Not one, not two, but 18 views on Whitehouse’s ‘Buffett rule’

The United States Senate will hold a vote this evening on whether to proceed with a debate on U.S. Sen. Sheldon Whitehouse’s “Buffett rule” bill, which would create a new minimum 30% tax rate for income over $1 million. (Here’s supporter Ezra Klein explaining it.) Regardless of the outcome tonight – Democrats need 60 votes to cut off a GOP filibuster – it’s safe to say this has become the most attention-getting initiative of Whitehouse’s first term.

Whitehouse appeared on Newsmakers earlier this month to make his case for the Buffett rule and defend it against critics. But he’s just one of many voices taking part in the heated national debate his bill has sparked. Here’s a sample of views on the Buffett rule from all over the map.

Ezra Klein: “Any deficit-reduction package is made up of lots and lots of smaller policies that contribute to the bottom-line figure. … When you add up the policies the two parties actually have in their budgets, Obama’s proposals reduce the deficit by more than Ryan and Romney’s. And that’s because he’s specified a bunch of tax increases that, together, add up to substantial deficit reduction. The Buffett Rule is the best known of these ideas, but it’s not the only one. On the Republican side, meanwhile, the crucial changes to the tax code have been left unnamed. Without them, the proposals lead to substantial deficit deterioration. Is that really on the same continent as serious?”

Josh Barro: “Tax reform is supposed to be about making the tax code simpler, less distorting, and less arbitrary. Yet, as I’ve written before, the Buffett Rule moves in the wrong direction on all of those measures. … Abolishing the step up in basis is exactly the sort of item that would show up on a real tax reform plan – it’s a reform that locates income that currently is improperly excluded from tax, and then taxes it. It would not introduce new distortions into the tax code, in fact, it would reduce them, by eliminating a tax incentive for people to hold assets they would otherwise trade. But then, that would be a serious policy idea, and the White House is mostly interested in the Buffett Rule as a political gimmick.”

Brian Beutler: “All Buffett Rule critics knock Obama for not pursuing more comprehensive tax reforms. If they’d paid even passing attention to the events of 2011, they’d know that the only tax reforms Republicans back either raise no revenue, or are conditioned on the idea of locking in the Bush tax cuts permanently. They imply future cuts to government programs that neither Democrats nor most Americans are prepared to accept, but are at the root of the GOP’s tax strategy. The Buffett Rule is designed to make those demands politically noxious — and perhaps clear the way toward a more reasonable approach to balancing the country’s priorities.”

James K. Galbraith: “The Buffett Rule would increase taxes on a handful of Mitt-Romney-like figures in today’s America, raising a few billions of dollars in new revenues each year from the very rich. It is perfectly tailored to the Obama political style, which is to nod symbolically leftward while reserving big concessions for banks, venture capitalists and insurance companies. … Symbolic gestures have their place. … And yet, at the same time, by itself, the Buffett Rule solves no significant economic problem.”

Arthur Laffer: “Putting aside all the oohing and ahhing over Mr. Buffett’s selflessness, his effective tax rate on his true income would hardly budge if this ‘Buffett Rule’ were applied. What’s worse, raising the highest tax rates would most likely worsen the budget deficit and lead to a further weakening of the economy. Everyone would suffer.”

• Jared Bernstein: “Face it, America. We’ve got an overly complex, unfair, inefficient federal tax code. It’s riddled with loopholes, it’s opaque and confusing, it’s less progressive than it used to be, and it doesn’t raise enough revenue to pay for the government most of us want and all of us need. We should scrap it and start over. But that’s not going to happen for awhile, so until then, we should have a Buffett Rule.”

John Gapper: “President Barack Obama’s proposed ‘Buffett rule’ – that no household making over $1 million annually should pay a smaller share of its income than middle-class families pay – may turn out to be good politics but it has a numerical weak spot. … While many of the wealthy do pay lower tax rates than the middle class because they can structure their affairs to avoid income tax, the average figures are not as inequitable as Mr Buffett’s original example.”

James Pethokoukis: “The average tax rate for middle-incomers is more like 14%.  So why isn’t that the Buffett Rule? … In the end, the Buffett Rule is about politics and not economics, so I guess I shouldn’t expect it to make much economic sense.”

