Monday, February 13, 2012
President Obama has a new favorite possession – the “Buffett Rule.” Like a poodle with a new chew-toy, Mr. Obama can’t leave the Buffett Rule alone; he takes it everywhere. For the president, the proposal that everyone earning over one million dollars should pay at least 30% of that income in taxes is satisfying on many fronts. ...
the Buffett Rule is an empty shell. We need serious and fair-minded reform of our tax code, not another gimmicky fix. We need to analyze whether the deductions and loopholes that cost Uncle Sam nearly a trillion dollars per year in lost revenues are appropriate an Rich Text d effective, whether the goals of prior generations are still relevant and -- yes -- whether our system is fair. There is a reason why rich people sometimes end up with lower tax rates. It is not because the tax code is regressive; on the contrary, the top one percent of filers pays nearly 40 percent of the total.
Messrs. Buffett, Gates, Romney and other tycoons pay a lower overall rate because policy makers have wanted to spur investment, and decided to do so by taxing long-term capital gains (and certain other investment rewards) at a lower rate than income.This advantage accrues mainly to the wealthy, the investing class.
The goal of encouraging entrepreneurs and risk-takers through favorable taxation was adopted in 1921; the rules have changed from time to time, but the philosophy has been nearly a constant. The question today should not be: “has this approach favored the wealthy?” This is a given. Instead, we should ask: has the policy worked? If not, is this Buffett Rule the best way to fix what is broken?