“So we have a consensus. Nobody likes the Buffett Rule,” said Howard Gleckman, resident fellow at the Urban-Brookings Tax Policy Center and moderator of a forum today on whether the rich should pay higher taxes.
The event’s expert panelists may not have agreed on what our tax code should look like, but they did agree that the Buffett rule isn’t it.
President Obama has been pushing his Buffett rule proposal before a vote in Congress next week. As the President has said, “It’s simple: If you make more money — more than $1 million a year, not if you have $1 million, but if you make more than $1 million a year, you should pay at least the same percentage of your income in taxes as middle-class families do.”
The Buffett rule has frequently been touted as an issue of fairness.
Douglas Holtz-Eakin, President of the American Action Forum, said at the Tax Policy Center event, “The real fairness issue here is not the one between high income Americans and low income Americans. The fairness issue that’s paramount is between the present and the future…”
With a high level of debt, chronic deficits, high unemployment, rising cost of healthcare and slow economic growth, the future for young Americans has certainly looked brighter. Remarkably, the Buffett rule solves none of the aforementioned problems.
Passage of the measure is expected to raise less than $50 billion over the next 10 years, less than one-third of one percent of our current deficit.
The federal government has over $15.6 trillion in gross debt, running budget deficits of over $1 trillion each year of President Obama’s term in office. A number of plans, including the bipartisan Simpson-Bowles Commission, have endorsed eliminating tax subsidies, which generally benefit higher income earners, to lower overall rates and simplify the tax code. The Buffett rule is a step away from that proposition. Comprehensive tax reform, which the President has previously said he supported, can actually raise revenue while simultaneously supporting economic growth.
Because the Buffett rule would potentially tax investment income, a number of economists have said that the punitive tax, a new AMT of sorts, could actually hurt economic growth and jeopardize the recovery. What should be the consensus? The Buffett rule is a political proposal, not a real economic solution.