The Buffett Rule: A Tax Band-Aid for a Broken Leg
Ladies and Gentlemen, the Buffet Rule was back in the political spotlight this week. On April 16th the Senate will held a procedural vote on the Buffett Rule to see whether or not it would be brought up for debate. Yes, you read that correctly, the vote is only to determine if they will even discuss the rule.
As most people expected, the Buffett Rule tax didn't receive the 60 votes required to pass it. However, Democrats hope that by bringing it to a vote, they can raise public attention on the issue of tax fairness. As part of their pitch for fairness, the President pinned this infographic to illustrate their point, and boy, do we have some issues with it.
For starters, “It could
mean up to
” $32 million? What it really should say is $32 million, but more likely less. They imply that by implementing the Buffett Rule the government will collect another $32 million in federal taxes from one millionaire. If that’s the case, this millionaire would have to be a multi-multi
-millionaire making more than $100 million in annual income. I’m pretty sure there aren’t too many households with that kind cash to cherry pick tax revenue from.
Second, the federal government does not hire teachers, state governments do. That means that none of the $32 million would go directly to hiring teachers. Also, if $32 million only allows us to retain 300 teachers, that would mean that a teacher’s combined salary and compensation is more than $100k. Teachers are extremely important and deserve to be compensated, but for $32 million we can only keep 300? That seems like a great example of government overspending, especially since the budget for the Department of Education
is already over $68 billion.
Lastly, let’s not forget that the Buffet Rule is expected to generate only $47 billion in revenue
over ten years. Under the Obama budget
, our deficits will average about $1 trillion per year and adds a total of $9.6 trillion to the debt.
$47billion/$9.6trillion = barely a ding to our federal debt.
If the concept behind the Buffett Rule is that millionaires should be paying more in taxes than the average American family then here’s some good news: the average millionaire does pay a higher rate
than a middle class family: 29% to be exact.
Let’s remember a few other facts on the subject of what millionaires pay. In 2008
• The top 1% paid more than 38% of all federal income taxes
• The top 10% paid 70% of all taxes
• The bottom 50% paid less than 3% of all federal income taxes
What the Buffett Rule really boils down to is forcing a handful of millionaires who earn most of their income as capital gains to pay more.
Howard Gleckman of the non-partisan Tax Policy Center
points out “His [the President’s] objection—and Buffett’s—is not with rates paid by the average taxpayer who makes a million dollars or more a year (and, yes, I did smile when I wrote that). Rather it is with those in this group (whose income averages about $2.9 million) who make most of their money from investments.”
If the President or any Democrats are listening, don’t pound your fist and beat around the bush; go straight for the problem and fix it. But there is nothing “fair” about demonizing over 200,000 taxpaying millionaires to get a few extra dollars from a few of them.
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