The Buffett Rule: Tax reform or political gimmick?
The 鈥淏uffett Rule鈥� is a wonderful political device 鈥� a call to even out the tax burden in a way that picks the pockets of those 鈥渕illionaires and billionaires鈥� President Obama keeps talking about while evening things out for the vast American middle class.
It鈥檚 very easy to understand, especially in contrast to a tax code requiring battalions of lawyers to navigate. And it has this wonderfully avuncular fellow for whom it鈥檚 named.
That it wouldn鈥檛 do much to help the US economy (or that it has any chance of passage in Congress) is true but also irrelevant. Its purpose is to define an important difference between Republicans and Democrats, as Obama pointed out in his radio address Saturday.
鈥淲e can鈥檛 afford to keep spending more money on tax cuts for the wealthiest Americans who don鈥檛 need them and didn鈥檛 even ask for them,鈥� he said. 鈥淲e just need some Republican politicians to get on board with where the country is.鈥�
'Buffett rule': Five questions about Obama's plan answered
In fact, most of the country is with Obama on this.
A Gallup survey out Friday has 60 percent of those polled favoring a minimum 30 percent tax rate for Americans with a household income of $1 million or more per year 鈥� in essence, the idea named for billionaire investor Warren Buffett.
鈥淎mericans in general say that the distribution of money and wealth in this country is not fair, and that money and wealth should be more evenly distributed,鈥� writes Gallup editor-in-chief Frank Newport. 鈥淧lus, 59 percent of Americans last year agreed that households making $250,000 or more per year聽should pay higher taxes.鈥�
鈥淭he current results reinforce these findings and underscore the now well-documented conclusion that Americans in general support various proposals for increasing taxes on higher-income Americans,鈥� observes Mr. Newport.
Not surprisingly, Democrats and Independents are more likely to favor the Buffett Rule (74 percent and 63 percent respectively) than do Republicans, who oppose it 54-43 percent. Still, more than 40 percent of GOP voters favoring higher taxes for the wealthy is a substantial minority.
The poll 鈥� and the debate 鈥� come just as last-minute tax filers are sweating this coming Tuesday鈥檚 deadline to communicate with the IRS.
Mr. and Mrs. Obama have done their taxes already.
For 2011, they reported a joint adjusted gross income of $789,674 and paid $162,074 in federal taxes, or about 20.5 percent 鈥� less than they would under the Buffett Rule and slightly lower than the President鈥檚 secretary, as Obama acknowledges. (Which is why he typically includes himself when speaking of the wealthiest Americans needing 鈥渢o pay their fair share.鈥�)
All of which puts Mitt Romney 鈥� Obama鈥檚 likely opponent in this year鈥檚 presidential election 鈥� in something of a bind.
Mr. and Mrs. Romney are far wealthier than the Obamas 鈥� upwards of $250 million in net worth by most accounts.
They鈥檝e just filed for an extension on their 2011 taxes. But for 2010, Romney鈥檚 campaign reported, their tax rate was only about 14 percent on $22 million in income. And so far, Romney has resisted calls to be more forthcoming about earlier years 鈥� especially the period when he headed the private equity firm聽Bain Capital.
鈥淲hat does he have to hide?" Obama campaign manager Jim Messina taunted in a statement Friday. "Did he exploit loopholes in the tax code by keeping his investments offshore and is that why he鈥檚 protecting those loopholes now? Why did he open a Swiss bank account instead of an American bank account and establish a corporation in Bermuda instead of on our shores? Did he pay a lower income tax rate than the 13.9 percent he paid in 2010, and is that why he opposes the Buffett聽Rule to ensure millionaires don鈥檛 pay less taxes than middle-class families?"
Republicans like to dismiss such questions as part of Democrats鈥� 鈥渃lass warfare.鈥�
But to some critics, all of this misses the point about the Buffett Rule 鈥� which is that (according to the nonpartisan Tax Policy Center) it would bring in less than $5 billion a year 鈥� pocket lint to Uncle Sam.
鈥淭here are [those] who are saying, well, this is just a gimmick. Just taxing millionaires and billionaires, just imposing the Buffett Rule won鈥檛 do enough to close the deficit,鈥� Obama said in a speech this week. 鈥淲ell, I agree. That鈥檚 not all we have to do to close the deficit. But the notion that it doesn鈥檛 solve the entire problem doesn鈥檛 mean that we shouldn鈥檛 do it at all.鈥�
On Monday, Senators will be voting on a bill mandating that income above $2 million be taxed at no less than a 30 percent rate, with a graduated boost in the minimum marginal rates for income between $1 million and $2 million.
There鈥檒l be speechifying and an essentially symbolic vote. But that鈥檚 as far as the Buffett Rule is likely to go.
