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Your Take: Buffett Tax

Earlier this week, President Obama floated the idea of a Buffett Tax [3]. While there were little details on the actual implementation, the idea was that high income earners like Warren Beffett would not pay less than your average middle class family. Despite the lack of details, pundits complained or lauded the idea because that’s what pundits do. So why shouldn’t we join in?

I see two big points of discussion with the Buffett Tax:

  1. Should we be changing our tax code in such a surgical way that higher income earners are taxed more, regardless of where that income comes from?
  2. Will this help?

The first discussion point is where we find people labeling the idea “class warfare.” The rich and the poor are battling it out with the government siding with the poor, redistributing wealth in a way that flows from the wealthy to the less wealthy. In that respect, it is class warfare because you are increases taxes on the wealthy. The label is appropriate, but the vitriol behind it is misplaced. It was class warfare whenever the Bush tax cuts were implemented because the cuts reduced everyone’s taxes but it drastically cut taxes on the wealthy! When you only look at the delta, one class is losing. If you look at the system as a whole, which you can do if you compare today’s rates with historical tax rates, we’re still really low.

The second point of whether this will help – it’ll help reduce the deficit but it won’t improve the economy. This seems like one big game of “whac a mole.” Our economy, along with a lot of other countries’ economies, are weak and we’re struggling to find a solution midst a constant political battle. This is just one pitched battle, of many, about the deficit when we should really be focusing on the economy. I am always stunned that the same folks complaining about the economy were pushing for an extension of the Bush era tax cuts, tax cuts that everyone knows costs a lot of money (but that everyone benefits from, so let’s ignore that!). Now that we’re talking about increasing taxes (“raising revenue”), the goal posts are moved so that the argument against it is about job creation and the economy. Talk about job creation and boosting the economy and the argument against it moves to the deficit. So which is the real problem? I don’t think it’s the deficit.

What do you think?