In what might best be described as asking a vegan if they feel like BBQ for dinner, the “Buffett Rule” brought before the Senate was blocked by Republicans on Monday to absolutely nobody’s surprise. It wasn’t just voted down, it was blocked from even being debated. The Democrats did not have enough people to even talk about the bill in public.
The Buffett Rule quite simply attempted to put a minimum 30 percent tax rate on any and all income of people who more than one million dollars per year. On face value, certainly seems like a reasonable idea. The bill’s goal was to ensure that no matter what, the most prosperous people in the US were taxed like it.
But taken in the context of the past three years, it is a waste of time both as a policy tool and a political maneuver.
On the policy side, ignoring the fact that seventy percent of Americans supported the Buffett Rule, its actual impact is remarkably small. The tax would affect roughly 1 in 1,000 tax payers and generate a yearly amount equal to about 3 percent of the annual federal deficit. In other words, the tax system might become more fair with the Buffett Rule, but it’s not really solving any problems.
It also still allows for loopholes and deductions, which have become the cornerstone of a tax code that is four times longer than Shakespeare’s complete works.
Politically, the GOP has made it clear they have no desire to raise taxes on the rich. Don’t even ask. Don’t even ask to talk about it. The Buffett Rule is tailor-made for Republicans to launch into their talking points about class warfare, the burden on job creators, and the difficulties of small business owners.
But the Buffett Rule doesn’t just represent a bill that had no chance of succeeding; it’s a serious missed opportunity to set the tone of the tax/budget debate going forward.
It’s tax season, the one time of year when each and every person in the US gets a reminder of just how absurd the code has become. As the saying goes, taxes and death are the only certain things in this world, and as of now only one of them is regulated.
With everyone trying to figure out if they can claim their body pillows as a dependent, it’s the perfect time to propose serious tax reform that would get the attention of voters and force Republicans to reject a bill that might actually make people think that real reform is still possible.
The pitch would be simple: every American should be able to do her/his taxes. The fact that an entire industry has sprung up that helps people maximize deductions on their taxes only goes to show that the tax code has gotten overly complicated, favoring those that are able to afford help.
Even include the idea behind the Buffett Rule – anyone with income over $1 million is taxed at a rate of 30 percent. After that, simply figure out what the other levels are, and that’s the effective rate. Deductions? Still available for homes, college payments, and charitable donations, but are simple enough to be done on the back of an envelope.
Not only would this speak to challenges that are on the mind of every citizen in the US, it also eliminates the loopholes that Republicans may be willing to close, which are responsible for some of the low tax rates paid by wealthier Americans.
There are, to be sure, many specifics that would have to be worked out for even Democrats to get behind the plan. But doing so would create a piece of legislation that would generate a serious amount of media coverage and put pressure on Republicans to come up with a unique stance as to why a simple tax code that reflects good ole year of 1955, which only contained 1,396 words, isn’t good for present-day America.
And that’s the kind of conversation the Democrats can use to further alienate voters from Romney. Mitt’s going to propose lower taxes, and in tough economic times that is going to attract voters. Romney’s going to be able to contrast that against Obama’s most recent proposal, which was a clear tax hike against a particular group of people.
Instead, Obama only offered the same plan he’s been espousing for what seems like his entire candidacy.
Here’s September 2010:
And February 2011:
Here he is at the State of the Union in January 2012:
It might be the right thing to do, but it’s stale. And with serious economic questions swirling in the US and especially in Europe, the president will have to come up with something that will engage Romney on his own terms. Otherwise, it’s Romney’s race to run, and Obama will have to hope he can keep up.