The Buffett Rule: A Gimmick?

In a recent article I came across, “Buffett Rule is politics over policy”, the author argues that the Buffett Rule looks to be successful in theory where the rich pay more taxes so that we may solve our fiscal problems in the United States but in actuality, the author states that:

Will the president’s tax hike at least tackle our fiscal problems? No. According to a recent analysis by the congressional Joint Committee on Taxation, the Buffett Rule would raise a mere $47 billion over 10 years, or 0.5 percent of the president’s new spending. Soaking the rich cannot get deficits down; only spending reductions can do that.

His republican views challenge any other view, and he argues that the only reason he is pushing for this plan is so that he can, “makes for great populist rhetoric but terrible policy. Worse, it’s a distraction from the big issues facing the nation, such as the deficit, the economy, jobs, gas prices, and health care.”

According to the Author:

The Buffett Rule would only weaken the economy and employment. It would fall most heavily on job creators and confiscate resources that would otherwise be used to start new businesses, expand existing businesses, and hire more workers.

The president has said “this is about giving everybody the chance to do well.” Really? Raising taxes on anybody somehow gives everybody the chance to do well? This is absurd even by the low standards of American political rhetoric.

Under the Buffett Rule, businesses and families earning $1 million will pay a minimum 30 percent effective tax rate. The president says those Americans aren’t paying enough. As proof, he points to billionaire Warren Buffett’s secretary, who reportedly pays a higher tax rate than her uber-wealthy boss. But he’s distorting the facts.

Many wealthy Americans receive dividends and capital gains, investment income that is subject to multiple levels of taxes. First, the investment income results from investment. This capital didn’t appear out of thin air. It was earned and taxed previously. Once invested, it generates income that is taxed at the corporate rate, 35 percent. And then it’s taxed again at the individual level for dividends and capital gains, 15 percent.

Imagine you’re driving down a toll road, and you pay three separate tolls. The first toll of $3.50 is when you get on the highway. Then, after a few miles, you pay another $3.50. And when you exit, there’s a final toll of $1.50. A reporter asks as you leave the last tollbooth how much you paid.

Now I agree with him that raising the capital gains tax is a bad idea because not only does it attack big business, but it also attacks the small business owner, who may hypothetically have a investment business or his business and income is solely based on dividends from investments.

So I do not agree with the Buffett Bill, though I admire Warren Buffett and the accomplishments he has had I do not agree with the tax policy he is advising to the president so that the American tax system would be more even.