at least equal to that of regular Ohioans would restore some fairness to the tax code. And that would be a good step in the right direction.”

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