Skip to comments.The Unanswerable Question About "The Buffett Rule"
Posted on 04/18/2012 4:57:28 AM PDT by Kaslin
Thats the one question about the present push for the Buffett Rule that President Obama cant answer at least not without exposing his own proposal as the shabbiest, sleaziest sort of partisan posing.
If the president cared sincerely about tax fairness, or the importance of millionaires paying a proper percentage of their income to the government, then why did he do nothing to address these issues during his first three years in the White House? This challenge applies with special force to the two years 2009 and 2010, when Barack Obama enjoyed overwhelming Democratic majorities in both House and Senate. Had he suggested the Buffett Rule in, say, April of 2010, the Hope-and-Change intoxicated Congress of Nancy Pelosi and Harry Reid would have passed it without delay, claiming at least partial progress in fulfilling Obamas often-repeated campaign promise to raise taxes on the rich.
But the president never fought for anything like the Buffett Rule when he easily could have prevailed in the battle, so what changed in the intervening months to make a tax adjustment they never even debated two years ago seem suddenly urgent and important?
Of course the Republicans won sweeping victories in November 2010, and that dramatically altered the political climate in the Capitol. But since Big Bad Boehner rode to power, his GOP Wild Bunch failed to make any major changes in the tax code, and enacted no new breaks or giveaways for millionaires. The same favorable treatment of investment income, the same exemptions and deductions and tax dodges that so offend the president in 2012 existed in all their glory when he first came to office in January 2009. The president can blame the new Republican majority for blocking many of his more ambitious spending initiatives but he can hardly blame them for the sorry state of a disastrously dysfunctional tax code thats remained largely unaltered in the Obama era.
If anything, the tax system looks less favorably on the rich than it did when this president took power; hes not only introduced new levies on the prosperous as part of Obamacare, but proudly passed a two year payroll tax reduction that saves 2 percent on all income below $108,000. The Democrats can hardly explain their new-found enthusiasm for a minimum tax rate on high earners by claiming that the administration they ardently admired presided over a shift in a less progressive direction.
Nor can they claim that this minor but mercilessly-hyped alteration makes a serious dent in the deficit. The administrations own figures show that even in a best case scenario the Buffett Rule would generate less than $5 billion a year amounting to less than 0.5 percent of the current $1.2 trillion deficit, and less than 0.1 percent of the $45.4 trillion the federal government will spend.
If the deficit crisis counts as such a dire emergency that even a reduction of one-half of one percent merits this ferocious tax fight, then why did the president ignore a similarly desperate situation in 2009, 2010 and 2011? Of course, he would say that he addressed the problem previously by calling for an end to Bush era tax cuts for the rich but those changes which Mr. Obama ultimately abandoned would have delivered an estimated $70 billion in added revenue per year. Thats still barely 5 percent of the deficit (in the most optimistic projections) but its fourteen times more than the anticipated haul from the Buffett Rule.
Of course, in December, 2010 President Obama gave up on his deeply desired tax hike for families bringing home more than $250,000 per year in part because of fears that any sharp increase in taxation could imperil a still fragile recovery. In the only possible non-political answer to the question of why he waited till now for the Buffett Rule initiative the president might say that todays stronger economy could handle any shock and shoulder any new burden far more readily. But this logic flies in the face of the common conviction that the recovery is still struggling to gain traction, as evidenced by major market reverses and job creation setbacks in early April. Most Americans still perceive the economic growth of the nation as uncertain at best, hardly robust and inexorable. Why, then, risk losing any momentum at all for a purely political gesture that will do nothing significant to fix our fiscal mess?
And the risks count as far more serious than any possible reward, since the proposed change would double (from 15 percent to 30 percent) the rate of investment tax for many of the nations most significant investors. If you counted yourself among the lucky few who earned more than a million a year from your portfolio, and if you knew that starting on January 1, 2013, you would pay twice as much in taxes on capital gains income than you would today, wouldnt you feel impelled to sell off significant assets in the low-rate months remaining to you? The impact on the stock market of the resultant tidal wave of sell orders would bring a sharp, painful reverse if not an outright crash, damaging middle-class investors and pensioners at least as much as Wall Street biggies.
