Hatch Memo on JCT “Buffett Rule” Legislation Analysis Revealing Not Enough Revenue to Replace AMT, Confront Debt
TO: Reporters and Editors
FROM: Antonia Ferrier and Julia Lawless for Senate Finance Committee
Ranking Member Orrin Hatch (R-Utah)
RE: JCT “Buffet Rule” Legislation Analysis Reveals Not Enough Revenue to Replace
AMT, Confront Debt
DATE: Tuesday, March 20, 2012
Citing either the severity of the budget deficit or as a replacement to the Alternative Minimum Tax (AMT) that Congress regularly patches to protect millions of middle-class families from a massive tax hike, the President and his congressional allies are pressing for a new, so-called Buffett Rule, named after billionaire Warren Buffett.
The President’s Fiscal Year (FY) 2013 Budget says that President Obama “is proposing that the Buffett Rule should replace 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)
President Obama: “This Congress could hold a vote on the Buffett rule…The vast majority of Americans believe it's common sense, and if we're serious about paying down our deficit, it's as good a place to start as any.” (Wall Street Journal, “President Presses for Action of the Buffett Rule,” March 7, 2012)
But according to the analysis by Congress’ non-partisan tax scorekeeper, the Joint Committee on Taxation (JCT), of the “Paying A Fair Share Act of 2012” (S. 2059), the Buffett Rule would generate a meager $47 billion over ten years, or less than $5 billion a year - a minute fraction of either the deficit that the Congressional Budget Office (CBO) confirmed is over $1 trillion for a fourth straight year or the AMT that would lose revenue of $864 billion just to patch for ten years, according to the JCT.
Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) said in response:
“The President’s so-called Buffett Rule is a dog that just won’t hunt. It was designed for no other reason than politics – there is no economic rationale for it. It would do little to bring down the debt, wouldn’t come close to getting rid of the Alternative Minimum Tax (AMT) and would make our tax code even more complex than it already is. Now that we have this analysis, I hope the President will stop the class warfare and start leading by putting out real proposals to bring down our debt, get rid of the AMT and reform our broken tax code.”
Below are some examples that put the $47 billion or less than $5 billion average a year in perspective:
• The so-called Buffett Rule fails to deal with the nation’s overwhelming debt and annual deficits. It only covers one day of deficit spending in FY 2012. And, keep in mind $47 billion is less than 0.3 percent of our $15.6 trillion national debt.
• In FY 2011, net interest outlays of the federal government were $230 billion. The less than $5 billion per year amounts to one week of 2011 interest payments.
• If this so-called Buffett Rule was intended to replace the Alternative Minimum Tax, it is impossible because the revenue raised by the Buffett Rule can’t even cover 5 percent of a 10 year AMT patch, much less repeal of the AMT altogether as the President has proposed.