Yesterday, Senate Republicans blocked consideration on President Barack Obama’s so-called ‘Buffett Rule’ to impose a minimum federal income tax on some millionaires earning income on certain kinds of investments. As I discussed in my column last week, no tax authority thinks implementing the Buffett Rule will make a scintilla of difference in the federal deficit. So good riddance to a time-wasting distraction.
But before we pivot to the Obama reelection campaign’s next economic inanity, let’s pause to consider what liberal support for the Buffett Rule really says about modern liberalism’s discriminatory use of the tax code.
In a splendid piece published yesterday, former Reagan advisor Richard Rahn explains that the Buffett Rule only hits the type of investment income most used by entrepreneurs, and thus blocks those trying to ascend the personal wealth ladder.
Even if the Buffett tax ever passes, it was crafted by members of Congress to hit few of their own. Very rich members of Congress, such as Sens. John F. Kerry and John D. Rockefeller IV, receive much of their income from tax-exempt state and local bonds and from trust funds, which largely avoid the tax. Members of Congress generally are restricted from entrepreneurial activities. So, of course, they have decided to increase the tax on entrepreneurs — the capital gains tax — which is a tax on becoming rich, not a tax on being rich.
Most people, such as students, are relatively poor by government methodology when they are young but rise through the income ranks as they become more productive and experienced and then fall in relative income as they near and enter retirement, even though they may have considerable net wealth. By increasing the tax on capital gains and marginal rates, the government makes it more difficult to move into higher income brackets, thus actually reducing income-class mobility.
Those who support the Buffett millionaires’ surtax as written reveal themselves either to be economically ignorant or to believe the voters are fools who will not see through their destructive games.
Three cheers for the fiscal conservatives in the Senate who blocked consideration on this atrocious bill. It’s time to get beyond gimmicks, and implement policies that get America back to work without further distorting the tax code.