Taxes

Obama and the Buffett Rule

If there's any consolation at all here, it is that Mr. Obama is positioning himself going into the election as the candidate of tax increases.

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If there were some kind of award for the most misleading statements in a single four-minute speech, President Obama would have earned it with his weekly address this weekend, timed for tax day.

"We can't afford to keep spending more money on tax cuts for the wealthiest Americans," Mr. Obama said.

This is really something. First of all, who is the "we" in that sentence? The many Americans who don't pay any income taxes at all, or who take more from the government in welfare or entitlement benefits than they pay in taxes? Second, it's great to see Mr. Obama start to crack down on unaffordable government spending. But it's hard to define tax cuts as spending unless you start from the concept that all money belongs to the government to begin with. It's one thing to conceive of some special tax break as a "tax expenditure." But it's not "spending" for the government to allow an individual to keep money that the individual earned or owned in the first place.

Mr. Obama went on: "This week, Members of Congress are going to have a chance to set things right.  They get to vote on what we call the Buffett Rule. It's simple:  If you make more than $1 million every year, you should pay at least the same percentage of your income in taxes as middle-class families do.  On the other hand, if you make less than $250,000 a year—like 98 percent of American families do—your taxes shouldn't go up. That's all there is to it."

Here is some language from the actual text of the Buffett Rule legislation, which Mr. Obama calls "simple": 

SEC. 59B. FAIR SHARE TAX.

"(a) GENERAL RULE.— "(1) PHASE-IN OF TAX.—In the case of any

high-income taxpayer, there is hereby imposed for a taxable year (in addition to any other tax imposed by this subtitle) a tax equal to the product of—

"(A) the amount determined under paragraph (2), and

"(B) a fraction (not to exceed 1)— "(i) the numerator of which is the excess of—

"(I) the taxpayer's adjusted gross income, over

"(II) the dollar amount in effect under subsection (c)(1), and "(ii) the denominator of which is the

dollar amount in effect under subsection (c)(1).

 "(2) AMOUNT OF TAX.—The amount of tax determined under this paragraph is an amount equal to the excess (if any) of—

"(A) the tentative fair share tax for the taxable year, over

"(B) the excess of— "(i) the sum of—

"(I) the regular tax liability (as defined in section 26(b)) for the tax- able year,

"(II) the tax imposed by section 55 for the taxable year, plus

"(III) the payroll tax for the taxable year, over

"(ii) the credits allowable under part IV of subchapter A (other than sections 27(a), 31, and 34). 

Got that? As President Obama says, "It's simple."

And, as Bloomberg News's Richard Rubin reported, the Buffett Rule, as proposed, doesn't apply to income from tax-free municipal bonds. So when Mr. Obama declares, "That's all there is to it," it's not true. That's really not all there is to it.

There's more. President Obama declared, "the thing is, for most Americans like me, tax rates are near their lowest point in 50 years." The most important word in that sentence is "near." The top individual income tax rate from 1988 to 1990 was 28%. In 1991 and 1992 it was 31%. Now it is 35%. For much of the past 50 years the payroll tax was also lower, and applied to a smaller income base. Nor does Mr. Obama mention that one reason tax rates were so high for much of the past 50 years is that America was paying for a military buildup to win the Cold War against Soviet Communism. That war is over.

Obama continued, "In 2001 and 2003, the wealthiest Americans received two huge new tax cuts.  We were told these tax cuts would lead to faster job growth. Instead, we got the slowest job growth in half a century, and the typical American family actually saw its income fall." Not true. After those tax cuts, which went not just to the "wealthiest Americans" but to all Americans, the economy actually added jobs faster than it did in the first two years of the Obama administration, during which Mr. Obama has been trying to repeal the tax cuts on the "rich." As to whether "the typical American family actually saw its income fall," it depends on what period of time you look at, but some studies that look at post-tax, post-transfer income and that include the value of employer-provided health insurance show a different picture.

Mr. Obama went on, "On the flip side, when the most well-off Americans were asked to pay a little more in the 1990s, we were warned that it would kill jobs. Instead, tens of millions of jobs followed." Those jobs followed largely after the Republicans took over Congress in 1994 and after the North American Free Trade Agreement went into effect the same year. Seeing the 1990s as a decade of tax increases is a misreading of history. The right tax aspects of that decade to focus on are the Nafta and GATT/WTO tariff reductions that Lawrence Summers has called "the largest tax cut in the history of the world," and the law President Clinton signed in 1997 cutting the capital gains tax rate to 20% from 28%.

