White House photo
Warren Buffett and President Obama in the Oval Office.
President Obama spoke in Florida yesterday, helping make the case for the "Buffett Rule," which is set for a Senate vote next week. As Obama put it, for those "bringing in a million bucks or more a year ... you should pay the same percentage of your income in taxes as middle-class families do. You shouldn't get special tax breaks. You shouldn't be able to get special loopholes."
Republicans, not surprisingly, disagree, but they're having trouble coming up with a coherent explanation as to why they disagree. It's a simple question -- why should some millionaires pay a lower tax rate than the middle class -- that the right can't find a simple answer for.
Some Republicans have said, for example, that the Buffett Rule would bring in "only" about $47 billion, which isn't that much given the size of the budget. There's some truth to that, but given the GOP crusade against Planned Parenthood and NPR funding -- in the name of "fiscal responsibility" -- it's hardly persuasive.
This week, as Noam Scheiber noted, Karl Rove's attack operation, American Crossroads, have rolled out a separate argument.
A data point in support of the misdirection hypothesis: Rove et al have launched a Facebook petition in response to Obama's latest Buffett-Rule push, calling on Obama and Warren Buffett to "put their money where their mouths are" and pay more in taxes voluntarily. According to Mike Allen, Crossroads is launching an ad campaign to amplify that message. Suffice it to say, these do not strike me as people overly concerned by Obama's populist rhetoric, or worried about a campaign that would be fought along those lines.
Greg Sargent's reaction was the right one: "Really, it continues to amaze that people in positions of real influence could venture something this idiotic with no evident sense of embarrassment."
Well said. The Crossroads pitch is a familiar one, but its ubiquity doesn't improve its inanity.
This isn't complicated. We're a massive, modern nation with a vast economy, a large debt, and by modern standards, low taxes. We face real challenges, but they're not the kind of challenges individuals can hope to resolve on their own, piecemeal, simply by having some wealthy individuals write a check. Whether Republicans choose to understand this or not, we need cooperative solutions built around shared action.
Making additional tax contributions voluntarily -- in other words, asking for a little more only from those willing to pay a little more -- is ridiculous.
The wealthy can afford modest tax increases, which in turn can help pay down the debt Republicans pretend to care about, while shielding many of those who can least afford to take another hit.
The scope of our societal challenges is simply too great to expect a handful of individuals to make voluntary contributions to the Treasury. Instead, we need the nation's wealthy -- the whole class of them, not just a willing few -- who've benefited greatly in recent years from a system tilted in their favor, to pay a little more and accept some degree of fairness in our tax policy.
Which brings us back to the original point: the Senate vote on the Buffett Rule is next week, and Republicans still need an argument to explain why people like Mitt Romney should pay a special, lower tax rate than the middle class.
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They'll probaly use the old stand-by excuse "It's just not enough" we need more than this to fix our economy. So, wait and we'll introduce another bill and we'll add to it. We'll give you your Buffet rule if you give us the Earth to destroy.
I would like to point out a rhetorical trick I have heard often in such discussions.
They start off talking about the deficit for a while. Someone proposes to tax the rich very heavily. The Repub says, "If the Gov. taxed the rich at 100% it would not be enough to make any difference in the debt.
This is just underhanded.
It took 30 years of spending by Repub Presidents who said that the deficit doesn't matter to get us this far into debt and now they want to say that since we can't pay it off in one year by soaking the rich for 100%, that therefore the rich should not be soaked some. Like 75%.
Since the Lame Stream Media moderator doesn't call the Repub on changing the topic from the deficit to the national debt, I wonder how many viewers notice it.
I mean really, your having a party and are trying figure out how much bottled water to buy and your friend points out that that is "just a drop to the ocean".
Very good point Steve. Any extra revenue can only help with the debt and deficits. On the other hand, spending this much time on this relatively small revenue generator seems more political than not. It is a $50 Billion issue that is getting more attention that many much larger issues that can and will affect budgets now and in the future. Again, it is a great idea to tax folks that can afford to pay in more than they do now - but lets just put it in perspective dollar wise. It will help, but it is not a cure all for our ballooning debt.
I heard the argument against it this morning. It goes something like this:
If we really wanted everything to be fair, everyone should pay the same percentage. Since anyone can take the tax breaks the rich have, maybe the people who don't make as much money should simply make more money so they can use the the tax breaks.
