Taxes Are Rising for the Wealthy

Posted: 15 Mar 2012 09:25 AM PDT

It's become an accepted truth that taxes are falling for the rich. Just look at Warren Buffett, who pays a lower rate than his secretary. Or the top 400 earners, who pay an effective rate of 18.1%.

Or look at the official rate, which at 35% is half of the 70% rate on the top earners in 1980. Republicans in Washington have blocked any attempt to raise taxes on the top earners, leading to ongoing coverage of the “coddled super-rich.”

Less noticed is the fact that taxes for rich people in some states are indeed rising. Yesterday saw two such moves: Maryland's Senate approved a tax hike on those making $500,000 or more, and California's governor proposed hiking taxes on those making $300,000 or more.

At the end of this year, New York will start generating revenues from a new tax on those earning $300,000 or more. And while New Jersey's governor has beaten back calls for another millionaire's tax, the issue could always come back if the economy falters again.

In California and Maryland, the proposed tax hike on the top earners generated the usual reaction from both sides.

“It was a nod to the more progressive members of our caucus — that we were listening to their concerns,” Maryland's Democratic Senate President Thomas V. Mike Miller, told CBS radio.

Republican State Sen. E.J. Pipkin said Maryland was “sending the wrong message to job creators.”

California Governor Jerry Brown has doubled down on his plans to fix the state's problems by taxing the wealthy. His original proposal called for raising revenues with a new half-percent sales-tax increase and a tax hike on those making $250,000 or more.

His new plan calls for a smaller sales-tax increase and more taxes on the wealthy. The tax hikes will start on those making $250,000 or more, who will see an increase of two percentage points, according to Bloomberg. Those making $1 million or more will pay a tax rate of 13.3%.

That means that a million-plus earner in Califonia could pay a combined federal and tax rate of 48.3% — not including local taxes.

Whether this is too much or too little depends on your politics. But the fact remains: taxes in some of the states with the most high earners are going up, not down.

The Job Worries of the One Percent

Posted: 14 Mar 2012 12:27 PM PDT

Mitt Romney isn’t alone among the one-percenters worried about getting pink slips.

A new survey from American Express Publishing and Harrison Group shows that 28% of the top 1% of earners are worried about their jobs.

: Associated Press

Fully 21% of the one-percenters who are corporate executives fear that they may lose their job over the next year, according to the survey.

Even one-percenters who own their own companies are worried. One quarter of those business owners say they worry that their companies may not survive over the next 12 months.

The 1% is also worried about its wealth. Fully 38% worry that they might run out of money at some point during their lives, which is why their average savings rate is 33%.

We can all hold the violins, of course. Next to 8% unemployment, a CEO worried about losing his multimillion-dollar paydays pales in comparison. And most Americans would never be lucky enough to save a third of their income.

But the anxieties of the elite have a real impact on the economy and recovery. Remember that the top 5% of earners account for more than a third of consumer outlays. If they’re hoarding cash and worried about their companies, they’re not hiring or spending–and thus, not creating jobs.

“America’s top One Percent income earners are holding their surplus cash under the nation's collective mattress,” said Jim Taylor, vice chairman of the Harrison Group. “They have yet to recover their optimism for the economy, convinced we are still in a recession and concerned that the recession has more than a year to go before fundamental recovery. ”

He said a recovery in the optimism and investments of the wealthy may be two or three years off.

Why do you think the one percenters are so worried about their jobs and money?