Buffett Rule: primer on the policy and the politics

WASHINGTON — When the Senate takes up the Obama administration’s so-called Buffett Rule on Monday, no one expects the measure to pass. Democrats would need several Republican defectors to break a filibuster, and there is simply no support for the high-income tax plan on that side of the aisle.

Both of Minnesota’s Democratic U.S. Senators will vote for the measure — Sen. Al Franken is a co-sponsor of the actual bill — one of the most high-profile policies President Obama has pushed this election year.

Obama’s plan would create a series of new high-income tax rates that ensures people who make more than $1 million a year pay a minimum tax rate of at least 30 percent, a rate much more in line with those paid by middle-income Americans. By the White House’s count, 22,000 households making more than $1 million paid less than 15 percent in taxes in 2009.

The Buffett Rule is so-named because the Omaha billionaire famously says he pays a lower tax rate than that of his secretary. Obama has been pushing the proposal since an August op-ed in which Buffett himself complained about the lower tax rate he pays, relative to the people who work for him. The president called for the plan last fall when the so-called congressional “super committee” was trying — and would eventually fail — to craft a deficit reduction plan.

Obama revived the Buffett Rule in his State of the Union address and has been on the offensive ever since, betting that even if Congress rejects the plan — which it will — voters will embrace it come November.

Democrats from the president on down have said the plan is less about directly paying down the federal deficit than it is about making the tax code fairer — those who make more money would pay taxes at a rate similar to middle class Americans, they say. Right now, about one-quarter of millionaires have a lower tax burden than many in the middle class, according to White House projections.

“We should have a principle in our tax code that those people who make more than $1 million a year shouldn’t pay less as a share of their income in income tax than middle class families,” Council of Economic Advisers chairman Alan Krueger said last week.

Small businesses

Republicans have adamantly opposed tax hikes, and have argued that the Buffett Rule will unfairly hurt small businesses that file tax returns like individuals.

The GOP is working to contrast their preferred tax policies with the president’s. Just Sunday night, likely Republican presidential nominee Mitt Romney began outlining the details of his tax plan, which includes a 20 percent across-the-board income tax cut. In Washington, House Republicans are scheduled to take up legislation this week that provides a 20 percent tax cut for up to 22 million small businesses. Republicans have argued that it’s a necessary measure meant to stimulate job growth. Two Minnesotans, Reps. John Kline and Chip Cravaack, are co-sponsors of the plan.

Republicans have also accused Obama of falsely masquerading the Buffett Rule as a deficit reduction measure, when the plan would raise only $46 billion over 10 years, according to the Joint Committee on Taxation (the current deficit is around $1.3 trillion). They’ve charged that Democrats are pushing the plan for purely political purposes.

That’s true, to a point. Obama used the Buffett Ryle to try and apply political pressure on Republicans last week, giving three speeches focused solely on the plan (two of them, not coincidentally, in the swing state of Florida). Democrats see it as a winning issue — a Gallup poll released Friday found 60 percent of voters support the plan, so there’s no doubt that politics play a key role in the heavy emphasis Democrats have placed on the Buffett Rule this year.

But the White House worked to dispel the idea that the Buffett Rule is more about politics than policy. Officials call the $47 billion figure significant in its own right, and point out that the plan would actually raise even more revenue — $160 billion over 10 years — if the George W. Bush-era high-income tax cuts are continued (they’re due to expire at the end of the year).

“The Buffett Rule is first and foremost a principle of fairness in the tax code, but it does raise a nontrivial amount of revenue,” Krueger said.

On Twitter, Minnesota Democrat Amy Klobuchar put it another way: “That’s not chump change.”

 “There are others who are saying, well, this is just a gimmick,” Obama said last week. “Just taxing millionaires and billionaires, just imposing the Buffett Rule won’t do enough to close the deficit. Well, I agree. That’s not all we have to do to close the deficit. But the notion that it doesn’t solve the entire problem doesn’t mean that we shouldn’t do it at all.”

Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry