The Stakes In The Buffett Rule Vote

Isaiah J. Poole

The Senate is scheduled today to vote on Sen. Sheldon Whitehouse’s “Paying a Fair Share Act of 2012,” which seeks to enshrine into law the “Buffett Rule” that millionaires and billionaires should not be paying taxes at a lower rate than the people who work for them.

The conservative attack was neatly wrapped up Sunday by Republican National Committee Chairman Reince Priebus, who called the Buffett Rule legislation “a shiny object” President Obama is using to distract people as he goes about “dividing and conquering.”

It bears repeating what I said in a post last week responding to criticism that the Buffett Rule is not much more than symbolism that would, as Priebus claimed Sunday, would only pay for “11 hours of the federal government.” This is not some symbolic “shiny object”; it’s a reflection of a bedrock principle that is at the center of what direction the country will choose to get its fiscal and economic house in order. We can ask the financially strongest segment of the society to carry the most weight or we can, as Priebus and the Republican Party are pushing to do, allow the financially strongest to do even less and shift the weight of deficit reduction to those already bearing the burdens of lost wealth, stagnant wages and high unemployment.

That’s the point that Institute for Policy Studies senior scholar Chuck Collins, a leading voice on the subject of income inequality and economic justice, makes in the above interview.

“In a way, the Buffett Rule fight is symbolic. It moves us in the right direction, but it doesn’t raise as much revenue as it should. We would be better off if Congress just said income from work, and income from investments, capital gains and wealth, should be taxed at the same rate, whether you have high income or low income,” Collins says in the interview.

Nonetheless, he adds, the Buffett Rule is a “totally important fight” that “moves us in the right direction.”

The legislation that is before the Senate does not go squarely after the difference between the rate at which earned income is taxed (at a top rate of 35 percent) and unearned income (such as dividends and capital gains, which are taxed at a top rate of 15 percent). The Buffett Rule in its purest form would eliminate this tax distinction, since it is the reason why a person such as Mitt Romney, who receives nearly all of his income from investments, pays a tax rate of 15.4 percent, while, according to this White House tax calculator, my own tax rate is 22 percent. (It’s what I get for having virtually no unearned income, no mortgage or dependent deductions, and a marriage that the federal government doesn’t recognize.)

What the Whitehouse bill does do is set a minimum tax rate of 30 percent for people with an adjusted gross income of $1 million, a floor that would be adjusted for inflation in future years.

On Friday, the Campaign for America’s Future joined more than 100 organizations representing the full spectrum of economic justice activists in a letter of support for the Whitehouse bill.

This should not be controversial legislation. We believe that a basic premise of the promise of America – no matter what your political party – is that everyone should contribute their fair share. The richest Americans have benefitted from enormous increases in wealth in recent decades, while everyone else has struggled to make ends meet. S. 2230 represents a modest but important step for addressing rising inequality. There is no reason that Washington should subsidize millionaires and billionaires. Continuing the array of tax loopholes that the Buffett Rule seeks to address adds to the deficit and requires middle-class Americans to make up the difference – either through higher taxes or through reductions in funding for Medicare and Medicaid, public education, researching new medical cures, or rebuilding our crumbling infrastructure.

Meanwhile, polls continue to show that the American majority supports the Buffett Rule. Six in 10 supported a 30 percent minimum tax on millionaires, according to a Gallup poll released Friday.

On Monday, some Senate Republicans will repeat their claims that America is overtaxed and that the federal government spends too much. Both claims are false. America pays a lower share of its gross domestic product in taxes (about 27 percent) than most of the developed world. And federal taxes on middle-income Americans are near historic lows, as this report from the Center on Budget and Policy Priorities shows.

What is true is that conservatives have signed onto a tax plan that goes in the opposite direction of the Buffett Rule. It would give even larger tax breaks to millionaires and billionaires, while imposing higher health care costs onto seniors, burdening college students with more debt, erecting higher barriers between struggling families and the economic support they need, and crippling the resources that support our common well-being.

As President Obama said Sunday, this argument over the Buffett Rule ultimately “is not an argument about redistribution. That is an argument about growth”—specifically, a broad-based growth supported by a government that is able to lay the foundation for shared prosperity.

If you haven’t already, send a message to your senators today asking them to support the Whitehouse bill. This is not class warfare. This is asking people from every class to be warriors on the same side for economic recovery and broad prosperity, based on the common-sense principle that those who have weathered the economic storm should do their part to help the rest of us climb up.

 

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