For this reason and many others, the president knows that hell make no progress on winning passage for the Buffett Rule, so he can demagogue to his hearts desire with no risk of real-world consequences. On this issue, Dems draw a freebiegetting to unleash impassioned rants on fairness while the reviled GOP House stolidly and reliably prevents their populist nostrums from doing actual damage to the economy. Barack Obama waited till the heat of a re-election campaign to conjure up the specter of a new tax on millionaires in part so he could make Mitt Romney the preferred poster boy for evil plutocrats who pay lower tax rates than their secretaries. Never mind that Romneys massive gifts to charity would probably spare him from any new personal liability even in the unlikely event that the Buffett Rule became lawsince Obama insists that even the wealthiest taxpayers could continue to deduct their charitable donations. When combining his contributions to charity with his federal, state and local taxes, Mitt shelled out more than 40 percent of his income over the last two years to help other peoplethat is if you think tax payments to government actually help other people.
Employing one strategy or another, the top-earner targets of the Buffett Rule would deploy their armies of accountants and attorneys to reduce its personal impact, but the damage to the stock market and the economy in general could be significant. This highly touted reform represents the very worst sort of policy proposal, with real risks to the private sector and no real benefits for the government. Politically, on the other hand, it provides the president with a convenient cudgel to batter his opponent while cynics in politics and media wink and shrug at a silly agenda item that will disappear in 2013, even if Obama is re-elected. Few insiders, in fact, take the current debate seriously enough to confront the president with the question about timing he cant possibly answer without embarrassment.
My favorite part of The Buffett Rule is that you can rack up a billion dollars in taxes that you don’t have to pay.
this hypocritical putz grandstands around the country on a campaign platform of “the rich” paying 30% to his federales -
while his own tax returns are open to the world and show every accounting loophole in the book was used to lower his personal tax rate to 20%
He already said “folks like me and Moochelle dont need all that money”
so give it up, barry, send the iRS a check for another 10%. Lead by example. We can call it “the obama rule” where you voluntarily pay 30%, speshully if you preach about you dont need the money
Or we laugh in your face, just like we laugh at Geithner and Rangel in charge of the IRS and the tax code
I posted this very same question HERE OVER a DOZEN times since early 2011, but my real question was why are not Republicans calling him on this rather than just submit to these daily whippings?
Obama never demanded that Democrats pass these tax increases in 2009 and 2010 when they had unblockable majorities (Obama-care raised taxes with less than the 60 Dem Senators voting for it under budget rules.) Democrats didnt want responsibility for any tax increase that goes into effect before the 2010 election.
The real answer is that ‘The Buffett Rule’ was purely a political response to Republicans calling for deficit reduction (spending reductions) last year, which I have posted Obama was baiting them to do in early 2011.
Obama kept taunting them :”Where are the big items in Republicans deficit reduction like entitlements?”
Then when Ryan proposed them Obama sprung the trap on Republicans, “How can you cut medicaid and other programs for the middle class when you defend tax cuts for the millionaires and billionaires?
Got news for you, any poll that says that most people would rather have taxes raised on the rich then cut their own benefits are real.
Question..............On this Buffett Rule. Does is change the rate everyone pays on the dividend checks they get? I mean how can it state that if you make over 1 million then you pay more on your dividend earned? I am not up on this, but it looks like Grandmas dividend rate would change and she would be taxes...which would hurt most elderly that count on the little extra money they get to make ends meet.... Please advise as if I am right the GOP needs to state this. Since the GOP is no saying this I assume there is a loop hole.....
Bring it up to a vote April 16. Brilliant. As if the 52% aren’t peeved enough that day. I made a huge contribution to the IRS on Monday. Did I say contribution? It wasn’t quite voluntary, now that I think of it.
