The Buffett Rule tax increase hawked by President Barack Obama and the Democrats in Congress uses taxation power to target a small group of individuals for confiscation for no better purpose than to fit their political aspirations. The real purpose targets one individual in particular who might keep Obama from winning a second term in office.
This abuse of power harks back to one of the more curious relics found in our Constitution, which prohibits Congress from passing a “Bill of Attainder.” Article 1, Section 9 prevents any individual or group from being condemned for crimes and having their property seized without all the muss and fuss of trials, juries, and even evidence.
Of course, Obama couches the Buffett Rule tax in fiscal terms. We need to have everyone pay their fair share of taxes, the President has argued, and why should a billionaire like Warren Buffett pay a lower rate on his income than his secretary? That sounds reasonable to the ill-informed, but Buffett pays a lower rate – as do many of the wealthier income earners – because Buffett derives his income from risk-based activities in investments, rather than as employment salary.
Congress has long treated capital-gains income differently than salary income in order to incentivize the risk-taking that leads to innovation and growth. Had Buffett’s secretary earned her income as capital gains, she would have access to the same tax rates as her boss does.
Furthermore, the top earners already pay their “fair share” – and more. According to the 2012 Economic Report of the President and reported by Bloomberg, the median effective tax rate for the middle 20 percent of American taxpayers is 13.3 percent, including income, payroll, and corporate taxes. For the top 1 percent of taxpayers – that group most famously demonized by Occupy protesters – the median effective tax rate jumps to 29.6 percent.
Ah, but that’s the median, the administration will point out. Some of the wealthy that earn more than a million dollars a year pay a lower rate, and that’s certainly true. Some of them pay under 15 percent in effective tax rates, mainly because (again) they derive their income from risk-taking activities that produce capital gains in a given year. How many households actually manage that feat? The non-partisan Tax Policy Center puts the number at about 4,000 households.
However, most of those are on the lower end of that top level of income. The real revenue opportunity comes with the wealthiest of Americans, where a surtax would confiscate much larger amounts of capital. Bloomberg’s Hans Nichaols reported this week that the Buffett Rule actually hopes to target just 400 earners in the nation. That makes this look a lot less like a normal tax policy and a lot more like an attack on specific Americans as a lever to seize their property in service to a President who has openly waged class warfare for the last eight months.