Seriously, well maybe they would like a bowl of Ramon noodles to go along with their Class warfare rhetoric. Hey, we'd all be rich if we had the same nice friends like they have. I just prefer my friends to not be carrying guns around with them and my friends wouldn't be bribing me. Maybe they can give us their secrets to success. How exactly did they make their millions? Inadvertantly from us. Whose Grammas' pockets have they picked (and continue to want to do so)?
The solution to the debt/deficit problem is obvious:
Return to the Clinton era tax rates. Including capital gains.
@!$%# that, soak the bastards for everything they've got.
I say, return to the Johnson (post Kennedy cut) tax rates, but adjust the brackets for inflation.
I also want to see a temporary net worth tax to take back what the rich were given or stole during the last 30 yrs.
Day, how much money would returning to the Clinton era tax rates produce?
But it's not fair that "Because Jesus!" isn't an acceptable answer.
I suggest another tax break,after raising corporate and capital gains taxes 10% For every 30,000 American jobs created that last over 3 years, one percent can be directly deducted from your tax bill retroactive to the time the jobs were created. It is time for those who claim to be job creators to show their successes in job creation
Rachel was pitch perfect last night on her show. She said she would prefer the "Buffett Rule" be renamed the "Romney Loophole". And why not? That is a brilliant idea! A great slogan that has the advantage of highlighting Mitt's elite status as opposed to the 99 percenters every time it's mentioned.
The President just mentioned also that they should change "The Buffet Rule" to "The Reagan Rule" Since this is what Reagan Believed also.
I strongly support the Buffet rule and have let my senators know. I think I'm more concerned by the increasing war rhetoric regarding Syria. Fighting wars without budgeting them and continuously removing the Dod from deficit discussions has a significant impact. Both parties seem to be arguing we went to war in the last 5 instances without the justification Syria appears to have. The war bells just seem very loud.
I can't get through to my representatives in Arizona.
While I agree with the "Buffet Rule" it should be renamed to the "Fairness in Taxes Rule". The GOP have proved to me that snakes do talk out of both sides of their mouths, and with 241 millionaires in Congress - they're just protecting their own hides from having to pay higher taxes from that insider trading that they've been doing!
RAISE ALL THEIR TAXES & STOP PICKING ON ME!!
You are being too nice. They are more like Willam S. Buroughs' "talking a**holes".
Weren't those animals in "The Island of Dr. Moreau?
Lets call it the "Obama Tax Rule"
"Really, it continues to amaze that people in positions of real influence could venture something this idiotic with no evident sense of embarrassment." This is the GOP MANTRA...
"Trickle down economics"? A better name would be "TINKLED ON ECONOMICS"!!!
When I was a kid these selfish, crybaby rich people would have been paying 90% instead of the pitance they're grudgingly contributing to the common coffers today. I get the feeling they won't be happy until their rate is zero percent, and the rest of us are required to contribute a portion of our incomes directly to them because they still don't have it all...yet.
Exactly since they're just working so hard to keep their money.
I'm glad none of you on this board are in congress. The Buffet Rule is just bad tax policy. The US now has the highest tax rates among industrialized countries. Our higher taxes and wages are why American companies have closed factories here and moved overseas. The underlying problem is the complexity of the tax code which continues to grow every year. The right policy answer is to simplify the tax code by eliminating all of the special interest tax breaks, incentives or loopholes and then lowering both corporate and individual tax rates so that we can be more competitive with the rest of the world. The Buffet rule just further distorts an already abomination of the tax code.
You DO realize that your post is factually wrong, don't you? The US has some of the lowest tax rates of the industrialized world. The Buffet rule actually simplifies the tax code by making all the tax breaks and loopholes passe since you still have to pay even if you do use them.
We all know the tax code is a problem that will have to be addressed at some point. Just not by this particular Congress. That will have to wait until some adult republicans elect other adult republicans to help sort out the mess. Until that glorious day, nothing will change.
We'll have none of that hanky panky around here. You're excuse #6 I think it is, is mute. The reason we have shipped jobs overseas is obvious they have abolished slavery in our country but, they have not abolished it in other Countrys. This is also why they are trying to abolish unions and banish the minimum wage. I don't know about you but, I don't think I can survive on .23cents an hour. The cost of living is already too high. I haven't had a raise in about 6 years.
