Monday, September 19, 2011

"The Buffett Rule"

Today, President Obama finally announced his plan for deficit reduction.  As should surprise no one, his solution is to raise taxes.  Not just to raise taxes, but specifically on the "rich".  He targets "millionaires" (those individuals making over $200,000), who have not been paying their fair share (the top 5% of wage earners in this country pay 60% of total taxes).  Of course, we know in reality this "plan" will hit just about everyone, not just those falling into Obama's "millionaire" target.  When liberals get tax-happy, watch out, because they'll slap a tax or a fee on just about anything that moves, or even if it doesn't.

Obama stated today that he would veto anything that came to his desk, that did not have serious revenue increases.  Every time you hear the word "revenue" from the mouth of a liberal politician, that's code for tax increase on the rich.  We all know that.  But I started to contrast his stated goals (increased revenue), with the name for his plan (Buffett).  Of course, Buffett, refers to Warren Buffett, who has famously advocated for tax increases on the "rich", demonstrating alleged "unfairness", with the example that he pays a lower tax rate than his secretary pays.  Without getting in too deep into the inherent fallacies of his comparison, I will tell you that it reminded me of the only way to increase Warren Buffett's taxes on income.  To do that, the federal government MUST increase the capital gains tax, which currently stands at 15%.

Economists have clearly demonstrated that increases in the capital gains tax rates actually DECREASE revenue.  There is little debate about this, and it was recently demonstrated in the 1980's, when increase of the cap gains rate to 28% caused a decrease in total revenue (see Paul Ryan's recent quote, "if you tax something more, you get less of it").

Don't forget that Obama just vowed to veto any legislation without "serious revenue" increases.  If we know that an increase in the marginal rate lowers revenue, then does that mean Obama is vowing to veto legislation with marginal rate increases?  Doubtful, but don't think Obama doesn't know the revenue impact of raising rates.  He knows full well, but he just doesn't care.  Below is an excerpt from a 2008 interview with Charlie Gibson (courtesy of

MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
SENATOR OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair. [. . . .]
MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.
SENATOR OBAMA: Well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going.
What this all boils down to, is more redistribution, and more tax policy to dictate "fairness", as determined by Barack Obama.  Once you see through the smoke and mirrors, this has nothing to do with deficit reduction or creating jobs, or turning the economy around.  It's just the same old liberalism.

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