If you’re aiming to tap the wallets of “millionaires and billionaires,” as President Obama is with his plan to create jobs and reduce the national debt, it’s not a bad idea to have at least one prominent billionaire on your side.
And that Obama does with investor and philanthropist Warren Buffett, the “Oracle of Omaha” whose estimated net worth is $47 billion. They’re such good buddies, in fact, that the “Buffett Rule” will be part of the plan to be unveiled at the White House Monday morning.
Details will be left to those in the administration and Congress tasked with rewriting the federal tax code. But the essence, as first reported in the New York Times, is that the wealthy “pay at least the same percentage of their earnings as middle-income taxpayers.”
In the abstract, at least, it’s hard to argue with that. And polls show that most Americans – in theory, at least – are on Obama’s side.
Earlier this year, an NBC News/Wall Street Journal survey showed that 81 percent of those polled agreed that “placing a surtax on federal income taxes for people earning over one million dollars a year” would be “acceptable” (55 percent said “totally acceptable”). Sixty-eight percent also were OK with “phasing out the Bush tax cuts for families earning $250,000 or more per year.”
Those are pretty whopping numbers – potent political ammo for a president whose approval ratings are down in the weeds. Whether or not the “Buffett Rule” becomes law – a highly unlikely prospect given a Republican-controlled House of Representatives not inclined to do anything Obama could take credit for – it’s already part of Obama’s re-election campaign.
And raising taxes – any taxes and no matter how slight the raise – is strictly verboten among the GOP presidential candidates. Asked recently which of them would accept a legislative package that included $10 in spending cuts for every $1 in revenue increases, nobody dared accept.
From the Republican perspective, any attempt to nick the wealthy for even a bit more in taxes in order to reduce the deficit and invest in job creation boils down to one thing: class warfare.
"It adds further instability to our system, more uncertainty, and it punishes job creation and those people who create jobs," Rep. Paul Ryan, chairman of the Budget Committee, said on Fox News Sunday. "Class warfare may make for good politics but it makes for rotten economics."
"It's a bad thing to do in the middle of an economic downturn," Senate Republican leader Mitch McConnell said on NBC's Meet the Press. "There is bipartisan opposition to what the president is recommending already."
Over on CNN's State of the Union Sen. Dick Durbin (D) of Illinois said that the proposal to raise taxes would be a good idea as long as it targeted "the wealthy and comfortable and those who wouldn't even notice it."
Well, he may be wealthy and comfortable, but you can be sure that Warren Buffett and the rest of the super rich do notice their tax situation. They didn’t get rich without the help of tax lawyers.
That’s what prompted Buffett last month to write his now famous New York Times op-ed column headlined “Stop Coddling the Super-Rich.”
“While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks,” he wrote. “Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as ‘carried interest,’ thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.”
(For the record, Buffett noted that he paid $6,938,744 in federal taxes last year. But that was just 17.4 percent of his taxable income – a lot lower than the 36 percent averaged by the 20 people who work in his office.)
“I know well many of the mega-rich and, by and large, they are very decent people,” Buffett wrote in his op-ed. “Most wouldn’t mind being told to pay more in taxes … particularly when so many of their fellow citizens are truly suffering.”
That may or may not be true. Perhaps Obama can get Bill Gates, whose net worth ($56 billion) tops Buffett’s, to weigh in as well.
Sen. McConnell’s answer to the “Buffet Rule” is simple: “With regard to his tax rate, if he’s feeling guilty about it, I think he should send in a check.”