Obama pushes 'Buffett Rule' to tax the wealthy. GOP cries 'class warfare!'(Read article summary)
To reduce the deficit and create jobs, President Obama wants a "Buffett Rule" to make the super wealthy pay taxes at a rate more like average Americans. Republicans call that "class warfare."
If youâre aiming to tap the wallets of âmillionaires and billionaires,â as President Obama is with his plan to create jobs and reduce the national debt, itâs not a bad idea to have at least one prominent billionaire on your side.
And that Obama does with investor and philanthropist Warren Buffett, the âOracle of Omahaâ whose estimated net worth is $47 billion. Theyâre such good buddies, in fact, that the âBuffett Ruleâ will be part of the plan to be unveiled at the White House Monday morning.
Details will be left to those in the administration and Congress tasked with rewriting the federal tax code. But the essence, as first reported in the New York Times, is that the wealthy âpay at least the same percentage of their earnings as middle-income taxpayers.â
In the abstract, at least, itâs hard to argue with that. And polls show that most Americans â in theory, at least â are on Obamaâs side.
Earlier this year, an NBC News/Wall Street Journal survey showed that 81 percent of those polled agreed that âplacing a surtax on federal income taxes for people earning over one million dollars a yearâ would be âacceptableâ (55 percent said âtotally acceptableâ). Sixty-eight percent also were OK with âphasing out the Bush tax cuts for families earning $250,000 or more per year.â
Those are pretty whopping numbers â potent political ammo for a president whose approval ratings are down in the weeds. Whether or not the âBuffett Ruleâ becomes law â a highly unlikely prospect given a Republican-controlled House of Representatives not inclined to do anything Obama could take credit for â itâs already part of Obamaâs re-election campaign.
And raising taxes â any taxes and no matter how slight the raise â is strictly verboten among the GOP presidential candidates. Asked recently which of them would accept a legislative package that included $10 in spending cuts for every $1 in revenue increases, nobody dared accept.
From the Republican perspective, any attempt to nick the wealthy for even a bit more in taxes in order to reduce the deficit and invest in job creation boils down to one thing: class warfare.
"It adds further instability to our system, more uncertainty, and it punishes job creation and those people who create jobs," Rep. Paul Ryan, chairman of the Budget Committee, said on Fox News Sunday. "Class warfare may make for good politics but it makes for rotten economics."
"It's a bad thing to do in the middle of an economic downturn," Senate Republican leader Mitch McConnell said on NBC's Meet the Press. "There is bipartisan opposition to what the president is recommending already."
Over on CNN's State of the Union Sen. Dick Durbin (D) of Illinois said that the proposal to raise taxes would be a good idea as long as it targeted "the wealthy and comfortable and those who wouldn't even notice it."
Well, he may be wealthy and comfortable, but you can be sure that Warren Buffett and the rest of the super rich do notice their tax situation. They didnât get rich without the help of tax lawyers.
Thatâs what prompted Buffett last month to write his now famous New York Times op-ed column headlined âStop Coddling the Super-Rich.â
âWhile the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,â he wrote. âSome of us are investment managers who earn billions from our daily labors but are allowed to classify our income as âcarried interest,â thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if theyâd been long-term investors.â
(For the record, Buffett noted that he paid $6,938,744 in federal taxes last year. But that was just 17.4 percent of his taxable income â a lot lower than the 36 percent averaged by the 20 people who work in his office.)
âI know well many of the mega-rich and, by and large, they are very decent people,â Buffett wrote in his op-ed. âMost wouldnât mind being told to pay more in taxes âŚ particularly when so many of their fellow citizens are truly suffering.â
That may or may not be true. Perhaps Obama can get Bill Gates, whose net worth ($56 billion) tops Buffettâs, to weigh in as well.
Sen. McConnellâs answer to the âBuffet Ruleâ is simple: âWith regard to his tax rate, if heâs feeling guilty about it, I think he should send in a check.â