The President’s Buffett Rule is vaporware

The President’s Buffett Rule is vaporware

va·por·ware (n): computer slang a product, especially software, that is promoted or marketed while it is still in development and that may never be produced

The President’s Buffett Rule is vaporware.

Here is the President speaking yesterday:

Congress needs to make the Buffett Rule a reality.  This is common sense.  (Applause.)  If you make more than a million dollars a year — make more than a million dollars a year — you should pay a tax rate of at least 30 percent.  (Applause.)  And if you do that, that means that if you make less than $250,000 a year, like 98 percent of Americans do, you shouldn’t see your taxes go up.  And we won’t be adding to the deficit.

These are things we can do today.  It shouldn’t be that difficult.  Now, whenever Congress refuses to act, Joe and I, we’re going to act.  (Applause.)

The President has not actually proposed a tax policy that fits this principle.  Neither his budget nor the tax proposals released by Treasury include any policy specifics to establish a new minimum 30% tax rate for those with income > $1M.

Treasury released 200 pages of proposed tax policy changes, including obscure things like repealing the preferential dividend rule for Real Estate Investment Trusts. They did not release specifics to accompany the one tax policy change the President talks about almost every day (and twice yesterday).

It’s OK to call on Congress to enact a policy that you describe only through broad-based principles. But when you do this you cannot also claim “We won’t be adding to the deficit.”  The only way you can legitimately make such a claim is if you offer a specific proposal to back it up.

When you call on Congress to enact a policy that you describe only as a principle, you generally send Treasury officials to engage with the chairs of the tax writing committees to help draft legislation. Other than the President’s public comments I can find no evidence that the Administration is actually trying to get Congress to enact the Buffett Rule in legislation. The logical explanation is that President Obama wants Congress not to act so that he has a rhetorical weapon to use against Republicans in an election year.

Administration officials appear to be describing a policy that would replace the Alternative Minimum Tax, yet their budget also contains no proposal to repeal or replace the AMT.

And yet the President is calling on Congress to enact his vaporware proposal today.

Or is he? Here is White House Press Secretary Jay Carney responding to questions yesterday:

Q:  I just wanted to ask you also about something the President said today.  In the payroll tax cut extension context, he was pressing Congress to take action on other matters and said that Congress needs to make the Buffett Rule a reality.  And the way he framed it seemed to suggest that this is something before Congress right now like the small business tax cuts and so forth.  But the White House isn’t actually asking for the Buffett Rule to be put into law right now, is it?  I mean, that’s a principle for tax reform.  Are you asking them to act now?

MR. CARNEY:  Well, it is a principle for overall individual tax reform.  He is calling on Congress to make it a reality within the context of tax reform.  The overall principle should be adhered to as we look at issues of the balance we have in our tax code going forward.  We have a — as you know, the Bush tax cuts expire at the end of the year.  This President believes that, short of overall tax reform, that the middle-income tax cuts need to be extended, made permanent.  That’s long been his position.

He’s opposed to the extension again of the higher-income tax cuts, which we simply cannot afford.  And the President’ overall approach to this is informed in part by the Buffett principle, by the Buffett Rule, that millionaires and billionaires should not be paying a lower effective tax rate than hardworking, average folks out there.

Q    But he’s not asking Congress to turn that into a law right now, is he?

MR. CARNEY:  Well, I think if you — it depends on how — what Congress’ approach is to issues of the tax code this year.  If they address income tax, individual income tax, then they ought to ensure that the Buffett Rule is made law, if you will, through that practice — through that legislation.

Which is it? “These are things that Congress should do today,” or “It depends on what Congress’ approach is to issues of the tax code this year?” Both cannot be true.

The President is promoting and marketing a Buffett Rule policy that he may never produce and that it appears he may not really want Congress to enact.  That’s vaporware.

(photo credit: White House photo by Pete Souza)

One response

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