1) What problem does the Buffett Rule address (assuming it is something more than just a campaign talking point or vague guideline)? Rising inequality? Inequality has been rising globally for years due to globalization and technology. Higher taxes on the rich won’t help that. The biggest economic problem America faces right now is slow economic growth.
2) Would the Buffett Rule reduce the budget deficit at all? That’s far from clear. Higher taxes on small business and entrepreneurs would slow growth and reduce tax revenue. It would also encourage greater efforts at tax avoidance. The 1993 Clinton tax hikes, for instance, only generated a third of the revenue that CBO forecasted. And those increases were instituted when the economy was growing at a steady 3% clip, not stuck in slow-growth mode like the U.S. economy currently is. From Obama’s speech, the it seems to me that the Buffett Rule is probably a special capital gains tax rate of 28 percent for people making $1 million a year.
3) Obama still declines to release a long-term, multi-decade debt reduction plan of the sort Rep. Paul Ryan has put together. I think the reason is clear: If Obama were to do that, it would be crystal clear to voters that the only way Obamacrats can pay for permanently higher levels of government spending is through permanently higher levels of tax revenue, including higher taxes on the middle class. As I wrote a couple of months back:
Three liberal think tanks recently devised budgets to put the U.S. government on a sustainable fiscal path through 2035. Their plans, collectively, called for Washington to collect an average of 23.6 percent of GDP vs. the post-World War II average of 18.5 percent. To put that in further perspective, the highest level of tax revenue that Uncle Sam has ever taken is 20.9 percent in 1944.
And to reach such a stratospheric level of taxation, these groups are calling for unprecedented tax hikes via millionaire surtaxes, higher taxes on alcohol and tobacco, securities transaction taxes, higher taxes on capital gains, higher taxes on corporations, higher death taxes, carbon taxes, and gasoline taxes. None of which, supposedly, would hurt economic growth. Even worse, all those tax hikes would still fail to balance the budget. And when you move past 2035, taxes would almost certainly need to go even higher.
4) OK, the top 1% of US taxpayers make 20% of income and pay 40% of taxes. Isn’t the tax code already “progressive?”
5) The Solyndra scandal revealed Obamanomics to be mostly a clever, crony-capitalist scheme to launder taxpayer money through favored special interests and then back into Democrat campaign coffers. This new budget and tax plan reveals the other: a plan to redistribute rather than create wealth.