Also we are aware that corporate taxes =/= individual taxes, yes? Raising the individual rate =/= raising corporate tax rate. Sigh.
@keepintime- "We all know the tax code is a problem that will have to be addressed at some point."
The complexity of the tax code is a direct result of the procedure by which Congresspeople receive the lion's share of their re-election campaign funds. Corporations and the rich rely upon tax "rents" that are purchased from Congress, who are, in turn dependent upon the formers' lobbyists who use their fund raising campaign aggregators to fund the politicians' re-election. Politicians then follow the unspoken agreement to vote for each others' pork-barrel tax loopholes.
This circle won't be broken until the American people pass an amendment to the Constitution to provide for public financing of all Federal offices and, thereby, force Congress to vote on the merits of each bill.
Please read "Republic, Lost" by Lawrence Lessig and visit this website for more info.
dkm - When Japan lowered its corporate tax rate on March 31, the US has the dubious distinction of having the highest corporate tax (combined with state - I live in CA and see the effects of our high corporate state and federal taxes has done to drive companies out of state to neighboring low tax states like NV, TX and AZ as well as overseas) in the industrialized world. Here is an article from Huff Post:
http://www.huffingtonpost.com/2012/03/30/us-corporate-tax-rate_n_1392310.html
In case you think Huff Post is Faux news, here is a Yahoo Finance article:
http://finance.yahoo.com/news/u-corporate-tax-rate-now-151000593.html
and an opinion piece from US World News
http://www.usnews.com/opinion/blogs/economic-intelligence/2012/04/02/worlds-highest-corporate-tax-rate-hurts-us-economically
The real debate is the tax rate on earned income vs. carried interest and how we have a tax code which gives preference to capital gains through investment. I fully support having lower tax rates on long term capital gains and dividends which is taxed twice by Uncle Sam, first at the corporate level and then again at the shareholder level. There shouldn't be double taxation on corporate profits. Congressmen of both parties support the preference for lower taxes on dividends and cap gains. However Warren Buffet earns most of his income through his carried interest in his investments n Berkshire, not through his salary like the rest of us wage earners. It became a politisized issue with hedge fund managers and Buffet whose majority of income come from investments. So to make the very few rich people "pay their fair share" of taxes like the rest of us pions the answer would be to raise the dividend and cap gains tax rates to equal the marginal tax rate. However that would discourage investment, capital formation, risk taking and destroy our economy. So the band-aid, populist fix is charge a surtax on those making over $1 million. Higher taxes for both individuals and corporations are drags on the economy and makes the US less competitive vs. other countries with lower tax rates.
The fact is that high-income earners do pay higher percent of their income in taxes than their secretaries. Estimates from the Tax Policy Center show that those who make more than $1 million do pay a 29% tax rate. http://bit.ly/yyLJDp
There is no doubt that tax fairness must be improved and the way to do that is to rebuild the tax code from scratch using a plan like Bowles-Simpson that leaves no sacred cows untouched. Shared sacrifice is the only way we will be able to simplify the tax code, improve fairness, and spur economic growth. http://bit.ly/noTDPF
When a rightwinger uses the expression "shared sacrifice," you know that the share of the poor to be sacrificed is a lot bigger than the rich classes' share.
So you're okay with them throwing your Gramma under the bus?
You must not have seen when Mittens released his tax forms and he only paid 14% - so that whole 29% rate is just the "trojan horse". Second, 29% is still less than I pay - and NO I'm NOT a millionaire or a corporate CEO - so again where is the fairness! It's time that the loopholes be closed on the wealthy and yes their rates can go up, period! Lest they forget at one time millionaires actually paid 90% of their income in taxes and they were still rolling in their own dough!
Simpson-Bowles was Obama's appointed commission. How bout Obama exhibit some leadership here and enact this change? That's my hope.
Zora Renee,
I’m curious, what is your federal tax rate if it is higher than 29%?
