Monday, September 19, 2011

Buffet rule - Class Warfare or Simple Math?

I received this today from the Obama administration after President Obama announced the "Buffet rule" at a Rose Garden ceremony today:

This morning, the President proposed the "Buffett Rule," which would require those earning more than $1 million a year to pay the same share of their income in taxes as middle-class families do.

This proposal makes sure millionaires and billionaires share the responsibility for reducing the deficit. It would correct, for example, the fact that Warren Buffett's secretary currently pays taxes at a higher rate than he does.

The other side is already saying it's "class warfare" -- that's their rhetorical smokescreen for providing millionaires and billionaires special treatment.

As the President said this morning, "This is not class warfare -- it's math."

The wealthiest Americans don't need further tax cuts and in many cases aren't even asking for them. Requiring that they pay their fair share is the only practical way forward. The Republican alternative is to drastically slash education, gut Medicare, let roads and bridges crumble, and privatize Social Security. That's not the America we believe in -- but many in the Republican leadership actually prefer those policies, which explains their refusal to act.

That's why they'll say "tax increase" over and over again, trying to muddy the waters and trick ordinary Americans into thinking the Buffett Rule will hurt them. And if we don't speak out right now, they just might get away with it.
Of course, the Buffett Rule won't really touch most Americans -- only 0.3% of households will even be affected.

And without it, the only way to reduce our debt is to savage the programs that seniors and middle-class families rely on.

That's exactly what the President refuses to do -- in fact, he's said he'll veto any bill that changes benefits for folks who rely on Medicare but doesn't raise serious revenue by asking the wealthiest Americans or biggest corporations to pay their fair share.

This isn't just a commonsense approach to cutting the deficit -- it's the only way to make sure we can provide security to people who work hard and play by the rules.

So right now, I'm asking you to say you'll stand with the President on something that won't be easy. Get the President's back today:



Jim Messina
Campaign Manager
Obama for America

My question is why do we distorting the facts? It is true the Warren Buffet effective tax rate is less than his secretaries nominal rate but if his secretary is making under $60,000 there is a very good chance that she pays 0% in an effective tax rate. So why don't we all get on the same page when talking about these rates. That being said it is widely accepted that our revenue, no matter the tax rate, ranges between 16-18% of GDP historically. The other widely accepted truth is that our current spending is north of 22% of GDP.

To get a handle on our deficit spending is not to raise revenue as President Obama would like for us to think; rather we need to get our spending under control. Notice that President Obama is not out there trying to defend the $535M given to Solyndra from the last Stimulus package that has now gone belly up! Perhaps we could use that money to help fix Medicare, Medicaid or SSN. Instead the notion is to raise taxes on the wealthy and claim it is not class warfare.

If we want to get serious about our deficit then start with the tax code. Flatten the tax code to 8% and eliminate all tax credits and deductions for everyone. Eliminate the corporate tax rate, and all tax credits and incentives, as corporations simply pass along those taxes onto the consumer. Then on investment income - raise short term capital gains to 55% while putting long term capital gains at 15% - this will curb some of the hedging that exists and encourage people to think long term as well.