What's wrong with the 'Buffett rule'
More tax code fairness is good, but it won't solve all the problems of the US economy. The reality is that everyone needs to pay higher taxes, plus undergo an attitude shift.
This post is from Rick Newman at U.S. News & World Report.
Many Americans feel dispossessed. Data support their grievances: Incomes are stagnant, joblessness is high, and more people really are falling behind.
President Barack Obama thinks he has a solution: a new "fairness" agenda that starts with the "Buffett Rule," a proposal to raise tax rates on millionaires to the same levels middle-class earners typically pay. This would be followed by other measures meant to assure that "everyone gets a fair shot and everyone does their fair share," as Obama has said repeatedly.
The U.S. tax code is certainly a mess that favors those able to move their money around and hire experts to take maximum advantage of loopholes. The Buffett Rule is actually sensible, because it would plug some of the holes that special interests have drilled into the tax code over the past 50 years. But it also seems like the wrong place to start trying to revive America's fortunes, for at least two reasons.
The first problem is that the Buffett Rule and Obama's whole fairness doctrine perpetuate the fiction that Washington can solve the overarching problem of fading prosperity. This might have been plausible 50 years ago, when the U.S. economy was far more self-contained and growing at a heady pace that made lavish government spending possible. (Post continues after video.)
These days, however, the federal government is heading toward insolvency, and many aspects of the global economy are beyond Washington's control. The enormity of the national debt, which now tops $15 trillion, makes it a mathematical certainty that Washington is going to do less for citizens and ask them to contribute more. If politicians were honest, they'd prepare voters for the sacrifices that lie ahead, instead of promising 99% of them that everything will be fine as long as the other 1% pays more.
The Buffett Rule would impose a minimum effective tax rate of 30% on people who earn more than $1 million per year, raising the average tax rate for that group by a few percentage points. But even the White House acknowledges that the amount of extra revenue raised would be trivial compared with the size of the debt.
Obama suggests that higher taxes on the wealthy will reduce the need to raise taxes on the middle class. But nearly every budget expert will tell you that the only way to get the debt under control is to raise taxes on virtually everybody, or eviscerate government services.
The second problem is that Obama is still not telling struggling Americans what it will really take to revive their own fortunes and, to some extent, the nation's: more grit, more self-sufficiency, a more entrepreneurial spirit and greater engagement with the world beyond U.S. shores.
There are many Americans who have what it takes to succeed in the hypercompetitive global economy. Others are getting the right skills and going where the best opportunities are -- which sometimes means overseas.
But too many Americans are stuck in place, waiting for jobs that are never coming back or hoping the government will intervene and fix things. The odds are very high that it won't. The government lacks the money and know-how to reboot most parts of the economy. Plus, ongoing paralysis in Washington makes the government the least effective cog in the whole American system.
This is not to say that free-market incentives and more competition are the answer, as many conservatives insist. All the bailouts, corporate meltdowns and economic disasters of the past decade have made it clear that capitalism generates turbulent waters, not the gentle rising tide that capitalist romantics believe in. It raises some boats, swamps others and threatens a tsunami every now and then.
We need nimble government that enforces some healthy rules, but we also need robust citizens who take smart risks, bounce back from setbacks and rarely think of government as part of their strategy to get ahead. Warren Buffett, the man, is an exemplar of such drive. The rule named after him isn't.
More from U.S. News & World Report and MSN Money:
$5 billion a year. That's right. All our problems are solved over $5 billion a year. Don't mind the damage it will do to an already over-taxed people. As of April 1st we have the highest corporate tax rate in the industrialized world. Including Obamacare taxes, elimination of the Medicare cap, expiration of the Bush tax cuts and Federal taxes are going up to 44% for the top 5%. Add in state taxes and your over 50% of your income to taxes. This still isn't enough for the left.
Cut spending NOW. No increase higher than the inflation rate.
I have not read or heard any compelling arguments justifying the excessive federal government spending. The Federal Government has a speding problem not a revenue problem. Taking the 100% of the wealth from the top 1% wouldn't even fund the governement for a year.
The solution is simple, "eviscerate government services" to reduce debt.
I wonder whose fault the loopholes are..... Congress, maybe? So they made it legal to pay fewer taxes and now Obama is all upset rich people have loopholes? My head is spinning.... How about get rid of the loopholes and you've effectively raised the tax rate without making a new law? Oh yeah, because they're lawMAKERS and don't understand how to get rid of a law, just patch over the problem today and all is well. But in reality (the world which they don't live in) these new laws make everything worse down the road.
This article is stating a very huge point: a small tax increase on the wealthy is not going to fix our debt, it just fuels the fiction fire that the rich are to blame for our problems.
The truth is that the government is making it easier for people to be lazy and suck money from it, so why should they work???
Force the able bodied to get up and do something, anything, to get them off of the welfare status and be responsible citizens. Hardwork will take you places, laziness will drag us all down!
Dont blame the rich who work for a living, blame the leaches of society!
First Job of a politician: Get elected
Second: Ask for money to get reelected
Third: Legislate only for those with the money that will reelect him/her
Told to me by my grandfather in 1945, I am 71 now, when I asked : What is a politician?.
Do they (all of them) want to legislate and resolve the problem?
Maybe , some day the country and the people will be more important than the political party.
I hope that is not too late
WOW...that "sounds" awesome. Its too bad that the people who earn more than 1 million dollars a year get paid 1 dollar a year and the rest is given in stock options and taxed at 14% for capital gains when they pull it out of the market. Way to go Mr. Obama. You have once again siad something that sounds great to an uneducated public and will get you votes. Nice job on not fixing our problems and getting re-elected at the same time.
All this will do is instead of making the people who get paid in stock options pay 28 cents in taxes from the 1 dollar they pay themselves is that now it will make them pay 30 cents in taxes a year. Educate yourself on how the modern economy works and you can see this is merely a ploy to get votes.
where are the jobs??? in china? they pay their workers $2.00 an hour. then bring the products here and sell them for some whopping price. people who are making minimum wage buy them here. how much profit did apple get?? nafta ?? good idea? for who? no one takes our goods. we don't have any. container ships come to the usa dump their goods and leave our shores empty.. there are no jobs here. we need the jobs to come back to us. you talk of the 50% really you believe that out of 300,000,000 people half are not working? now if you believe 50% don't pay even if they are on welfare they pay taxes on everything they buy, or use. what is washington doing? why do they spend millions to get a job that pays $250,000? how many leeches can the american public support? city , county, state, national. who pays them? our taxes. if you need more money do you get to print more? or do you have to live in a budget. they keep stealing from social security and then complain about it. when f.d.r. put it into effect people did not live to 65. . in the 60's johnson took wow millions . they have demographs they know who turns 65 and how many do. so they knew what they were doing. do they ever take a pay cut? their retirement is what ever pay they got.. . now election is coming what choice do we have? none! sad very sad where is the honesty?? only greed isee.
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