President Barack Obama calls his proposed tax on millionaires the “Buffett rule,” based on financier Warren Buffett’s claim that he pays a lower tax rate than his secretary. Obama claims that the “Buffett rule” asks millionaires to “do their fair share” by paying the same income tax rate that middle-class families pay.
Despite a sluggish recovery and depressing job creation numbers, the president isn’t pushing for policies that would stimulate the economy and create jobs; he’s focusing on keeping his own job. On Monday, the Senate voted 51-45 — shy of the 60 votes needed — on a version of the “Buffett rule.”
FactCheck.org looked into the “Buffett rule” and took Obama and Vice President Joe Biden to task for leaving the “false impression that many, if not most, millionaires (people who earn $1 million or more a year) are paying a lower tax rate than the middle class. The fact is that even without the Buffett Rule, ‘more than 99 percent of millionaires will pay’ a higher tax rate than those in the very middle of the income range in fiscal year 2015, according to the nonpartisan Tax Policy Center.”
Tax Policy Center budget guru Roberton Williams figured that middle-class families pay about 15 percent of their income on taxes, whereas the average $1 million earner pays 24 percent in taxes.
So why is Obama pushing to raise millionaires’ tax rate to a minimum of 30 percent — that is, double the middle-class tax rate — in the name of fairness? A CNN poll shows that 72 percent of Americans think the “Buffett rule” is dandy. As Scott A. Hodge, president of the Washington-based Tax Foundation, observed Monday, if the president suggested Americans tax Canadians to balance the budget, that probably would poll well, too.
Americans love taxes that other people pay.
What’s the matter with taxing millionaires? Hodge watches the White House and hears rhetoric that “has had a chilling effect on economic activity.”
By pushing for a millionaires tax with no reforms attached, the White House has sent a message that whenever Washington overspends, the political class will squeeze the rich.
Hodge notes that while 237,000 millionaires paid 20 percent of income taxes in 2009, some 58 million filers paid payroll taxes but no federal income taxes at all. (Most earned less than $50,000.) That’s 41 percent of income tax filers, “the largest share of nonpayers since World War II.”
Personally, I could accept a deficit reduction package that increased revenue, flattened tax rates, shaved loopholes and reformed entitlement spending — along the lines of a draft presented by the Simpson-Bowles commission, created by, and then ignored by, the president. Reforms should stimulate the economy.
But the “Buffett rule” represents the exact opposite of Simpson-Bowles. By talking as if America could balance its books by squeezing the rich, Obama is pushing the notion of what Hodge called “free government” — unrestrained entitlement spending, fewer taxpayers and a bigger bite on working families. In the “Buffett rule” world, a large chunk of voters know that no matter how big government grows, they won’t have to pay for it.
It’s not fair. It’s not in the best interests of the country. It’s just good politics, in the worst sense.
Debra J. Saunders is a San Francisco Chronicle columnist. Her email address is dsaunders@sfchronicle.com.
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