Charles Krauthammer: “The reason Buffett and Mitt Romney pay roughly 15 percent in taxes is that their income is principally capital gains. The Buffett Rule is, in fact, a disguised tax hike on capital gains. But Obama prefers to present it as just an alternative minimum tax because 50 years of economic history show that raising the capital gains tax backfires: It reduces federal revenue, while lowering the tax raises revenue…. The United States has the highest corporate tax rate in the industrialized world. Now, in the middle of a historically weak recovery, Obama wants to raise our capital gains tax to the fourth highest. No better way to discourage investment – and the jobs and growth that come with it.”

• Ryan Lizza: “The Buffett Rule is not Obama’s tax policy in a perfect world, it’s Obama’s tax policy when you run against a really rich guy like Mitt Romney.”

Jim Tankersley: “If the Buffett Rule was a serious pitch to help the jobless, it would deal with one of those main drivers of unemployment. It would boost persistently weak aggregate demand or incentivize business investment. It does neither. Instead, it tells America’s job-seekers, Don’t worry, we’re going to make the tax code look more fair to you. Lots of polls suggest that’s a good political argument. But that’s what it is: a political pitch.”

Sebastian Mallaby: “No reasonable person can doubt that the US must eventually raise taxes. The country is running an unsustainable budget deficit. Its tax take, measured as a share of gross domestic product, is the lowest in the OECD. The 1990s suggest the US can raise revenues without damaging growth. Other countries have also managed similar feats. Sweden, for example, which collects 53 per cent of GDP in taxes, has grown faster over the past decade than the US, which collects 32 per cent, counting state and local government. … By focusing his rhetoric on the Buffett tax, Mr Obama is fumbling his best chance to win a mandate for intelligent reform – reform, moreover, that ought to be the centrepiece of a second term.”

John Cassidy: “The question is what sort of doomed measure the President should seek to rally public support for, in the hope he will be able to pass it after the election. The Buffett Rule is a modest and simple proposal that appeals to common sense. Maybe the White House’s plan is to start small and build up from there. If so, the rule will serve a very useful purpose. But it shouldn’t be mistaken for a cure-all.”

Robert Reich: “The Buffett Rule sets the bar too low. For most Americans, wages and benefits are declining (adjusted for inflation), net worth has been plummeting (their only asset is their homes), and the public services they rely on have been disappearing. For the top, it’s just the opposite: Their incomes are rising, their stock-market portfolios have been growing, and a growing portion of their earnings has been subject to a capital-gains tax of just 15 percent. … Why not restore top rates to what they were before 1980, and match the capital-gains rate to the income-tax rate?”

Zachary Karabell: “When everyone is getting wealthier, few object if some are getting a lot wealthier. When everyone is running fast to stay in place, the Croesus-like success of a small minority is much more disturbing and raises questions about who is slicing the pie. … The Buffett Rule et al. may succeed as electoral tactics, but someone is going to have to address the fiscal gaps and lack of sufficient dynamism to fill them. … It might get Obama reelected, but it leave us no closer to the answers we need.”

Reihan Salam: “There is, however, another way forward. Economists from the left, like Robert Frank of Cornell University’s Johnson School of Management, and from the right, like Mitt Romney adviser and Columbia Business School professor Glenn Hubbard and Alan Viard of the American Enterprise Institute, have called for a progressive consumption tax that would eliminate taxes on savings and investment. … The Buffett Rule presents a huge roadblock to this kind of pro-growth tax reform, and that will leave us all worse off.”

Barry Hinckley: “As a longtime advocate of tax reform, I could support the so-called Buffett Rule. I have been arguing for years that it’s time for everyone to pull together and ‘pay their fair share’ but, if you allow this government [to] confiscate more money without offsetting cuts, they will simply spend it all and then some. … It’s long past time to scrap our current tax code and move to a fairer, simpler system – one without special giveaways, and one that will encourage labor, savings and investment rather than penalizing them.”

Sheldon Whitehouse: “We should celebrate those Americans who do well and earn high incomes. But with all the advantages that come with that high income, paying a lower effective tax rate than middle-class Rhode Island families should not be one of them. … A straight deal is getting harder and harder to come by as special interests and super political-action committees pollute Washington. By voting for the Paying a Fair Share Act, members of the Senate can show the American people that Congress is capable of doing the right thing to make the tax code begin to work for middle-class taxpayers again.”

And just for fun:

@grossdm: “I propose the Buffet Rule. At weddings, bar mitzvahs, barbecues, people who make more than a million go through the line last.”

(photo: Associated Press)

1 thought on “Not one, not two, but 18 views on Whitehouse’s ‘Buffett rule’

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