Global investors support 'Buffett rule' tax increase

Poll shows backing is lower in US, highest in Europe
2011-10-01T00:00:00Z Global investors support 'Buffett rule' tax increaseBloomberg News Bloomberg News Arizona Daily Star
October 01, 2011 12:00 am  • 

WASHINGTON - Global investors overwhelmingly support President Obama's proposed tax increase for those earning annual incomes of $1 million or more in an effort to reduce the deficit.

By a margin of 63 percent to 32 percent, respondents in a Bloomberg Global Poll approved of the president's proposal, known as the "Buffett rule" in a nod to Warren Buffett, the chairman of Berkshire Hathaway Inc., who has said it is wrong that he pays a smaller share of his income in taxes than does his secretary.

Obama said Sept. 19 that making sure that the wealthy pay at least the same tax rate as the middle class was "just the right thing to do."

House Speaker John Boehner accused the president of practicing "class warfare," saying any new tax would hurt job creation and that Buffett's situation was not typical.

The call for the rich to pay more, however, found backing among financial professionals in the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers.

"Higher tax payments could help to avoid or delay potential social disturbances and in addition create some kind of a general solidarity," says Henry Littig, chief executive officer of Henry Littig Global Investments in Cologne, Germany, a poll respondent.

In the United States, support for the idea was lower, with more than half opposing it, although four in 10 supported it.

"The U.S. does not have a tax-rate problem - we have a spending and entitlement problem," said poll respondent Jay Wright, managing director of Samco Capital Markets in San Antonio. "And if we do not address it quickly we are going to be Greece."

Support for the millionaire's tax was highest in Europe, where French President Nicolas Sarkozy plans a 3 percent surcharge on incomes above $680,000. European poll respondents backed Obama 78 percent to 17 percent; Bloomberg customers in Asia supported the president's idea 69 percent to 21 percent.

"Increasing taxes on millionaires may not harm the economy, but it will not help it either," said Don Lindsey, chief investment officer at George Washington University, who participated in the survey. "What we need is a complete overhaul of the tax system."

On average, taxpayers with annual incomes of more than $1 million last year paid a 29 percent tax rate, compared with 15.1 percent for those making between $50,000 and $75,000, according to the nonpartisan Tax Policy Center in Washington.

Some high-income individuals, like Buffett, do pay a lower average tax rate because much of their income is derived from capital gains rather than wages. In 2009, the most recent Internal Revenue Service data shows that 1,470 individuals with at least $1 million in annual income paid no income tax.

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