If there's any consolation at all here, it is that Mr. Obama is positioning himself going into the election as the candidate of tax increases. As it gets closer to November, if the Republicans are even marginally competent (a big "if") he'll have a tougher time getting these sorts of misleading statements off unchallenged.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.

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  1. The rule should really be called the Warren Buffet enrichment rule…

    Here’s how it works. Let’s say you were going to invest in a fund that returns 8% over 20 years. IF you make lots of money, you will be required to pay 30% (or whatever) of your capital gains to the govt. It works out that your return is reduced to something like 5%

    But, if you buy a permanent life insurance policy – say from a life insurance company that Warren Buffet has a huge stake in – and put the money you want to invest into the policy instead, they will charge you a 1% fee and you can keep the rest of the capital gains tax free.

    So, all the savvy investors will go and buy life insurance policies, the federal gvt will get minimal additional revenues, and Warren Buffet – who is playing Obama like Satriani plays a guitar – gets richer!

    I am actually impressed at how knuckle-draggingly stupid the progressive rank and file are on this issue.

    1. But what about fairness? Dont you care about fairness?

      1. Sure it’s fair to let Buffet make more money.

    2. So close the loophole.

      Oh wait, team red will filibuster that.

      Stupid progressives!!!

    3. Don’t let shrike and Derider know they are knuckle-draggingly stupid, they might get upset.

      And then shrike might call you a redneck or something.

      1. Fuck ’em both.

  2. Smoke and mirrors… shiny object… worthless goddamned jealousy-based tax policy… choose your phrase, they all fit.

  3. Sure, its a little symbolic since the rev numbers are about $5 billion a year.

    Talking symbols – what about that sad fucking ‘Ole Man Herman Cain’ and his NANE NANE NANE plan for stupid fucking duped rednecks who listen to that Stepin Fechit POS?

    Flave Cain is as sad as that fucking Alan Keyes but with 1/10 the eloquence.

    1. Fuck you, shrike.

    2. u mad bro?

      1. Yes, he is, 30+7. shrike is probably insane. Being pounded by Soros’ cock all these years is likely the culprit.

    3. Cain’s plan might be the stupidist thing ever conceived by man…and you’re still a racist shitbag for calling him “Flava Cain” because he doesn’t go Dem.

      Science you are a DEMFAG.

    4. People like you are a good reminder that the modern Democrat was born the day they figured out it was easier to keep black people down by giving them handouts than to set crosses on fire in their front lawns.

      1. And blacks vote for them 90+ percent because they are (check one):

        1) Easily deceived
        2) Weak-willed
        3) Other inherently racist explanation

      2. Whereas the last Republican president to give a shit about black people was Lincoln.

        1. Nothing racist about those reasons, Tony. You would do well to look up the word in the dictionary.

  4. Say, speaking of Stepin Fetchit… Obama, taking tax advice from rich old white man Buffett… hmm.

  5. Buffett Rule goes down!

    Suck it, Team Blue. That’s what you get for letting a billionaire socialist write tax policy.

    1. The fact that team red filibustered this is good news for team blue, FYI.

      It polls at over 70% approval.

      1. well, of course; the looter class is always in favor of having someone else pay for its freebies. And in other news, 70% were found to love puppies and sunshine.

        1. Reason Rupe public opinion survey says…

          1. Idiots keep pushing for pointless tax increases.

            The sun rises in the east.

            Tony and shrike post stoopid Team Blue bullshit.

            The sun sets in the west.

            1. ^^May be the truest four sentences ever posted on the interwebz

              1. I is owed an internetz for that one.

  6. How exactly do you “spend” money on a tax-cut?

    Spending money and not earning some amount of money are two completely different things.

    The only explanation I can think of is that to him, all money in the US economy belongs to the government and any amount the government doesn’t take in taxes is a expenditure.

  7. Obama is right one thing: folks should be paying their fare share. Therefore, it is time we demand that the moochers and looters who currently have no federal liability get some skin in the game. 10% paying 70% of the federal income tax load IS unfair. If the left wants to play rhetorical games, let’s play.

    1. Two words: Flat tax.

    2. Your primary motivation being the creation of more poor people to blame for their poverty?

      There is a federal imbalance in tax receipts (progressive taxation) because the non-rich carry the burden of states and localities. Taken as a whole the tax system is barely progressive, not to mention filled with nice deals for those with access to lobbyists (not poor or middle class people!).

