What happened
The debate over higher taxes for the wealthy returned to center stage this week, as Senate Republicans filibustered a millionaires’ tax championed by President Obama. The “Buffett Rule”—named after billionaire investor Warren Buffett, who famously complained that he paid a lower tax rate than his secretary—would impose a minimum 30 percent tax rate on anyone earning $1 million or more per year. Even though polls showed that the bill enjoyed support from 72 percent of the public, Senate Democrats were unable to get the 60-vote majority required to break a filibuster, with senators voting 51 to 45 to proceed. Senate Republicans derided the Buffett Rule as an election-year gimmick. But Obama said the bill would be the first step to bringing some “basic fairness” to the tax code, adding that it was “just plain wrong that millions of middle-class Americans pay a higher share of their income in taxes than some millionaires and billionaires.”
House Republicans countered with their own election-year tax proposal—the “Small Business Tax Cut Act,” which would cut taxes by 20 percent for businesses with fewer than 500 employees. The bill, proposed by House Majority Leader Eric Cantor (R-Va.), was expected to pass the Republican-controlled House but to die in the Democratic-controlled Senate. “Since the other side will not join us in an honest tax-reform discussion,” said Cantor, “we believe that right now it is urgent that we help our job creators.”
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What the editorials said
The Buffett Rule is a “non-solution to a non-problem,” said NationalReview.com. Wealthy Americans already pay the bulk of federal income taxes. Only 10 percent of millionaires are taxed at a rate of 24 percent or less—most of them retirees and professional investors who get most of their incomes from capital gains, rather than salaries. This supposed fix would only raise $5 billion a year anyway, said The Wall Street Journal, or less than 0.5 percent of this year’s budget deficit. For all Obama’s talk of “fairness,” this gimmicky addition to the tax code would serve only to advance his goal of “spreading the wealth”—while effectively doubling the capital-gains tax and discouraging investment and job creation.
The Buffett Rule makes sense as a simple matter of fairness, said The Washington Post. But even ending the Bush tax cuts on those making more than $250,000—another Obama goal—would not fund the country’s burgeoning entitlement costs while reducing the annual $1 trillion deficit. Sadly, Obama would prefer to “rail against millionaires who fail to pay their fair share than to say that the pain will have to be more widely shared.”
What the columnists said
The Buffett Rule isn’t tax policy, said Charles Krauthammer in The Washington Post. It’s a naked attempt to “channel the sentiment underlying Occupy Wall Street,” and pit the 99 percent against the 1 percent. The fact that Obama will keep talking about higher taxes on the rich has nothing to do with debt reduction, and “everything to do with re-election.”
True enough, said Nancy Cook in NationalJournal.com, and it just might work. The Republicans’ adamant opposition to raising taxes on millionaires will give Obama and the Democrats “a clear, distinct talking point for the campaign trail”—that they alone are the defenders of the middle class, standing up for fairness and civic responsibility. The Buffett Rule is indeed a political ploy, said Jonathan Chait in NYMag.com, “but that doesn’t make it wrong or even cynical.” It’s a symbolic way of exposing “Republican extremism”—the party’s nutty opposition to any higher taxes on the rich.
Republicans aren’t alone in their irrational “anti-tax orthodoxy,” said Ezra Klein in Bloomberg.com. Obama and the Democrats won’t consider raising taxes on anyone except the 2 percent of Americans earning $250,000 or more. But that will only raise $1.5 trillion over 10 years—not nearly enough to “pay for the social welfare state they say they support.” With the country facing mounting costs and growing debt, the only responsible way forward is “comprehensive tax reform,” with broadly distributed increases. Sadly, both parties would rather pander to their respective constituencies with “ridiculous tax pledges.”