I do know that Romney paid a very low tax rate and that is because he makes most of his money as capital gains/carried interest which is currently taxed at 15%. But that does not mean that 29% is a trojan horse, it is very much the average federal tax rate millionaires pay. http://bit.ly/yyLJDp
The real problem is the treatment of “carried interest.” The carry allows private equity managers overseeing an investment deal to receive their compensation as tax-advantaged capital gains instead of as salary, which is taxed as ordinary income. http://bit.ly/xsYfBg
As the Daily Finance's Bruce Watson explains “The money wasn't generated from income that he had already paid tax on. Think of it as being sort of like a tip skimmed off the top of all the money that his company makes for its investors.” http://aol.it/z9mdIZ
So instead of saying the rich need to pay more we need to be overhauling the tax code using a Bowles-Simpson like plan so that it promotes economic growth and collects the required amount of revenue to support the needs of our country.
Not only does Barack Obama already lost 150 milllion Christian/Catholic/Evangelicals voters, he's also stand to lose a lot of rich donors. Way to go Mr. President, keep up the bad work.
Maybe but, have you asked yourself why he has lost that vote? He has won the vote of decent human beings who genuinely care about each other. He has won the vote of spiritual people who beleive in God or there are some who do not. He has won the vote of people who believe in treating everyone as equal. He has won the vote of people who are not prejudice or fascist or rascist or chauvenistic. My Jesus would not exclude anybody. My Jesus loves Muslims.
Cindy How did President Obama lose 150,000,000 votes when only about 130,000,000 voted in 2008 in the presidential election? Was this a vision? Where are these extra Republican voters coming from? Did they forget the primaries thus far?
Er Cindy more than 150 million Americans don't vote in elections at any given time. What exactly are you talking about here?
Cindy
The total population of the US is as of June 2011 331,591,917. Of the population 77.7 million are Catholic and approx. 26.3% are Evangelicals. There can't be 150,000,000 of the combined groups. It's statically impossible Please before you post here check your facts.
I would love if we go ahead and pass this "Buffett Rule" so we can quit talking about it as the center piece of solving our deficit problems. Wasn't the Alternative Minimum Tax mess suppose to solve the problem of the rich not paying their "fair share"? What happened there? AMT was another really poorly written piece of tax legislation that creates problems the wizards in Washington never intended and I'm positive that the "Buffett Rule" legislation will be just as poorly written and Congress will immediately have to start writing its patches as soon as the 1000's of untended oxen get gored from their sloppy work.
The Buffett Rule is a diversion tactic where the Big O wants everyone to look at the rich guy over in the woodpile rather than his administrations output over in the outhouse. The Buffett Rule is worth $57 billion over the next ten years while the projected Federal deficit during this period is $13 TRILLION! I'm sure the Harvard grad understands the magnitude between a billion and a trillion. It is a joke. It is a campaign piece. It has no real value beyond its political worth. The people know this. The only ones that don't are the arrogant liberal hacks on MSNBC. Give the Dems the Buffett Rule so they don't have a talking point!
First the CBO predicts that the federal deficit between 2013-2022 will be $6.4 trillion not $13 trillion. Secondly the POTUS will be reducing the federal deficit down to just under $1 trillion as of next year assuming spending and revenue stay the same. Thirdly raising taxes would HELP the deficit and debt so how exactly is Obama attempting to distract from the issue of the debt and deficit when this proposition will help w/ the debt and deficit? Fourthly you realize that the AMT was an alternative to a previous version of what's being called the Buffet Rule, yes? It was an attempt to levy a tax on the wealthy w/o actually levying a tax on them. The Buffet rule would simply advocate closing loopholes and increasing the amount the wealthy have to pay from 35 to 39% like we had under Clinton. That is, of course, unless Congress waters the damn thing down. In which case I don't know why you're getting mad at the POTUS and not Congress since the Congress is the one who actually makes the law. Fifthly so you are saying having $57 billion dollars more would not help the deficit or national debt? It is more money than what we have right now, isn't it? And that money would help close the deficit now wouldn't it? You realize you just admitted- in your attempted attack- that the Buffet Rule would help the situation, right? Sigh
Woodpile? Really.....
Ahhhh! there it is... Excuse #1
There are many people in America scraping to raise a family on a budget of $2.00 per day. For many of us work a day schmoes $47 billion is an incomprehensible amount of money and it is a ridiculous argument to imply that this is not enough to have an effect on the deficit. Since when is $47,000,000,000 not enough for those living on $2.00 per day????
