State of the Union: Obama rejoins tax debate with Buffett rule
by Russell's Rants
Originally published January 25, 2012
While the GOP presidential candidates are in a bidding war to see who can propose the lowest tax rates, President Obama tonight proposed what amounts to a new “alternative minimum tax” for millionaires. (Call it an “MAMT.”)
Mitt Romney would like to make the Bush tax cuts permanent, including for those in the top tax bracket.
Not to be outdone, Newt Gingrich wants a flat tax rate of 15% on earned income – a rate that he notes is about the same as the effective rate of the taxes that Mitt Romney actually paid in 2010. Turns out, however, that Newt would eliminate all capital gains taxes, so Mitt might reconsider his vote since he would pay close to zero in taxes on the dividends and capital gains from which most of his “unearned” income is derived.
President Obama had a rejoinder to these Republican proposals in his State of the Union Address this evening:
Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 per cent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary. . . .
Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 per cent in taxes. . . . [I]f you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 per cent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.
Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.
The President also had a response to Mr. Romney’s claim that those criticizing his venture-capital ways are merely jealous of his wealth.
We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference – like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right. Americans know it’s not right. They know that this generation’s success is only possible because past generations felt a responsibility to each other, and to their country’s future, and they know our way of life will only endure if we feel that same sense of shared responsibility. That’s how we’ll reduce our deficit. That’s an America built to last.
In other words, it’s not about envy, but equity. Clearly, Mr. Obama lost Mr. Romney’s vote as his tax bill would more than double under the Buffett Rule.