It’s a familiar script:
1. The Senate fails to pass a bill because even despite near uniform support from Democrats, the proposal does not come close to the 60 votes necessary to block a filibuster.
2. The bill has no chance in the House because, if the bill might help those in need, the Republicans have no interest in it.
3. The original bill addressed the issue in a watered-down manner, and even if it passed, the problem would only be half-addressed.
Once again this was the case earlier in April 2012 with the so-called Buffett Rule, a proposal to reform the United States tax code. The rule was the brainchild of Warren Buffett, the world’s third wealthiest individual. It was quickly adopted by President Barack Obama and others, including former President William Clinton.
Buffett, an investor based in Omaha, was appalled when he learned several years ago that his secretary was paying a higher income tax rate than he was. While he did not reveal his secretary’s income, we know that Buffett’s net wealth is well over $40 billion and has been known to increase (or fall) as much as eight to ten billion dollars a year.
Senate Majority Leader Harry Reid put the Buffett rule to a vote. It “passed,” 51-45, with one Democrat, Senator David Prior of Arkansas who is up for re-election later this year, voting against it. One Republican, Senator Susan Collins of Maine, voted for the bill. But even with the dynamics of this 2% bi-partisanship, the vote came nine votes short of the necessary 60 votes to stave off a filibuster.
The Buffett Rule, as proposed by the Harry Reid and supported by President Obama, would have put a 30 percent minimum tax on millionaires. The idea behind the tax was fairness, not significantly reducing the federal deficit. The bill would have been estimated to raise $47 billion over the next ten years, which is approximately one-tenth of one percent of the anticipated $45 trillion federal spending increase over the next decade.
CNN’s Fareed Zakaria, who is as brilliant an economist as he is an expert of foreign affairs thought that the Buffett bill would have had limited benefits. He said:
My problem with it is that what we really need is comprehensive tax reform. We have what I would describe as the world’s worst tax code. It is the longest, the most complicated, riddled with loopholes, exceptions and deductions – all of which are fundamentally institutionalized corruption. They are a way that Congress is able to reward powerful constituents by giving them what seem to be small giveaways in the tax code but which are, of course, government grants often amounting to hundreds and millions and billions of dollars in perpetuity (because unlike appropriations, these do not come up for review every year; once you put in a tax exemption or preferential tax treatment, it exists forever).
Zakaria goes on to say, “I would be much more comfortable with the Buffett Rule if it were part of a larger tax reform strategy.
One of the largest loopholes in the proposed bill is one that has widespread popular support. Unlike the regulations of today’s tax code, under the Buffett Rule, wealthy people would be able to deduct an unlimited amount of money for charitable purposes. There would be no limitations on tax deductions. This would mean that Mitt Romney could give an unlimited amount of money to the Mormon Church without any tax penalty. Similarly, a donor to health clinics for the poor distributed across the United States could donate billions without any tax restrictions.
The fact that the three wealthiest individuals in the world (Carlos Slim Helu of Mexico, Microsoft founder Bill Gates, and Buffett) are all progressives and supportive of the Democrats’ plans to reform the tax code, is of little or no consequence to Republicans. GOP members of Congress and other powerful individuals in the Republican Party have plenty of other sources of money including the infamous Koch Brothers. But perhaps more importantly, and a factor that may be to the credit of Republicans, many on the extreme right are willing to fall on the sword for principle. It may not matter that the principles are based on protecting the wealthy and undermining the needs of the poor. If there is an opportunity to be insensitive to those most in need, they are often willing to seize the moment and sacrifice efforts to even share in the wealth of the world’s wealthiest individuals (still one of the great mysteries of the world). Kudos to the Republicans who stand up for principle, but an ‘F’ to them when it comes to exercising a social conscience. The combination may work for many Republicans, but not for those most in need. This is not only odd; it’s most unfortunate.