By Paolo von Schirach
March 20, 2012
WASHINGTON – I wrote a while ago (see link above) that the “Buffett rule” is just feel good populism. The ”Buffett rule” is a proposed tax code change that would require the few very wealthy Americans who are taxed at a low rate because their money comes from capital gains and not from regular earning to pay more.
All about fairness
Obama likes to talk about “fairness” and supposedly this is the biggest fairness issue. Paying taxes at a low rate became a political liability for presidential candidate Mitt Romney, a multi millionaire, when he disclosed his tax returns indicating that he pays taxes at a low rate, because most of his money comes from capital gains.
And so the Democrats have ground to insist that this horrible injustice should be rectified. Warren Buffett should not pay taxes at a rate that is lower than his secretary. Fine. Let’s do it. Let’s wipe this stain.
How much extra money by taxing the rich?
And, by the way, how much extra money will the Treasury raise by having rich capitalists pay “their fair share”, at the same rates as everybody else? Well, according to official calculations, reported by the AP, not that much. These new taxes on the wealthy will generate about $ 31 billion over the next 11 years. Very little indeed, if you think that in the same period the national debt will grow by about $ 7 trillion.
Any brighter ideas?
Taxing the rich may be good politics; but it is not very effective public policy. How about trying something else, like serious tax reform and entitlement spending reform?