If your AGI (adjusted gross income is high enough) it does. Think of it as a flat tax on high earners, or a high-end AMT. So, if you are fortunate enough to have a high income--whether regularly of for one year in your life--regardless of any precautions or calculations you've made (like investing long term)--you'll pay the new higher rate.
The only way out--surprise--is to invest in municipal bonds, whose interest doesn't count for the income calculation.
I just heard on the radio of some “rich” people clamoring to have their taxes raised at some gathering. My question is, if they WANT to give money to the government to piss away, why DON’T they?? Nothing says you can’t.
Theres an exemption for Tax-Free Municipal bonds, which means there would be a stampede to buy them which, in turn, means whoever holds them will make some sweet profits.
..and who holds tons of tax-free Municipal Bonds? Why Berkshire Hathaway. To the tune of $4.3 Billion ..yeah, with a B.
Question: “When Warren Buffet calls the White House, what does he say?”
Hi, this is Warren. Please connect me with my Stradivarius.
——from Buffet’s Baloney Boo-Fay: http://stumpedagain.wordpress.com/2011/10/17/buffets-baloney-boo-fay/
The Regime has no doubt made a cold blooded calculation that Buffet will soon die of prostate cancer. In a Wellstone-style wake, Buffet will then be cast as a selfless billionaire trying to help “the people”. Anyone who ever pointed out Buffet’s hypocrisy in not paying the taxes he actually owed will simply be “evil”. The irrationality of the “rule” doesn’t matter, since Obama supporters are not sentient.
I have identified the real problem.
The number of millionaires and billionaires that are being bandied about lately are determined by the combination of income and assets; net worth.
” My favorite part of The Buffett Rule is that you can rack up a billion dollars in taxes that you dont have to pay.”
” My favorite part of The Buffett Rule is that you can rack up a billion dollars in taxes that you dont have to pay.”
Easy to refute, but nobody tries. EASY to refute!
Revenues always go down with tax increases.....see Maryland.
Obama says it's not about revenues, jobs or gas prices. It's just about fairness.
It's not fair that some OWS kid makes less than you; so he is is ‘ Evening the playing field’ by taking more of your money.
In return for that 'fairness' the dumb kid will vote for Obama even if he has no job and prices keep going up. Because he is more concerned about you than himself.
By 2014, 60% of Americans will be on the dole in one way or the other. I can’t afford them : )
SJB, im still waintin for my pie...stepinfetchit there Sir...hehehehe
I suspect when that 60% finds out the country is out of money they will be very angry.
Maybe they will get Dems to pass a law making you wear a dollar bill sign to label that you are rich so they can keep an eye on you; just as the Nazis labeled the Jews with Stars of David before rounding them up and confiscating their property..
Everyone knows you rich guys are responsible for Americans's problems.
stepinfetchit....the actor, owned a lot of real estate .
He died broke : )
Moving to Austrailia.....I will finance kangaroos OAC : )
Good point, They will need to revoke your passports too so you ycant escape. They don't want you stealing ‘America's Wealth’ which is currently in your accounts and property and needs to be fairly distributed, etc.
Everyone knows you all got rich because of the unemployed Americans (many undocumented) hard work at spending food stamps.
I have been in Singapore dollars for 4 years : )
” Everyone knows you all got rich because of the unemployed Americans (many undocumented) hard work at spending food stamps. “
I worked 12-14 hours a day for 30 years.....collecting food stamps....according to our “Fearless Leader”
I hate to be a stickler for details but since this is a VERY important point that every voter should know...
Revenues do NOT always go down with tax increases.....see the Laffer Curve. If taxes were 0%, the government would be taking $0, and an increase to 1% would INCREASE revenues, since they would take in more than $0.
Of course, we are almost certainly to the right side of the Laffer Curve in the US today, so your point is clearly valid in almost every realistic situation that we can point to in the real-world... but again, the point needs to be made.