So to put 47 billion into perspective here is a bit of math. Approximately 50 million people do not have health insurance in our country. The working poor. If we could reap 47 billion by taxing the rich, that would break down to $940.00 for each of these 50 million working poor. Divided by 365 days in the year this would more than double their daily income by $2.57 per day. Of course, for the rich this does not look like much money, but for these working poor it would double their income. The disparity is incomprehensible.
Perhaps the Buffett Rule should be re-branded as "welfare reform?" I've been following this debate between the Ryan budget and what the Democrats have proposed and what I see is a great chance for the Democrats to capitalize on Republican terminology. Essentially, what the Buffett Rule does is eliminate the welfare we as a country provide to our wealthiest citizens and corporations. It is not so much raising taxes, as the Republicans are saying (and, sadly, some Democrats are echoing this phrase), as closing welfare loopholes; in essence, we would be "repairing the social safety net," to use a Republican talking point.
This
That
And the other thing
When it becomes more economical for the owner of a business to invest some of his income back into the company rather than pay it in taxes, then the economic base will expand and provide the tax revenues to start paying off our national debt. That's what Clinton did, and the fact that it's a provable remedy is gravy.
"It's expanding the economy, stupid!" should be Obama's most prominent message.
The buffet rule is moronic. It raises taxes on venture capitalists, yes, the people who fund new innovative American companies like Facebook, Google, and green energy. In other words, it will decrease investment in new businesses, and hurt the backbone of our economy. Mr. Buffet will be dying soon, and leaving all his money to charity, he has no concept of reality. And this doesn't even consider the fact that the effective tax rate for a dividend, for example, which is what the "rich" are supposedly using to avoid paying a "fair" share, is more like 50%+, when you consider the fact that as a company shareholder, you are being double taxed. First the company's earnings are taxed at 35% (not including state/local), and then you are being taxed on what's left that is paid out to you at an additional 15% (not including state/local). In other words, everyone needs to stop complaining....it's quite stupid. And don't respond with this nonsense that corporations don't pay any taxes because of loopholes, if you know anything about accounting you will know that the rules are mostly quite fair. For example, there's something called a net operating loss carryforward, where a company can lose a lot of money one year, and take a deduction the next couple of years from that such that if their cumulative profits over 3 years are equal to 0 they won't pay any taxes, which makes sense, since over the last 3 years total they made no money! Of course, CNN fails to ever explain any of this, thanks to their bias against big money/big business. I guarantee no buffet rule supporters will respond to this with any credible argument.
Provide any evidence that "venture capitalists" will be unable to invest in companies like Google, Facebook, or green energy companies w/ the Buffet Rule in place.
Also you are aware that CNN, MSNBC, and Fox are all big businesses right? How can they have a bias against themselves? This doesn't make sense logically.
Additionally stating that a company would be spending over 50% of net revenue gains in taxes is not a compelling argument. First off the Buffet Rule is primarily targeted towards individual taxes, not corporate taxes. The POTUS wants to lower the corporate tax rate to 28% and raise the individual tax rate to around 40%. These two are not the same thing. What a corporation does and what the Buffet Rule do are not necessarily the same thing, although yes there is some criss-crossing. But regardless the average American spends about half of their income in taxes so I am not understanding where the argument that someone who makes more than 400x that of the average American should not be spending at least 50% of their income if not more. Perhaps you'd like to provide a logical argument as to why this is so?
Tax loop holes were not put in place to give the tax payer a break, they were put in place to promote economic activity in the area the tax break was given in. For instance tax break for mortgage payment helped all tax payers but it also created more business in the home building industries and in the financial institutions that issued the mortgages. I am sure this was also true of most of the other tax loop holes which again subsidized the businesses that benefited from the tax payer getting the loop hole.
The real problem in getting rid of tax loop holes may not be the tax payer getting the tax break, but the business that benefits from this tax break. When a tax payer gets a tax break for doing something, that tax payer may receive only a tiny break for his activity, but all of the businesses that benefit from the tax break may be unwilling to give up the extra income. When the company or person who gets the tax break is the same person who financially benefits from this tax break such as the oil companies, then the tax break has to go.
The mortgage tax break on the primary residence should be a permanent tax break as well as tax breaks for education and medical expenses.