On Wednesday, the House passed a new bill which would allow wealthy Americans to pay more than they actually owe in taxes.
The bill was mischievously titled the “Buffett Rule Act,” a reference to the Buffett Rule which the president talked about for months beginning last year and continuing until this April. The new Republican-proposed Act creates a box which an individual can check on their tax return, allowing them to easily send in more money than they actually owe. The Act passed by voice vote with some Democratic support.
The President spent months talking about his version of the Buffett rule and his desire for a “balanced approach,” in which the wealthy would pay more. The name of the rule came from investor Warren Buffett, who supported the change to tax policy, claiming he paid too little in taxes. The idea was to raise taxes on top earners who make most of their income from investments. The current top rate on investments is 15 percent, while the rate for ordinary income is 30 percent.
Both Obama and Buffett claimed repeatedly that Buffett’s secretary, Debbie Bosanek, paid ahigher percentage of her income in taxes than Mr. Buffett. Obama even raised the issue in his State of the Union speech in January with Bosanek in attendance, seated beside Michelle Obama.
Estimates by the Joint Committee on Taxation suggested that, if implemented, Obama’s version of the Buffett Rule would raise about 47 billion in new revenue over ten years. That works out to less than half of one percent of our recent annual deficits. The improvement is so slight relative to the amount of time Obama spent discussing it that it can only be seen as a debating tactic. It just so happens the Buffett Rule would apply to Mitt Romney, something that probably didn’t escape the notice of the White House even last year.
The Republican’s Buffett Rule Act seems unlikely to pass the Senate so long as Democrats control the chamber. Its real purpose may be to neutralize complaints by Buffett and other wealthy Obama supporters who say they want to pay more in taxes.