published Sunday, April 15th, 2012

Beyond the 'Buffet rule' tax

The nation's annual tax filing deadline this week should focus attention on Monday's vote in the Senate on the "Buffett rule," President Obama's proposal to require Americans with annual incomes of $1 a million or more to pay a minimum of 30 percent in income taxes. The rule is eminently fair: A lot of non-millionaire earners have to pay the top income tax rates of 25-to-35 percent, yet the super-rich often pay less than half that due to lower rates on to capital gains, dividends and other sheltered investments. Because politics takes precedence over tax fairness, however, Republican senators will probably defeat the Buffett rule with a filibuster.

Obama and the Senate's Democrats surely expect this outcome. Their point is to emphasize that Republicans continue to thwart measures to bolster tax fairness for America's working families, even as they wrap themselves in the banner of family values. The GOP's lockstep opposition the Buffett rule, named after its chief citizen advocate, mega-billionaire investor Warren Buffett, is an apt example.

Buffett has argued widely that it's wrong for his secretary -- and many Americans generally -- to have to pay a much higher percentage of their income in federal income taxes than he and many other multi-millionaires and billionaires pay. As Buffett laments, they typically escape with effective income tax rates of 15 percent (the tax rate on dividends) or less.

Mitt Romney, the likely Republican presidential nominee, is among the super-rich in this category. He disclosed in January that he paid just 14 percent in federal taxes on his $21 million income last year. Unfortunately, he thinks that's fine. If he wins the presidency in November, he proposes to continue cutting taxes on the rich while further slashing the nation's already crippled budget for education, health care and entitlement programs like Social Security and Medicare.

Romney's formula would further deprive the federal government of needed revenue and deepen the deficit, even as it would send an ever-greater share of the nation's wealth to the most affluent one percent, and especially the super-rich in the top tenth of the top one percent in earnings. This group already scoops up a larger share of the nation's income than they have had in the last 80 years.

Fixing a fairer minimum 30 percent tax rate for the nation's multimillionaires and billionaires would be reasonable. (The richest 1 percent of Americans make $1.5 million a year; it's the top tenth of their number who net most of the bounty of low taxes on investments.) It would not, however, make a significant dent in the federal debt.

The Buffet rule would produce roughly $160 billion in increased tax receipts over the next decade if the Bush tax cuts of 2001-2003 are not allowed to expire, or just $47 billion in the same period if the Bush tax cuts are allowed to expire. Republicans are playing a shell game by citing the lower number as a relatively insignificant gain from the Buffet rule, even though they will pull out all stops to extend the Bush tax cuts for the richest Americans -- and their biggest campaigns donors.

Regardless, the Buffett rule -- if Congress ever enacts it -- should not be used as a reason to keep the Bush tax cuts intact. They were never needed in the first place, and letting them expire would generate over $800 billion in revenue in the next decade. That would sharply curb deficit spending, and help restore a more reasonable level of tax revenue as a percentage of the nation's overall economy

In fact, deficit spending has soared mainly because the level of tax revenue dipped to a near historic modern low of 15 percent of GDP last year, down significantly from the more normal 18-to-21 percent level of prior years. Tax equality, and taxes generally, have to rise to restore a fair share of the benefits of economic growth for ordinary Americans, and for the infrastructure the country needs to move forward.

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conservative said...

The writer : Because politics takes precedence over tax fairness, however, Republican senators will probably defeat the Buffett rule with a filibuster.

It's all about politics!!! Obamination and the Demoncrats want to change the political debate from SPENDING, DEBT, UNEMPLOYMENT, the ECONOMY, and GAS PRICES to name their big failures. They know this is going nowhere. They know it will not pass. They know they are in deep trouble and they know it won't work!

Sensible people know it as well. Sensible people know that the rich pay much more than their fair share while 47% of American households don't pay federal income taxes and thus don't pay their fair share!

April 15, 2012 at 9:05 a.m.
joneses said...

We already have the "Buffet Rule". It is called the Alternative Minimum Tax (AMT) which was implemented so people like Warren Buffet could not escape paying taxes.

April 15, 2012 at 10:10 a.m.
rick1 said...

"Buffett has argued widely that it's wrong for his secretary -- and many Americans generally -- to have to pay a much higher percentage of their income in federal income taxes than he and many other multi-millionaires and billionaires pay. As Buffett laments, they typically escape with effective income tax rates of 15 percent (the tax rate on dividends) or less."

Buffett is such a liar and the TFP are just as bad for not being completely honest on the above listed comment made by Buffett. Buffett takes an annual salary of $100,000 a year and also lives off of Captial Gains which has a lower tax rate. Buffett says his secretary pays close to 34% tax rate, which would mean she makes close to $500,000 per year. I noticed TFP also failed to mention Buffett's secretary and her husband purchased a second home earlier this year in Arizona as well. Sounds like they are really suffering.

TFP is morally bankrupted.

http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html#_grp1

April 15, 2012 at 3:24 p.m.
conservative said...

.The writer : "As Buffett laments, they typically escape with effective income tax rates of 15 percent (the tax rate on dividends) or less."

What is your point for? Is it to exploit and fool those who let others do their thinking for them? The tax rate on dividends is available to EVERYONE not just the wealthy.

April 16, 2012 at 8:41 a.m.

No amount of taxation is going to fix our debt problem. 100% taxes wouldn't fix the issue. This is just another marxist playhouse production to distract people from the real issues. It is high time to cut spending. There is no other way to fix the problem.

The marxist president/senate/congress's laser-like focus on taking more and more from Americans tells everything we need to know about their plans for our country. They want your freedom. They are taking it one executive order and law at a time. If they reduce everyone to depending upon them, there won't be anyone to oppose them. Welcome to slave state USA where you will no longer be working for yourself, you will be working for the state. Enjoy your rationed food, medicine, housing, and thought. That is all you will have left beyond your state approved work. Rally comrades! For mother USA....

If you think this is an impossible idea, you haven't been paying attention.

April 16, 2012 at 9:58 a.m.
TOES02800 said...

Here we are at the brink of complete economical meltdown, and all the great Obama can do is try to incite class warfare? This is all he knows, to pit one group against the other just to create civil discourse so he can ride in and save the day! The liberals must create victims to succeed in their agenda. That's why they only like blacks who buy into the " i am a victim " role. If you notice, the liberals hate every black man who succeeded on his/her own. Obama is nothing more than a little kid in a huge candy store. Folks, we need to get this socialist out of office in November. This country cannot bear another four years of his childlike spending.

April 16, 2012 at 10:41 a.m.
conservative said...

Obamination initially proposed this silliness as a means to reduce the deficit. Someone must have told him that someone would run the numbers and expose him so he swapped lies and called it "fairness."

The vast majority of those who support Obamination are the ones who don't their fair share in federal taxes. They make up the majority of the 47% who pay no federal taxes. Stated another way they pay ZERO in federal taxes and these who join the "fairness" choir make themselves hypocrites and liars!

Ditto to comments above!

April 16, 2012 at 10:56 a.m.
dude_abides said...

What a bunch of illiterate pigs, all trying to out-oink each other!

April 16, 2012 at 5:16 p.m.
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