President Obama pushes Buffett rule

Berkshire Hathaway Chairman and CEO Warren Buffett waves at the New York Stock Exchange after ringing the opening bell on September 30, 2011 in New York City. A proposed 30 percent minimum tax on millionaires supported by Buffett and currently being pushed by President Obama has become known as The Buffett Rule.

Kai Ryssdal: Speaking of the general election, President Obama was on the campaign trail in Florida today. Couple of fundraisers and a tax policy speech.

The president's stumping for what's come to be called the Buffett Rule: a minimum tax rate of 30 percent for Americans making more than a million dollars a year. You'll not be surprised to hear Republicans say the proposed rule isn't so much tax policy as tax politics.

Our Washington bureau chief John Dimsdale reports.

John Dimsdale: White House aides say the tax code is rigged in favor of the wealthy. They released a study this morning that finds the highest income households in the country paid an average federal tax of only 18 percent. That’s because most of their earnings are taxed as capital gains.

In Florida today, Obama said that’s not fair.

Barack Obama: The share of our national income going to the top 1 oercent has climbed to levels we haven’t seen since the 1920s. The folks who are benefiting from this are paying taxes at one of the lowest rates in 50 years. 

The Buffett Rule’s 30 percent minimum tax on millionaires would bring in an estimated $47 billion in extra government revenue over the next 10 years. Not much compared to the $10 trillion or so in expected red ink over the same time.

James Galbraith: This is, it has to be said, a symbolic gesture. It does not by itself solve any actual economic problem or even make any significant contribution.

Still, University of Texas economist James Galbraith thinks it’s a good idea.

Galbraith: I favor useful symbolic gestures and things that help focus the debate on the problem of inequality, on some of the inequities in the tax code. And it could open the door to a broader progressive reform.

The Buffett Rule is on the Senate agenda next week. Few predict it will pass. But for now, the White House believes it has an argument for fairness on its side.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.
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See kingjon, the problem is that the rich aren't investing more when we don't tax them. They are still sitting on it. We actually ran into trouble with the housing crisis because Wall Street tried to make up a way for the rich to invest and make more money. As there is no new ways for the rich to invest all their money, they just send it overseas where it sits in accounts that we don't make any money on. If you look back at history, you would see that when capital gains were taxed higher, the rich paid more and that helped the economy more.
Trickle down theory does not work. The rich aren't helping the economy just because we let them have more of their money.
Do you really think it's fair that I pay a higher tax rate as a college student than Warren Buffet does?

I seem to recall that the Alternative Minimum Tax was the 1960s' "solution" to this "problem," but Congress seemingly has to act every single year to prevent the AMT from affecting a majority of taxpayers. Why not modify the AMT, if we must penalize those who make successful investments, rather than adding yet another parallel tax system?

And there's a reason capital gains are taxed at a lower rate: we would rather have the rich investing their money than for them to just sit on it. We're in the middle of a recession right now; why does President Obama want to discourage the people who are most able to help get the economy going again from doing so?

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