Buffett Rule = Reagan Rule? Uhhh…No
President Obama is hoping to sell his so-called “Buffett Rule” to Americans, by saying it was something former President Reagan would want. Obama believes invoking Reagan’s name will show how the current crop of GOP candidates are “extremists” and cater to only a select few. In fact, as the clip below shows, Obama (sarcastically) calls Reagan a “socialist.”
Now it’s true both Reagan and Obama used the “executive pays less in taxes than his secretary” argument, but that’s about where the similarities end.
The “Buffett Rule” would tax Americans who make over a million dollars at least 30-percent of their income. How both Buffett, Obama and his like-minded ilk see it, the rich aren’t paying enough taxes. So they should contribute more by raising their personal taxes.
Reagan thought nothing of the sort. As “The Washington Post” quotes, Reagan was pushing to give tax cuts to everyone. The emphasis on the quotes are mine:
“It stands to reason that the more complex our tax code is, the more open it is to abuse. So, we’re making it simple to make it fair. America’s tax plan will do away with special breaks for a few so we can lower the tax rates for all. Our simpler, three-bracket design will assure that no American pays one penny more than his fair share….By closing the loopholes, we can bring tax rates down for the vast majority of Americans. Our tax proposal is the opposite of trickle down; it’s bubble up. Most important of all, America’s long suffering families will get dramatic tax relief. The fair share plan gives all of America’s families a much-needed break by lowering the tax rates, increasing the standard deduction, making tax deductible IRA’s equally available to homemakers, and best of all, nearly doubling the personal exemption so that you can deduct $2,000 for yourself and every one of your dependents.”
The “Reagan Rule,” otherwise known as the Tax Reform Act of 1986, was a way to encourage people to try to make more money and “move up.”
Which is what capitalism is about. Someone who starts at the very bottom should have the opportunity to work hard, be ambitious, earn their stripes and move up at their job. If they think they’ve gone as far as they can go, then they can move from to another company or another career. Or, better, yet, start their own company.
In my mind, raising taxes means less people will have the desire to move up and will do whatever they can to hold on to their cash. And “the rich” will see no reason to invest their money, take risks and hope to make more money. If you’re going to see 30-percent of it go away, why even bother investing it?
If someone decides not to invest the money into a business, it means less of a chance for expansion. And less expansion means less jobs. Less jobs means higher unemployment. It’s capitalism.
I took a look at the current tax rate for those who make over a million dollars. If I understand it correctly, those who make at least a million currently pay around 20.6-percent, which would equal out to around 206-thousand dollars. That’s a nice chunk of change. Raising to 30-percent would mean 300-thousand dollars, a difference of 100-thousand or so from the current rate. While that may not seem like a lot to those of us who don’t make that, those who pay that much tend to have it heavily invested in businesses, real estate, etc. If someone’s expenses are almost equal to what they take in, there’s not a lot to save. And who knows what kind of sudden expenses might come up. That would cause even more problems.
I realize Obama wants to get his plan across, but misquoting another president won’t help. At least, not with those who actually bother to look at the facts and history. Maybe more people need to be willing to do that, instead of relying on soundbites.
Filed under: Politics, Taxation | 2 Comments
Tags: Barack Obama, Budgeting, Buffett Rule, Capitalism, Politics, Ronald Reagan, Taxation, Taxes