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Clinton's tax surcharge on highest earners would hit top 0.03%
[DES MOINES, Iowa] Hillary Clinton is calling for a 4 per cent tax "surcharge" on incomes of more than US$5 million annually, a move that would affect fewer than the top one twentieth of 1 per cent of Americans.
Her main Democratic presidential rival called the proposal "too little, too late." The proposal is the first of several Clinton plans to unveil this week aimed at ensuring that the wealthy pay a higher effective tax rate than the middle class.
About 0.03 per cent of 146 million individual income tax returns in 2013 had gross adjusted income of US$5 million or more, according to a 2014 Internal Revenue Service data book.
"Right now we're behind and we have to get the wealthy and the corporations to pay their fair share," Mrs Clinton said at a campaign rally in Waterloo, Iowa.
Mrs Clinton's surcharge proposal comes as her leading opponent for the Democratic nomination, Vermont Senator Bernie Sanders, gathers strength in key early-state polls. He also wants to raise taxes on the wealthy and use the revenue to fund a range of proposals, including a single-payer health care system, and he plans to release a detailed tax plan before the Feb 1 Iowa caucuses.
While Mrs Clinton has said a tax code that favours nurses and truck drivers over hedge fund managers could pay for job, infrastructure, and health research initiatives, Mr Sanders said the plan isn't bold enough.
"At a time of grotesque income and wealth inequality and when trillions of dollars have been transferred from the middle class to the top one-tenth of 1 percent over the last 30 years, Secretary Clinton's proposal is too little too late," Sanders campaign spokesman Michael Briggs said in a statement.
The measure would raise US$150 billion over a decade and would be imposed on two out of every 10,000 taxpayers, said a campaign official who asked not to be named. Sanders said it would raise "less than half of what we need just to pay for paid family and medical leave." Daniel Shaviro, a tax professor at New York University School of Law, said Mrs Clinton's proposal on its own doesn't affect high-income taxpayers' ability to shelter or otherwise legally understate their true incomes for tax purposes. Still, he said, that doesn't mean it won't have an effect.
"I wouldn't call this a radical proposal," Prof Shaviro said. "Keep in mind that, pre-1986, rates well above this used to apply to people starting at much lower income levels, even adjusting for inflation."
Mrs Clinton earlier this month vowed she would "go beyond" Warren Buffett's plan to set the minimum effective tax rate for those earning US$1 million per year at 30 per cent. The billionaire endorsed her in December.
Overseas, Mrs Clinton's "fair share surcharge" bears some similarity to a French measure introduced in 2011. The French version applies a 4 per cent surcharge to incomes exceeding 500,000 euros, according to an analysis published last year by Ernst & Young LLP, which called such surcharges an "increasingly popular way for governments too extract additional revenue," particularly in Europe. French taxpayers earning from 250,000 to 500,000 euros pay a 3 per cent surcharge.
The Republican presidential field in the US, in contrast to the Democrats, is largely opposed to raising taxes.
During a Monday speech in his home state, Florida Senator Marco Rubio charged that Mrs Clinton's "answer to every problem is to raise taxes and create a new government programme," according to prepared remarks. And, he said some in the GOP-including Senators Ted Cruz and Rand Paul-back the introduction of a value-added tax. "It's not just her, or the avowed socialist running against her. Believe it or not, multiple Republican candidates for president support new taxes on the American people," he said.
Republican front-runner Donald Trump said Saturday in Iowa, "Wall Street has caused tremendous problems for us. We're going to tax Wall Street." BLOOMBERG