The Buffett Rule, proposed by President Obama has created an immense amount of tension leading to the upcoming Presidential election of 2012. The White House specifically stated the definition of the Buffett Rule: “No household making more than $1 million each year should pay a smaller share of their income taxes than a middle class family”. This seems like a reasonable statement, however that is not what President Obama has been encouraging throughout his speeches. He has stated that Congress should raise taxes on millionaires instead of keeping a steady tax rate for every American citizen no matter their amount of income.
The deputy director of Obama’s National Economic Council stated that the main goal was to tax wealthy Americans to a standard rate of 30% to ensure they pay more than middle class families.The fact is that even without this Buffett Rule millionaires pay more than their “fair share” in income taxes. Bloomberg Newsstates that, according to the Tax Policy Center research group, in 2011 Americans earning more than $1million paid an average of 24.1% in federal income taxes while Americans earning $50 thousand to $75 thousand — the middle class range — only paid 6.9%. What that data doesn’t mention is that the majority of wealthy Americans also gain income from investments (capital gain or dividends) which is taxed at a rate of up to 15%, on top of ordinary federal income taxes. If the majority of wealthy Americans already pay more federal income taxes than middle class Americans then why would this Buffet Rule be necessary since it only raises the average percentage they pay by 5.9%.
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However, if the Buffett Rule were to be signed into law how would that affect our dire financial situation in terms of both the deficit and the economy? According to Congress’ Joint Committee on Taxation, it would only bring in an estimated $47 billion through the year of 2022 which is significantly less than 1% of our estimated deficit of $7 trillion. As for the economic repercussions it would only dig this country into a deeper hole than it already stands in. Though it is targeting a very small group of Americans (generally the 1%), this group affects our economical situation drastically. With the federal income tax doubled their expendable income would decrease, which means that they would be pumping less money into our economy. If they have to pay taxes instead of, say, hiring hard working Americans to construct a pool in their backyard then those hard working Americans would be stuck with significantly less income as well.
As Alexander Hamilton stated, the father of our capitalistic society, wealth trickles down through the masses from the very top. Thus, this decrease in spending would be detrimental to our economic health as a nation. It would increase the unemployment rate which is just slightly under 9% already; it would be a blow to our national morale and cause many other problems that result from high unemployment rates.
This is not the time to raise taxes on the American people, whether they be the 99% or the 1%, both affect our economy drastically and the grand majority of the 1% have earned their wealth and do pay their “fair share” in taxes. It seems that the undertone of this potential law has been discouraging success and hard work, and is instead promoting class warfare.
