Romney opposes the Buffett Rule? Why would that be?

Via the Washington Post‘s Fact Checker by Glenn Kessler, I see that Mitt Romney has adopted the specious “if it doesn’t fix the entire problem, it’s not worth doing,” objection to the Buffett Rule. Romney brushed aside the Buffett Rule because the $5 billion in revenue it would raise for fiscal 2013 relative to current law would only fund government for 11 hours.

First, it’s interesting to note that Romney and other individuals deriving the vast majority of their income from investments benefit tremendously from the lack of a Buffett Rule (which is more accurately characterized as the Romney Rule). The Paying a Fair Share Act—the Senate’s legislative version of the Buffett Rule that was filibustered last week (in spite of 72 percent public support)—would serve as a millionaires’ alternative minimum tax. When fully phased in, it would apply a minimum tax rate of 30 percent on adjusted gross income less charitable contributions (modified by the limitation on itemized deductions—temporarily repealed as part of the Bush tax cuts—if reinstated).

Mitt Romney’s 2010 tax return showed $21.6 million in adjusted gross income and $3.0 million in charitable giving. Had the Paying a Fair Share Act been fully in effect, Romney would have paid roughly $5.6 million in taxes for an effective tax rate of 25.8 percent, instead of the $3.0 million in taxes and 13.9 percent effective tax rate he paid for the year. That’s because the Buffett Rule is an indirect way to close the preferential rates on capital gains and dividends, as well as the carried interest loophole, that produced Romney’s rock-bottom tax rate.

Second, there’s an enormous amount of hypocrisy and insincerity going on here. As I recently noted, this ice-thin defense against popularly supported progressive tax policies is often used by the same people who spend inordinate amounts of time on defunding the National Endowment for the Arts, National Public Radio, Planned Parenthood, or other small budgetary line-items. Romney himself devotes eight full pages in his economic plan to his proposal to cut job training programs, which together represent one-half of 1 percent of the budget.

Furthermore, the Buffett Rule would raise far more than advertised. The cited estimate by the Joint Committee on Taxation (JCT) is based on current law, meaning that the Bush-era tax cuts are assumed to expire. Kessler notes that liberals have been pointing to a different JCT score based on current policy showing $162 billion in new revenue. But Kessler dismisses liberals’ use of the current policy score because other tax policies they support—namely expiration of the upper-income Bush tax cuts—would overlap with the $162 billion. True. But then you need to talk about the entire package and give the Democrats $47 billion in addition to the $849 billion that would be raised over the next decade by letting the upper-income tax cuts expire. Conversely, if we’re adjusting baselines for stated policy preferences, conservatives should be citing the $162 billion figure with regard to the Buffett Rule, reflecting continuation of all the Bush tax cuts.

Regardless of revenue scores, conservatives will again trot out the “if it doesn’t fix the entire problem, it’s not worth doing” line—but it’s ludicrous to argue that $896 billion is such a trivial sum that it’s not worth pursuing. That’s more than the first round of Budget Control Act spending cuts and caps conservatives’ extracted by hijacking the statutory debt ceiling. Accounting for net interest savings, the Buffett Rule coupled with expiration of the upper-income Bush tax cuts would save more than $1 trillion over a decade and reduce the debt-to-GDP ratio by 4.2 percentage points by 2022, relative to current budget policies. By all objective accounts, this is serious deficit reduction that would seriously improve fairness in the tax code. Strange, how purported concerns about the public debt fade into the ether when tax increases—or tax cuts—are on the table.


  • Andujar Cedeno

    What are the justifications for increasing taxes on one segment of citizens? One justification seems to be that taxing one segment to benefit another segment is popular. Is that all we need to justify a tax, its popularity? Another justification is that the money is needed to pay for government programs. So now all you have to do in the United States to create a government right to someone’s income is to create a government program that requires the funds? 
    Both of these justifications miss the real reasons for the Buffet rule. First, envy and jealousy of the success of others is at the center of the call for higher taxes. Second, the unquenchable sense of entitlement by segments of the population dependent on government programs creates a situation that demagogues are quick to manipulate. 
    Both of these reasons are unflattering at the least and repulsive at the worst. 
    If someone has accumulated wealth illegally the court system is the proper forum to rectify the situation. 
    We should celebrate the ability of individuals to accumulate wealth and just as importantly preserve it. Those without wealth should replicate their skills not covet their wealth. It’s mentally unhealthy to do so. 

    • KSA

      How does one accumulate wealth if one has no access to a good education,
      no way of posessing a car to get to a job, none of the “contacts” that the wealthy use to help their children into promising jobs?  “Those without wealth should replicate the skills of the wealthy?”  How does a poor kid get those
      skills and contacts?  How does he get into a first rate college if his or her
      grade and high schools were sub-standard in poor neighborhoods? 
      Andujar Cedeno must live in some kind of gilded cage, out of touch with the reality most poor people face.

      • Andujar Cedeno

        The tenants in the Occupy movement have excellent educations and no jobs because the entitlement state has suffocated job creation. 
        Immigrants used to flock to this country without educations and built lives for themselves. The higher education system in this country is imploding rapidly. Open course and online resources are rapidly destroying the argument that we must commit huge national resources to support brick and mortar institutions of higher learning that grant useless degrees in Art History and American Studies while living the recipients in ruinous debt. 
        You also present the wealthy as a monolithic self-perpetuating class that is as enshrined as medieval titled nobility. As any economist knows the make up of the top quintile changes every generation. People lose their wealth and fall economically and others increase their wealth and rise. The same is true of the bottom quintile. It is not monolithic and static that traps people permanently like serfs unable to rise out of poverty. 
        I’m ethnic and grew up in a single parent household in abject poverty and rose significantly because I didn’t buy into the limits of the entitlement mindset. The people who escaped rejected the rhetoric that KSA is shoveling. Those who looked to a someone else, be it an educator or a bureaucrat, to save them are still stuck there. The people I know that relied on their own abilities, ambitions, lived within their means, saved money, and worked, worked, worked made it out. So don’t tell me about living in a run down trailer with no furniture, and getting a job at a fast food joint as soon as you were old enough for the shift meal because I’ve been there, and will never ever go back.