Buffett Rule a good place to start
TheStar.com – opinion/editorialopinion – This is an edited version of an editorial that appeared this week in the San Jose Mercury News.
Published On Fri Apr 20 2012. San Jose Mercury News
Republicans in the Senate have blocked the Buffett Rule — in essence, a fair tax rate for millionaires — from coming to a floor vote. They’re betting that letting the wealthy continue to pay taxes at a lower rate than average working people will not light a fire under voters this fall.
Polling today indicates otherwise.
Warren Buffett, the billionaire critic of U.S. tax policy, started it all by lamenting that his tax rate is lower than his secretary’s. A secretary who has a few hundred or thousand more dollars in disposable income is likely to spend it, whether on food or on sending a kid to college. This spending will stimulate the economy. People who make, say, $5 million a year might use a tax break to splurge on an extra house, but they also will probably invest in financial instruments that are more likely to drive layoffs to increase a company’s profit margin than they are to create jobs.
A variety of polls indicate that moderate and independent voters agree with that argument, in proportions ranging from 50 per cent to 67 per cent. A CNN poll released Tuesday shows more than two-thirds of its sample, with a three-point margin of error, thinks the current tax system is unfair to working men and women. Moderates and independents agree by wide margins. Even Republicans are evenly divided on it.
The creation of wealth in America, whether it accrues to the struggling or to the already rich, relies on a base of public infrastructure — roads, mass transit, schools to prepare the next generation of workers and police agencies to keep communities safe. These all require public planning and investment to create a nation where businesses and individuals can thrive.
The United States needs to cut spending to get the deficit under control, but without increasing investment in key areas, its economy will erode just as badly as if the deficit is ignored. Spending cuts alone will increase that erosion. Some additional revenue is needed.
The Buffett Rule is a simplistic way to reform the tax system. It would be far better to have comprehensive reform that sets truly fair tax rates and starts from scratch to encourage things we value, perhaps home ownership and job creation, and to discourage harmful practices such as creating offshore tax shelters.
Pollyanna optimists, we hope for real reform someday. But expecting it anytime soon is like looking for peace on Earth to break out next week. A step at a time is the way to go, and the Buffett Rule — with its focus on tax fairness — would be as good a place as any to start.
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