Fact Sheet: The Do’s & Don’ts of the Buffett Tax
It Won’t Create Jobs, Fix the Economy, Lower Gas Prices or Solve America’s Debt Crisis; It Will Fund More Government Spending, Make America’s Tax Code More Complex
While the President and his Capitol Hill allies have promised that they will “focus like a laser on jobs, the economy, and the middle-class,” they are instead pushing a new tax hike – the Buffett Tax – for reasons that shift by the day. But this tax increase won’t do a thing to help America’s struggling economy, get people back to work, fill up a middle-class family’s gas tank or solve America’s debt crisis. The only thing it’ll be used for is to fund more Washington spending.
BELOW ARE THE DO’S & DON’TS OF THE PRESIDENT’S LATEST TAX HIKE:
WILL IT SPUR ECONOMIC GROWTH?
NO - The Buffett Tax will do nothing to generate economic growth.
President Obama claimed the Buffett Tax is “… also about growth. This is also about being able to make the investments we need to succeed. And it’s about we as a country being willing to pay for those investments and closing our deficits.” (Remarks by the President on the Buffett Rule, April 11, 2012)
But the data doesn’t support that, economist Kevin Hassett said, “The Buffett Rule, amongst economists, could also be called the stupid rule. It’s basically just a back-door way to hike taxes on capital.” (“Top Earners Pay Higher Tax Rate Than Others Without Buffett Rule,” Bloomberg, April 10, 2012)
And this is being pushed at a time when a new poll shows 80 percent of independent voters “prefer a candidate who focuses on creating economic opportunity rather than reducing income inequality.” (“Obama puts taxes at center of campaign fight,” Reuters, April 9, 2012)
WILL IT HELP UNEMPLOYED AMERICANS GET A JOB?
NO - The Buffett Tax won’t get the 13 million unemployed Americans back to work. Disappointing jobs numbers in March prompted Economic Policy Institute economist Heidi Shierholz to say, “The low job growth in March was an unpleasant surprise and underscores the fact that a robust jobs recovery has not yet solidified.” (“U.S. hiring slowed sharply in March; unemployment fell to 8.2% ,“ Washington Post, April 6, 2012)
But the White House continues to drive its job-crushing Buffett Tax. And, as economics correspondent Jim Tankersley writes, “If the Buffett Rule was a serious pitch to help the jobless, it would deal with one of those main drivers of unemployment. It would boost persistently weak aggregate demand or incentivize business investment. It does neither.” (“The Buffett Rule Won’t Get You a Job,” National Journal, April 10, 2012)
More than half of the American people say they personally worry "a great deal” about the nation’s high unemployment rate, according to a recent poll. (“Economic Issues Still Dominate Americans' National Worries,” Gallup, March 28, 2012)
WILL IT HELP REDUCE THE PRICE OF GAS THAT HAS SOARED TO A NATIONWIDE AVERAGE OF JUST UNDER $4.50 A GALLON?
NO - The Buffett Tax will do nothing to lower gas prices or bring more American energy online. According to a Gallup poll, 65 percent of Americans say they worry a “great deal” about rising prices at the pump. (“Economic Issues Still Dominate Americans' National Worries,” Gallup, March 28, 2012)
Even more, 7 in 10 Americans say rising prices in gasoline are the source of their financial burdens, with about half of the public believing they will pay $5 per gallon for gasoline this year. (CNN Poll: Americans increasingly worried about gas prices, CNN, March 29, 2012)
WILL IT SOLVE THE NATION’S DEBT CRISIS?
NO - The Buffett Tax would only generate less than $5 billion in revenue next year – a minuscule fraction, less than 0.3 percent, of our nation’s $15.6 trillion debt. President Obama said the Buffett Tax would, “stabilize our debt and deficits for the next decade. ..this is not politics; this is math.” (Remarks by the President at DNC Event -- San Diego, CA, September 26, 2011)
But, according to the Joint Committee on Taxation, the Buffett Tax would only generate around $5 billion next year - covering less than 2 days of deficit spending. (Analysis by the Joint Committee on Taxation, March 20, 2012, Congressional Budget Office, Updated Budget Projections, Fiscal Years 2012-2022, projecting a $1.2 trillion deficit for Fiscal Year 2012)
Even Washington Democrats acknowledge it won’t rein in Washington’s out-of-control spending, with U.S. Senator Chris Coons (D-Del.) saying the Buffett Tax “…isn’t going to balance the budget.” (“Dem senator: Buffett Rule ‘isn’t going to balance the budget’,” The Hill, April 11, 2012)
And, White House Press Secretary Jay Carney now says, “The president -- no one -- ever suggested that implementing the Buffett Rule would contribute in large measure to reducing the deficit.” (“Obama Ignores Critics of 'Buffett Rule,' Presses Case on Fairness, National Journal, April 10, 2012.)
WILL IT GENERATE ENOUGH REVENUE TO REPLACE THE ALTERNATIVE MINIMUM TAX (AMT) THAT THREATENS 30 MILLION AMERICAN HOUSEHOLDS WITH A MASSIVE TAX HIKE?
NO - The Buffett Tax wouldn’t even come close.
The President’s Fiscal Year (FY) 2013 Budget says that President Obama “is proposing that the Buffett Rule should re¬place the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended.” (President’s FY 2013 Budget, Office of Management and Budget)
But the math doesn’t add up, because the revenue raised by the Buffett Rule can’t even cover 5 percent of a 10 year AMT patch which would cost $864 billion, according to the Joint Committee on Taxation. (Analysis by the Joint Committee on Taxation, March 20, 2012)
And as the Wall Street Journal editorial board notes, “The U.S. already has a Buffett rule. The Alternative Minimum Tax that first became law in 1969…The surest prediction in politics is that any tax that starts by hitting the rich ends up hitting the middle class because that is where the real money is.” (“The Obama Rule,” Wall Street Journal, April 10, 2012)
WOULD IT MAKE AMERICA’S TAX CODE MORE BURDENSOME AND COMPLEX?
YES - The Buffett Tax would make America’s already overly burdensome tax code more complex.
“The Buffett Rule is a distraction that further mucks up an already complicated tax code,” wrote Bloomberg View editorial board member Deborah Solomon. (The Buffett Rule Is Back, and Still a Distraction”, Bloomberg, April 10, 2012)
The Wall Street Journal editorial board further noted, “A basic principle of any tax reform worth the name is to broaden the tax base in order to lower rates for everyone, not to raise them. The point is to make the tax code more efficient by reducing the incentive for avoidance—legal or illegal.” (“The Obama Rule,” Wall Street Journal, April 10, 2012)
WILL IT BE USED TO FUND MORE GOVERNMENT SPENDING?
YES - Even the President has said it would be for more Washington spending.
The President himself said that the revenue generated from the Buffett Tax should be used for more spending, “…in things like education and research and health care.” (“Obama: Tax the rich to grow the economy,” USA Today, April 10, 2012)
But don’t forget, in his first three years in office, the President has increased spending by 24 percent, and our debt by 44 percent - leading to the first credit downgrade of the United States in our nation’s history. (Analysis by Senate Finance Committee Minority Staff)