If you are among those carrying the torch for reformation of our tax code then the next several days will feel like Christmas morning to a five year old. The White House will kick off a week long push to sell the Buffet Rule today with a Presidential stump speech in Florida. The Democratic Senate has scheduled a procedural vote on the rule for April 16. That this flurry of activity comes as Americans face an April 15 deadline to file their taxes is no coincidence. That the law has less than a snowballs chance in hell of passing does not lessen its political impact on the upcoming elections.
For those who may not be familiar; the “Buffet Rule” stems from a controversial comment made by billionaire Warren Buffet. Buffet had the temerity to comment on how unfair it seemed that he, a billionaire, was paying a lesser percentage of his income in taxes than his middle class secretary. Since most of Buffet’s earnings came from investments he was legally permitted to pay his taxes at the 15% capital gains rate while his secretary paid hers as ordinary income; a rate of anywhere from 20-35%. Democrats, led by the White House, seized on his comments, using them as key talking points in their effort to correct the income disparity between the richest 1% of Americans and the remainder of the country. The result is a piece of legislation, the Buffet Rule that requires anyone making over $1 million in income to pay a minimum tax rate of 30%.
Conservatives who oppose the rule refer to it as “class warfare.” They say that liberals are simply punishing the rich for their success. They caution that most small businesses file their taxes as individuals and raising taxes on these job creators will hurt the economy and ultimately hurt the middle class. They say the proper way to generate increased revenue is to eliminate loopholes, reduce the tax rates and broaden the base. But they offer no details on which loopholes they are willing to eliminate.
Liberals who support the rule say that the current system has been rigged to favor of the rich for decades. The proof is in the huge disparity of income growth in the country. They say that any talk of hurting job creators is nonsense; pointing out that the Bush tax cuts have been in place for a decade without any corresponding increase in job creation. They say the Buffet Rule is simply a matter of fairness. They ignore that the Buffet Rule will only generate $47 billion in increased revenue; a mere blip on a $22 trillion dollar debt.
70% of Americans believe that the government should increase taxes on the rich. This overwhelming sentiment will have no affect on a tone deaf Congress. The fact is the Buffet Rule has no chance of passing through this deeply partisan legislature. The Democrats know this. But they will push for a vote simply to force Republicans to go on the record as being against tax increases for the rich.
We need to have a serious discussion about comprehensive tax reform. This food fight over the Buffet Rule is not a serious debate. The Buffet Rule is bad policy…but it makes for good politics.
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