Assume for a minute that Obama gets his way and he gets the Buffett Rule through Congress (he won’t; it won’t pass either house), and he signs it. Then what? Well, let’s start with what Obama said it would do when he introduced it back in September
“and that basic principle of fairness, if applied to our tax code, could raise enough money that not only do we pay for our jobs bill but we would stabilize our debt and deficit for the next decade. And as I said when I made the announcement, this is not politics, this is math.
The italics in the quote are mine. So this would stabilize our debt and deficit for the next decade and this is math, not politics. So why don’t we apply a little math to the Buffett Rule. First, how
much money is this 30% tax rate going to bring in?
Well according to the Congressional Joint Committee on Taxation it will raise 5.1 billion dollars in 2013.Now if that was my lottery winnings I would think it a lot of money. But, compare it first to the 2013 project budget (3800 billion) and more importantly the deficit, which is the amount of
money we need to somehow find to make how much we spend and how much we take in
balance (1300 billion)
So let’s do the math. We need 1300 billion. The Buffett Rule would raise 5 billion. Does this sound like it will stabilize our debt and deficit?
This like your spouse telling you that we need to buy a $1000 refrigerator. You know that you have $660 dollars in savings. But, your spouse knows a great way to get the rest of it; we check the couch for change. You do and glory be, you find exactly $1.32; problem solved.
“we never suggested -- the President, no one ever suggested that implementing the Buffett Rule would contribute in large measure to reducing the deficit. The President has put forward a comprehensive deficit reduction plan that takes a balanced approach, that includes as a principle of tax reform the Buffett Rule, but that does not rely on -- and we never suggested it would rely
on -- the Buffett Rule to reduce the deficit by a significant measure. It is a principle of tax fairness.”
The most operative part, to me is the last sentence “It’s a principle of tax fairness” I refer you back to April 17, 2008 when Senator Obama was being interviewed by Charlie Gibson of ABC.
GIBSON: All right. You have, however,said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, "I certainly would not go above what existed
under Bill Clinton," which was 28 percent. It's now 15 percent. That's almost a doubling, if you went to 28 percent. But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.
GIBSON: And George Bush has taken it down to 15 percent.
GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.
You caught the part where CG says that when the capital tax rate dropped, revenues increased, and that when the rates were raised the revenues went down, right?
Let me try to explain that. Say you own a store and you sell widgets. You need to raise the amount of money you bring in. You sell your widgets for $20. What do you do? You put the widgets on sale. So instead of selling 10 for $20, you might sell 20 for $15. What do you think would happen if you raised the price, to say $25? You’d sell less. It works the same with tax rates (to a point; read up on The Laffer curve)
If tax rates are too high, the people with money to invest, don’t do it. They put their money in other areas, even in other countries. So instead of getting 15% of $1000 for example, the government collects 30% of maybe nothing.
This is not conjecture or guess work; it has already been shown time and time again. Obama knows this; Charlie Gibson explained it to him. Obama’s response? It doesn’t matter. What is important is ‘fairness”
Two more questions; why is fairness so important to Obama? Two reasons; the political calculus I explained last week. He wants to claim to be the hero of the common man, who he says is getting screwed by the rich. Vote for Barrack; He’ll fix those bastards.
The other reason? He’s a socialist. He believes everyone should be equal. Sounds good until you realize that equality and freedom can not co-exist. You are either free to improve your station in life; or Obama takes as much of your money to give to someone else to make them
equal. Equally miserable
Final question; what happens when everyone wants to have their hand out instead of the nose to the grindstone?