There is a video on line of Senator Harry Reid making an appeal, on November 1, 2011, for an income tax surcharge of 0.7% on incomes over a million dollars. (This is the same Senator Reid who got caught on video arguing that the US Income Tax is voluntary.) The senator explains that this is a “tiny fraction of a percent” increase on only the “richest of the rich,” the top “two tenths of one percent,” “millionaires and billionaires,” who earn “more than half of all the money earned each year in this country.”
Senator Reid, I wish your proposal made sense so we could find some rationale for supporting it. You make it sound so reasonable, but you are just plain wrong. Of course something big might have happened since 2008, the most recent year for which IRS information on individual tax returns is available to the public, and you may have access to more recent data, but, in 2008, this was the situation. (Click for readable copy.)
So, in 2008 there were 319,000 tax returns with incomes equal to or greater than $1M. That was 0.35% of all the tax returns (Not 0.2 %.) and accounted for 17.92% of all the income (Not half.) and 24.15% of all the income tax paid. The average income for these richest was about $2.9M or about 50 times the average for all filing tax returns.
In an effort to demonize these high earners, Senator Reid identifies them as the same people who, over the last three decades have seen their incomes increase 275%. Of course he knows nothing about the earnings thirty years ago of the people who are now in the top 0.2% or top 1%. Most of them were probably in high school. Lady Gaga wasn't even born. He is comparing the earnings of the top group now to earnings of the entirely different top group 30 years ago and making no acknowledgement of the simple fact that the membership of that infamous group changes every year.
We could forgive his hyperbole if he were proposing something that made sense and would truly help our overall economy. So, what do you think? A 0.7% surcharge on incomes over $1M would generate .007($938B - $319B) or $2.23B. That is 0.15% of our current year estimated federal deficit. As a matter of fact, if every dime over $1M earned by these richest were taxed away, it would only amount to 21% of the federal deficit. Still, Senator Reid argues ridiculously that this tiny increase in revenue would "create hundreds of thousands of jobs."
And so of course neither Republicans nor Democrats nor Independents should be using congressional time and energy even talking about such trivialities let alone voting for or against them in the current environment of excessive federal deficit spending.
Here is a link to Senator Reid's appeal and one to a Huffington Post article about it.
And just in case you want to check my math, here is the IRS spreadsheet. Click on 2008 under Table 2.