Mike Kueber's Blog

October 13, 2011

The Buffett Rule – a Republican version

Filed under: Issues,Politics — Mike Kueber @ 5:33 pm
Tags: , ,

Senator John Thune of South Dakota has been one of my favorite politicians in Washington.  Like people from my native state of North Dakota, people from South Dakota and the Great Plains tend to be thoughtful and modest.  (Sarah Palin is a glaring exception.)  Through the years, Senator Thune seemed to be a good reflection of Great Plains values, until last night.

Last night, Thune appeared on On the Record with Greta van Susteren to announce the introduction of a bill to enact the Buffett Rule.  As you may recall, Buffett thinks there should be an alternative minimum tax rate on the mega-rich so that the investors who live off capital gains and the hedge-fund managers who live off “carried interest” pay at a rate higher than their current rate of 15%, but less than the current maximum rate of 35% on regular salaries/earned income.  (Twenty-five percent has been informally suggested).  President Obama has informally endorsed the Buffett Rule.

I blogged about the Buffett Rule a few weeks ago, and suggested that it would be a good idea, especially in the context of comprehensive tax reform.  Any attempt to adopt the Rule on its own, however, would be doomed because both sides had already shifted into their demagoguery of a good idea – the Republicans claimed that it was class warfare while the Democrats claimed that the rich were getting off easy.

Because of my pessimism, I was mildly surprised to see Thune moving forward with the Buffett Rule.  Thune has become a player in the Senate, not by showboating, but by being a good team player.  Thune didn’t get very far into his interview with Greta, however, before he disabused me of any notion that he might be above petty politics.

Thune explained to Greta that his Buffett Rule wouldn’t accomplish what Buffett wanted, but rather it would accomplish what Mitch McConnell and several other demagogues wanted – i.e., it gave Buffett and any other mega-rich, if they thought there should be a minimum tax rate on the mega-rich, a streamlined process for voluntarily donating cash to the federal government.

Such a proposal, which fits the classic definition of demagoguery, makes no sense.  Under the Thune thought-process, legislators would never be able to require anything of the public because opponents of the requirements would simply argue that those who support the requirements should voluntarily comply while leaving everyone else alone.  You think the speed limit should be 55 mph?  Go ahead and comply, but leave me alone.  You think the sales tax should be raised to 9%?  Go ahead and pay it, but leave me alone.  You think we should re-institute the draft?  Go ahead, but leave me alone.

But that’s not the way government works.  Buffett wasn’t saying that he wanted to give more of his money to the government; he was making a policy argument that there should be a minimum tax rate that prevented his office staff from having a higher effective tax rate than many of the mega-rich.  Buffett’s argument is not demagoguery – instead of appealing to one’s baser side, it appeals to one’s higher side.

A blog posting in The Hill this week describes Thune’s proposal.  The title of the posting is “Thune introduces own version of ‘Buffett rule’, mockingly solicits donations from wealthy.”

Senator Thune, you may disagree with the Buffett Rule, but you should have better things to do that mock it.

Btw – the NY Times had an article today on the Buffett Rule and another Republican congressman from the Midwest, Tim Huelskamp of Kansas, who wants some time in the spotlight.  Ever since Buffett proposed his rule, Huelskamp has been demanding that Buffett release his tax return.  Is that the sort of harassment that concerned citizens are supposed to be subjected to?

Although Buffett decline to provide his tax return to Huelskamp, he did send him a letter stating that he paid $6.9 million in federal income taxes in 2010 and this amounts to 17.4 percent of his $39.8 million in taxable income.  According to the NY Times article, “Mr. Huelskamp, in a statement Wednesday, slammed Mr. Buffett’s letter as inadequate and again called on him to either release his full returns or voluntarily give more tax money to the federal government.”

Thune and Huelskamp are Midwestern Republicans from states that border Buffett’s Nebraska.  This week, they have not done their state, their region, their political party, or America proud.

4 Comments »

  1. I’ve got another idea for a modified “Buffet Rule” that focuses on these “job creators.” If you’re going to call yourselves “job creators” doesn’t that mean you have to take responsibility for the lack of jobs? I recently published a blog post about how to motivate these “job creators” to do their duty. In a nutshell, it involves tying a new top marginal tax rate to the unemployment rate (and has a carrot and a stick). http://www.ragingwisdom.com/?p=185JobCreators

    Comment by WiseFather — October 13, 2011 @ 5:50 pm | Reply

    • Thanks for the suggestion, WiseFather. I don’t accept the premise that people who make $20 million a year are the job creators. I having even a stronger disagreement with Republicans who want to classify those who make over $200k/$250k as the job creators. Job creators come in all sizes.

      Comment by Mike Kueber — October 13, 2011 @ 6:51 pm | Reply

  2. “Job creators” is simply political framing. A higher marginal tax rate should, by rational expectations, motivate entrepreneurs to divert more resources, which are tax exempt when spent on the business, into productive resources and business growth,

    Whenever you hear a Republican politician talk about “job creators,” just substitute “the wealthy” in your mind. The rest is just marketing.

    Comment by Casper Milquetoast — October 13, 2011 @ 10:25 pm | Reply

    • I agree that “job creators” is misleading. Just like when Republicans opposed the $5 million estate tax because it would cause the break-up of small businesses and family farms.

      Comment by Mike Kueber — October 14, 2011 @ 12:43 am | Reply


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