      Your concern for tax justice is perhaps laudable, but why do you fixate on the role of the poor? Do you really think the problem in this country is that the poor have it too good, and the rich are too burdened by taxes?

      However did the poor and middle class land themselves such a sweet deal. It’s a wonder the rich don’t give away most of their money so they too can live the good life.

      1. $

        (You know what it means, Tony)

        1. That you’re a bobbleheaded moron who can’t come up with his own insults?

          1. T o n y|4.16.12 @ 10:20PM|#
            “That you’re a bobbleheaded moron who can’t come up with his own insults?”
            No, shithead, it means un-weaving your dishonesty isn’t worth the time.
            Got that, shithead?

      2. But you want to roll back the Bush Obama tax cuts Tony. Don’t you realize that doing that makes those bottom 40% that don’t pay taxes actually pay them? I mean, that’s the only way to actually raise any significant money.

        Why do you hate the poor?

    3. It’s a war of words you’ll lose at the voting booth.

      1. The Derider|4.16.12 @ 10:28PM|#
        “It’s a war of words you’ll lose at the voting booth.”
        Yes, and in a war of stupidity, you’re the clear winner.

  8. It’s a test case. Will Republicans vote against a popular, commonsense tax change to make the very wealthy pay the same rate on income as everyone else? No, no they won’t. Thus, they are wealthy-coddling anti-tax dogmatists. Those meanie Democrats, how dare they unmask Republicans by forcing them to vote on a bill! It’s unsportsmanlike!

    1. It’s a test case. Will Republicans vote against a popular, commonsense tax change to make the very wealthy pay the same rate on income as everyone else give more of their money to Warren Buffett? No, no they won’t. Thus, they are wealthy-coddling anti-tax dogmatists. Those meanie Democrats, how dare they unmask Republicans by forcing them to vote on a bill! It’s unsportsmanlike!

      Fixed it for you! 😉

      As I said, it’s entertaining watching Warren Buffett play you guys like Satriani plays a guitar.

      1. For the record, Satch is waay overrated

        1. What “commonsense tax change” would that be?

          How long would the stupid goddamn Buffet Rule* run the government? Even a full day?

          Jealousy-based tax policy is bullshit. Live it.

          * Again… why the fuck is a rich white man setting tax policy?

        2. I strongly disagree. Satch isn’t my favorite, Steve Howe is. Check out Joe’s latest CD, Black Swans and Wormhole Wizards.

    2. The GOP should vote: no tax increase is allowed while unemployment is above 8%.
      By the way, why doesnt Obama take into account the double taxation issue of capital gains? Maybe he forgot.
      What is this issue of fair? What is Obama?s definition of “fair”?

    3. T o n y|4.16.12 @ 10:10PM|#
      “It’s a test case. Will Republicans vote against a popular, commonsense tax change to make the very wealthy pay the same rate on income as everyone else?”
      Test case: Will shithead ever post without lying?

    4. There’s nothing common sense about the rich paying too much in taxes.

      Suck me off. This is at least the fourth level of taxation dipshit.

  9. Slightly off topic:

    I originally responded to Barry’s remarks about “we” needing to pay “our” fair share with the punchline from ye olde Lone-Ranger-surrounded-by-Commanches joke. Lo and behold, the system blocks it. Still feeling the fallout from Pale Aboriginal’s stupidity, I see.

  10. Welcome to America! Run by the rich, FOR the rich! its the American way lol.

    http://www.Gettin-Privacy.tk

    1. Welcome to America, the place where people own their earned property, and the king does not. (At least thats how it was supposed to be)

      1. That’s how it was, for the first 100 years, when we were citizens. Now we’re subjects.

  11. This just in: “MA Tea Party Patriots: “We will not be silenced by faggots.””

    Love that libertarianism 😀

    1. Guess it’s a good thing that Tea Party people aren’t fucking libertarians you fucking idiot.

    2. Wow you’re ignorant.

      The bottom 46% paying no income tax need to shut the fuck up.

    3. So… do you ever open your mouth, without subtracting from the sum of human knowledge, ever???

  12. SusanM|4.16.12 @ 11:17PM|#
    “This just in: “MA Tea Party Patriots: “We will not be silenced by faggots.””
    Love that libertarianism :D”
    Care to explain? or should we presume brain-dead issues?

    1. Susan is probably Tony’s sister or something.

      1. Memo to Susan:

        $

  13. Common sense is to have a president that wants a balanced budget and won’t raise taxes when he overspends like a populist bitch.

    I would love to see rich people leave this country. We get more revenue from a lower capital gains tax.

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