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Owens, Doheny are near top of tax bracket

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Democratic Rep. William L. Owens and Republican Matthew A. Doheny may have differing views of the tax rates that the wealthy should pay, but they are similar in one regard: They themselves were in that wealthy group, paying more in federal taxes than most of the people they hope to represent after Nov. 6.

Both candidates declined a request to share their tax returns with the Watertown Daily Times but agreed to disclose the average effective tax rate they paid over the past five years.

The federal government received an average of 30.5 percent of Mr. Owens’s income over the last five years, he said.

Mr. Doheny said he paid just below 35 percent of his earnings to the federal kitty over five years. The top tax rate is 35 percent.

Both candidates said they took advantage of only the typical deductions such as the tax break for donating to charity.

And that’s where the similarities end.

Mr. Owens wouldn’t mind seeing taxes hiked on wealthy individuals such as himself and Mr. Doheny, a Watertown businessman who will face him in November.

But Mr. Doheny concludes a tax hike on the wealthy would hurt job growth, and would like to see a “flatter” tax, which could include lower tax rates for higher earners such as Mr. Owens and Mr. Doheny, and the elimination of tax deductions.

“What my goal is is not to have ever-increasing tax rates,” said Mr. Owens, D-Plattsburgh. “That’s not where I’m going with this. My thought process is, we are now in a position where we have a very high deficit and debt, and we need to cut, and we need additional revenue. That’s what we need to do.”

Not so, Mr. Doheny said.

“Reducing tax rates will lead to growth. It’s been proven,” he said. “In terms of where we’re going, flatter, simpler and fairer will get us there.”

Tax rates took center stage last week in the debate over the so-called Buffett Rule, touted by President Barack Obama and Mr. Owens as a way to ensure tax fairness.

Financier Warren Buffett, one of the richest men in the world, pays a lower effective tax rate to the federal government than his secretary does. Tax expenditures — called loopholes when one is trying to get rid of them — help contribute to a less-than-straightforward tax rate. It’s not just a percentage of the money earned that the federal government taxes; it’s the way money is earned, too. In Mr. Buffett’s case, he pays a lower rate because he earns most of his money through investments, income that’s taxed at a lower rate than income for driving a bus, teaching a class or working as a secretary.

The Buffett Rule would require millionaires to pay at least 30 percent of their income, even if most of it came from capital gains.

But the rule wouldn’t have applied to Mr. Owens or Mr. Doheny because they already were paying at least 30 percent.

“It’s pure politics,” Mr. Doheny said. “It’s not going to help the people who are hurting, who want an opportunity to work.”

The star power behind the legislation, and the inherent debate about tax fairness, helped keep the Buffett Rule in the headlines, but meant little for its fate in Congress, where it failed in the Democratic-controlled Senate.

Its chances were even more bleak in the Republican-controlled House, which has resisted efforts to raise taxes on the wealthy.

The issue is likely to come to a head at the end of the year, when President George W. Bush’s tax cuts expire.

Mr. Owens said he would support letting the Bush tax cuts expire on those making more than $500,000 annually — a group to which Mr. Owens himself belonged over the past five years.

Reverting to the President Bill Clinton-era tax rates wouldn’t hurt the economy, Mr. Owens said, because they didn’t hurt the economy in the 1990s.

“I think it’s very important to reflect back on when the rates were enforced in the Clinton years,” Mr. Owens said. “We grew 22 million jobs. We had a booming economy. When they lowered tax rates, the economy was not booming. The argument that lowering taxes will result in a booming economy is simply not accurate.”

But Mr. Doheny, who touts his extensive history in restructuring businesses, said higher taxes dissuade people from taking risks.

“I want to reduce the size of the federal government,” Mr. Doheny said. “We brought in $3.6 trillion in revenues. I want to go ahead and reduce the size of government, in a way that makes sense, (and) reduce the overall amount of money that we take from taxpayers in this country.”

Mr. Doheny’s tax mantra since he officially entered the race has been a “flatter, simpler and fairer” system.

Tax rates in the United States are progressive, meaning those who don’t make a lot of money pay a lower rate in taxes — about 10 percent — than those like Mr. Doheny, who pay the top 35 percent rate. A flatter tax would involve making the top rate closer to the bottom rate, either by increasing taxes at the bottom of the scale or by lowering taxes at the top of the scale. Through a spokesman, Mr. Doheny ruled out raising tax rates on anyone, including those who don’t pay federal taxes at all because they don’t make enough money.

And Mr. Doheny said a “flatter” tax rate is linked inextricably to a “simpler” one — meaning the federal government should lower tax rates while also getting rid of tax expenditures.

But eliminating tax expenditures will bring more money into the federal government, which Mr. Doheny will not countenance. So every extra dollar the government gets from eliminating expenditures should be made up for by reducing tax rates, and then some, Mr. Doheny argues.

To be sure, the prospect of tax cuts for the wealthy has become a political rallying cry everywhere from the 21st Congressional District to the battle between President Obama and Republican Mitt Romney.

Said Mr. Owens of the “flatter, simpler and fairer” plan: “If it’s flat, it may get you to simple, but not necessarily fairer.”

The Owens staff and campaign is always eager to add that Mr. Owens supports tax hikes only on the wealthy, who make up a very small number of people in the congressional district. In 2005, only 28 people had incomes over $1 million in Jefferson, Lewis and St. Lawrence counties, according to the Center for Working Families.

For his part, Mr. Doheny hastens to add that eliminations of tax expenditures would also affect the wealthy — the same fiscal argument made by supporters of Republican Rep. Paul Ryan’s budget plan. Critics excoriated it for “slashing taxes” for the wealthy; the Tax Policy Center, a nonpartisan, Washington-based research organization, concluded the plan would cut taxes for the wealthy. Charles Krauthammer, a conservative columnist for the Washington Post, called the argument “scurrilous.” Mr. Doheny said he applauds Mr. Ryan’s efforts on taxes.

His ideal plan would work by “removing the expenditures and the expenditures for the wealthy as well. You have to say both in the same breath,” Mr. Doheny said.

Much like the Ryan plan itself, Mr. Doheny declined to rule any tax expenditures in or out, saying Congress ought to take a “comprehensive” look at the problem.

Mr. Owens singled out tax breaks for oil corporations as ripe for eliminating, and said the deduction for paying mortgage interest would be “very low on my list.”

Kellie A. Greene, who will face Mr. Doheny in a June 26 Republican primary, declined through a spokesman to discuss the tax rates she paid.

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