Thursday, April 5, 2012

Buffett rule heads to the Senate; Let the tax season begin

By Rebekah Rast

Nothing like a little tax question from the president to get you ready for April 17:

“When it comes to paying down the deficit and investing in our future, should we ask middle class Americans to pay even more at a time when their budgets are already stretched to the breaking point? Or, should we ask some of the wealthiest Americans to pay their fair share?” President Obama said in his weekly address.

Interesting how the only option is an either or. Tax one group or tax the other — take your pick.
Obviously, the president would like to tax the “rich,” using his favorite model provided by billionaire investor Warren Buffett. Under the Buffett rule everyone making more than $1 million will pay at least 30 percent of their income in taxes — whether it comes from income or investment.

According to the Huffington Post, Congress’ Joint Committee on Taxation estimated that if the Buffett rule is enacted, it would only collect $47 billion through 2022 — a drop in the bucket compared with the $7 trillion in federal budget deficits projected during that period.

Where are the trillions of other dollars going to come from to pay down the deficit, Mr. President?
You see, even if Obama got everything he wanted, no strings attached, it wouldn’t help bring down the deficit. Taking more from one group to use on another is nothing but the redistribution of wealth. It does not create new wealth and will not get America a balanced budget.

In fact, a likely scenario if the Buffett rule was enacted would be to see the country go from bad to worse — further troubling the fiscal crisis facing America.

The wealthy in this country usually invest their earnings. They invest their wealth so it grows, but their investment also provides capital for the growth of businesses, small and large alike. If suddenly both investment and regular income are taxed at a much higher rate, less money will become available for American businesses.
Even The Christian Science Monitor explains that this rule sounds good in theory, but won’t work in practice:
“The Buffett rule sounds good in principle. High-income taxpayers should pay at least as large a share of their income in taxes as the rest of us. But most already do. On average, middle-income households will pay 2015 taxes totaling about 15 percent of their income (using the legislation’s definition). Without the Buffett rule, more than 99 percent of millionaires will pay more than that and only about 4,000 will pay less. Barely 10 percent of them will pay less than 20 percent. The proposed legislation would certainly raise taxes on a lot of high-income taxpayers. But the price would be even more complicated tax code.”
Even those media outlets that typically support the president can’t get all the way behind this plan. Nevertheless, the plan is scheduled for a vote in the Senate on April 16.

Get full story here.

No comments: