Claims That a Modest Tax Surcharge on Millionaires Would Damage Small Businesses and the Economy Do Not Withstand Scrutiny
Publication Date: May 2008
Author(s): Aviva Aron-Dine
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: Tax code; Income diversity; Household income; Economic projections
Supplemental appropriations legislation that the House of Representatives approved last week (H.R. 2642) would impose a modest income tax surcharge on couples with adjusted gross income above $1 million (and singles with AGI above $500,000) to fund an expansion of higher education benefits for veterans. The surcharge would be equal to 0.47 percent of a taxpayer’s income above the threshold. For example, a couple with AGI of $1.1 million would pay a surcharge of $470 ($470 = 0.47% x $100,000). Critics of the legislation have charged that the surcharge would harm small businesses and thereby damage the economy.