Right Said:
As President Obama pontificated to the nation last month about how Stimulus II would renew our economy and restore the middle class he claims has evaporated, he made it abundantly clear that Congress should pass it “right away.” What he failed to elaborate on, despite having taken a month to release the plan in the first place, is how he would pay for it. It has since become obvious that the president is more interested in engaging the Republicans in class warfare, as evidenced by his emphasis on the “Buffett Rule” — a new tax on successful businesspeople — than actually negotiating with Congress to achieve fundamental tax reform. This demonstrates a clear failure to lead on the part of the president, as a comprehensive reform of our tax system — proposed both by Congressman Paul Ryan and the bipartisan commission on deficit reduction (Bowles-Simpson) — would not only reduce the deficit but also provide a sound foundation for economic growth.
Our national income tax system suffers from three problems: it isn’t fair, it isn’t competitive and it isn’t simple to comply with. All three of these factors create inefficiencies which stunt our economy’s ability to grow and create jobs, and all three could be solved with commonsense reform.
First, as the president and Congressman Ryan have repeatedly pointed out, the U.S. income tax code isn’t fair since it’s filled with exemptions and carve-outs — commonly known as loopholes — which allow politically connected companies to gain a competitive advantage in the marketplace. This not only puts existing companies and small businesses at a disadvantage, but it also creates another barrier to entry for new job creators. Second, our tax code is insufficiently competitive for the global economy; with an effective tax rate of nearly 40 percent, no company — not even ones that start in the U.S. — has a rational reason to remain in the United States if it could be paying the average corporate tax rate of 25 percent somewhere else. Third, the U.S. tax code creates inefficiencies simply because it currently isn’t easy to comply with — small businesses and corporations spend approximately 6.1 billion hours and $160 billion that could be spent creating jobs and wealth just trying to understand and comply with the tax code.
With all these major problems, it’s really no mystery why U.S. employers “ship jobs overseas” instead of staying in the United States. Luckily, the plans put forward by Bowles-Simpson and Ryan provide a vital solution that would simultaneously help to reinvigorate our economy and reduce our deficit. By eliminating all tax loopholes and drastically lowering corporate and individual rates, the Ryan plan would provide a strong foundation for prosperity and bring our tax code in line with the goal of economic opportunity for all. Furthermore, the Ryan plan would also help to reduce the deficit, as the closure of loopholes and the economic growth from lower rates would greatly expand the amount of taxable income.
Through his advocacy of the Buffett Rule, the president has once again offered us poor leadership and a false solution to our economic and debt woes. Luckily, we still have statesmen like Alan Simpson, Erskine Bowles and Paul Ryan offering us a real path back to prosperity. One can only hope the president will start to show the same kind of leadership.
Daily Nexus conservative columnist Jeffrey Robin didn’t say Obama cannot do anything right — just that he’s doing it all wrong.
In Response, Left Said:
Though lambasting it repeatedly, my counterpart has failed to offer a concrete definition of what the “Buffett Rule” is —it was explained once as a “new tax on successful business people” without further detail. The Buffett Rule is technically a new tax, yes; it’s a minimum tax rate for individuals making over $1 million per year. Currently, the highest tax bracket starts at just under $400,000 — a lot of money, but certainly not enough to make you a millionaire. Any income level after that pays the same exact base percentage. It’s named for Warren Buffett, an extremely successful investor who in recent news famously claimed that his secretary pays a higher tax rate than he does; she gets taxed for a paycheck, and he gets taxed at a much lower rate for his investments.
President Obama and Congressional Democrats have listened to the demands of those who claim $250,000 per year isn’t sufficiently wealthy to raise taxes on now. They have listened to the demands of the American people for a “jobs bill”, offering a real solution involving infrastructure projects, and tax cuts for middle class workers and 98 percent of businesses — while their opponents have failed to offer any concrete solutions at all. You wanted a jobs bill — here’s your jobs bill. Simply because Obama’s backing it does not mean that it’s the wrong solution. After all, to use Obama’s words, “This isn’t class warfare; it’s math.”
The core of Mr. Obama’s deficit reduction plan is $1.5 trillion in new taxes. About $800 billion comes from repealing the Bush-era tax rates for couples making more than $250,000.
The president is also putting forward a measure he’s calling the “Buffett Rule” — named for billionaire investor Warren Buffett — to compel those making $1 million or more a year to pay the same overall rate as other taxpayers. Taxpayers making $1 million or more often make their fortune through investment income, which is taxed at 15 percent; the top income tax rate is 35 percent
Sounds reasonable to me. I support progressive taxes, both in principle and in practice.
Those who are fortunate enough to be wealthy in this country have the means to pay an increased marginal tax rate; this is particularly true of the ultra-wealthy, who as it stands pay no more than those who make significantly less than them.
Why is this controversial?
$1.5 trillion in new taxes will always be controversial!
Thankfully he hasn’t said concretely what the Buffett rule is. This way it’s open to our interpretation and can shift it from one rate to the next. Today it’s “millionaires/billionaires” but that isn’t enough to make a dent, we need to tax the middle class, those making 250k and under to make sure those who undeservingly have profited pay the price for their theft (aka capitalism), which they’ll codename success.
Obama has already cut taxes on those making under 250k… I don’t think they have anything to worry about (other than irresponsible speculation by bank, the cost of unnecessary foreign wars…)
Give the GOP credit…Obama is from the Alinsky school…he knows the big middle class is where the power lies. Think how we could prime the pump and the govt could spend if he did what he wanted to and wasn’t constrained by political barriers. You honestly don’t believe he wanted to cut their taxes do you? He is with us in spirit, but hasn’t had the balls to do it.
Obama was forced (by a congress that was willing to stand up to him) to leave the Bush era tax cuts in place.
On the other hand, had Bush not invaded Iraq the debt issue wouldn’t be what it is today.
Remember, banks are run by directors elected by shareholders. If we would have let the bad ones fail, the shareholders of the rest might have reconsidered their positions on risky behavior. Just a thought.