The “Buffet Rule” and the politics of taxation

Staff Editorial

Emma Waitzman/The Phoenix

Isolating the multitude of inequalities that are inherent to our contemporary social structures is a reasonably effortless task. From health care to environmental policy, our notions of justice and liberty for all in a society are counteracted and replaced with institutional unfairness time and time again.

But perhaps the most palpable embodiment of social inequity for us today is economic inequality. The division of labor, the lack of employment prospects and the generally disagreeable state of the economy all point to a trend that favors a particular social make-up. That is to say, to be rich, white and male is to have a world of opportunity at hand. It is to be part of the decision-making structures and procedures that herald power — the “one percent.”

It is also to enjoy preferential treatment in what is ostensibly a progressive tax system. Here is where the political prop of the moment comes into play. Investor Warren Buffett, America’s second-richest man with a net worth of $44 billion, has given namesake to the “Buffett Rule.” Under this principle, millionaires (those making at least $2 million a year) should pay a minimum of 30 percent of their incomes in federal taxes. Buffett introduced this idea after he noticed that he pays a lower nominal tax rate (on capital gains) than his secretary does (on income).

But on Monday, the “rule” failed in the Senate with 51 votes in favor and 45 in opposition. With 60 votes required for cloture (a procedure for ending debate and taking a vote), the proposal could not proceed. Championed by President Obama as the “most simple, common sense reform,” Senate Republicans largely and predictably pushed back against the Buffett Rule, arguing that it penalizes those wealthy individuals whose worth is tied heavily to investments. This, they contend, would ultimately stunt job creation and, invariably, economic growth.

Yet proponents, spearheaded by Obama himself in what could be seen as an election-year effort, maintain that the Buffett Rule is steeped in our common conception of economic fairness — the idea that everyone should pay their fair share in taxes, that the nation’s wealthiest individuals shouldn’t pay a smaller share than those who earn smaller incomes.

“At a time when we have significant deficits to close and serious investments to make to strengthen our economy, we simply cannot afford to keep spending money on tax cuts that the wealthiest Americans don’t need and didn’t ask for,” Obama said in a statement following the unsuccessful Senate vote.

To be sure, the Buffett Rule would only be part of a comprehensive deficit reduction and debt control strategy, not a sole means for fiscal consolidation. Meaning it would help us close the deficit by really only a marginal degree. But taxes are a sticking point for Republicans, who refuse to raise them at all, and on anyone. The Buffett Rule, then, is not all-inclusive economic relief, as the Obama Administration may rhetoricize it. And while framing the principle in this way resonates with poor and middle-class Americans (seemingly rousing Obama’s key voter base), the Republican criticism that it won’t solely pave the way for a smooth economic trajectory is accurate.

But the Buffet Rule is less about fiscal recuperation than it is about a fair republic. A higher tax on the staggeringly rich is not truly what Mitt Romney would describe as “taking from the rich and giving to the poor,” but rather a measure of distributive justice for all — wealthy and middle-class.

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