The facts of the Buffett Rule are simple. The President wants millionaires (and small businesses taxed as individuals) to pay a minimum tax of 30 percent. For all of his rhetoric that the measure would “stabilize our debt and deficits for the next decade,” the Buffett Rule would bring in only $47 billion in revenue in ten years. To put those numbers in context, President Obama’s budget calls for adding $6.7 trillion to the national debt. So the Buffett Rule would cover just 0.7% of all of Obama’s debt and .1% of Obama’s spending.
None of this even touches on the failure in logic underlying the President’s argument, as we detailed in depth last week. In short, President Obama is employing the Buffett Rule as an election-year class warfare weapon. And he’s aiming it at the highest-earning families and businesses in America who are already shouldering the vast majority of the country’s tax burden. Just one example: The top 1 percent of income earners — those earning more than $380,000 in 2008 — paid more than 38 percent of all federal income taxes while earning 20 percent of all income.
What’s more, the whole idea of the Buffett Rule is based on a fallacy. The President says his tax is necessary because people like billionaire Warren Buffett’s secretary pay a higher tax rate than the wealthiest Americans. In reality, Warren Buffett pays over 50 percent tax on his income. He earns much of his income as capital gains and dividends from stock he owns in businesses — he pays a 15 percent tax on this income, but first, the businesses that generate this income pay a 35 percent corporate income tax. Corporate income is subject to at least two layers of tax. To create an artificial political fight, Obama and Buffett conveniently ignore the first.