Although Labor Day is a time to honor workers, today we want to honor Warren Buffett, the billionaire investor who has pointed out that the federal tax code treats him better than most workers. Buffett has brought a lot of attention to the fact that he pays a lower tax rate than his secretary.
How could that be?
Well, it’s because Buffett earns most of his income from investments, which are taxed at a lower rate than paycheck income for most workers. In other words, working people who earn almost all their income from their jobs pay more in taxes as a percent of their earnings than generally wealthy people who make most of their money from investments.
Warren Buffett says that he should not pay a lower tax rate than working people ‘ implying that he should be paying more. And there are signs that DC residents understand the importance of a strong, progressive tax system. A DCFPI poll conducted last year showed that 70 percent of District residents said it was more important to maintain services than hold down taxes. And nine of 10 voters supported raising taxes on higher-income households to help maintain important services. Even most high-income voters agreed.
So why do investors in DC’s tech industry disagree?
According to a memo from the Gray administration, a vocal group of tech investors want their tax rates lowered, or they have threatened to leave the District. Now, at the behest of the Mayor, the DC Council is considering legislation that would lower the tax rate on investment income in DC technology companies to just 3 percent. That rate is lower than the rates for any other workers in DC. For example, the first $10,000 of income earned by a working District resident is taxed at 4 percent.
In just two short weeks, the DC Council will vote on whether to lower tax rates for these wealthy investors to lower than what you and I pay as workers in DC. If you believe that hard-working DC residents shouldn’t be taxed at a higher rate than tech investors, please join us in telling that to Mayor Gray and the DC Council.
And a belated Happy Labor Day!