Sorry to have been so silent on the recent Buffet Tax dustup. There’s lots to say but I am otherwise distracted. Here, David Henderson captures exactly why I am apoplectic about it, ignoring for the time being what anyone thinks about rates, justice, fairness – the fact of the matter is, there is an utter lack of principle, coherency and principle in this discussion and it drives me loony. Sorry, but here is the entire thing:
According to the Sept. 19 White House fact sheet, “The President calls on [the super committee] to undertake comprehensive tax reform, and lays out five principles for it to follow: 1) lower tax rates; 2) cut wasteful loopholes and tax breaks; 3) reduce the deficit by $1.5 trillion; 4) boost job creation and growth; and 5) comport with the “Buffett Rule” that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”But the administration’s tax plan violates these principles. It raises rather than lowers tax rates, shrinks tax deductions to pay for more spending, makes no believable contribution to economic growth, has nothing specific to say about the Buffett Rule, . . .
This is from Alan Reynolds, “The Spend Now, Tax Later Jobs Bill.” Wall Street Journal, September 22, 2011.
I noted yesterday Megan McArdle’s post pointing out that for all Obama’s talk about Warren Buffett and other rich people paying a lower percent of their income in taxes than secretaries do, his plan does nothing to change that for people like Buffett.
Alan Reynolds points this out too, but goes further. Obama himself, as Reynolds notes in the first paragraph above, advocated lower tax rates along with cutting loopholes and other tax breaks. But his own proposal is to raise tax rates.
I’m used to politicians saying one thing and doing another. I’m used to politicians lying. But it’s strange for a politician to say one thing and then say the opposite, and act as if he’s saying the same thing both times, all in the space of about a week.
One nit to pick with David’s otherwise terrific observation: how strange is it really? Wasn’t FDR famous for this sort of thing?
Update: Megan McArdle illustrates:
Even if you dismiss the above as so much airy fairy theorizing in the face of REAL WORLD PROBLEMS, the fact is that as far as I can tell, the Obama Administration itself has not outlined anything of the sort. At least in the White House document that I read, I saw no proposal to set some sort of AMT [Alternative Minimum Tax] on millionaires. Instead, it claims to do this, while rehashing a bunch of things that the administration has long proposed: allowing the Bush tax cuts to expire for those making more than $250,000; changing the treatment of carried interest income accrued from capital gains; and altering the treatment of deductions for very high earners. If all of these things were passed, guess who would still pay a lower effective tax rate than his secretary? Hint: his initials are WB, and he lives in Omaha, Nebraska.
If a “Buffett Rule” is such a great idea, how come the administration doesn’t actually propose enacting one?
The other night on Greta, Chris the congressman from Montgomery County, Maryland, was saying that investment income should be taxed at the same rate as “earned income” the same way “working families” are taxed.
Left unsaid was whether he had in mind taking out social security taxes, Medicare taxes, and Federal Unenployment taxes, a thought Harry Reid brought up a while ago in the wake of one of Warren Buffet’s burps.
Watch for talking heads saying supply-side policies did not work for Reagan, or, for that matter, Clinton (lower rates on capital gains).
In a perfect world, I think capital gains should be indexed for inflation and, along with interest and dividends, should be taxed at a low rate or zero, since one’s savings have already been taxed.
Then, if Ron Howard or Warren Buffett want to make whatever charitable contribution to whomever they wish, let them.