Don't get me wrong. There is nothing wrong with the principle behind the Buffett Rule: the idea that the wealthy should pay at least as much in taxes, as a percentage of income, as the less wealthy. Even Ronald Reagan supported that proposition, as the White House is quick to point out.
The problem is, the legislation Obama supports to embody the Buffett Rule is simply bad legislation. Here is what CNN has to say:
The Joint Committee on Taxation, which analyzes tax legislation, has estimated that the "Paying a Fair Share Act" would raise $47 billion over 10 years, or an average of less than $5 billion a year, assuming the Bush tax cuts expire.
That wouldn't do much to help reduce federal deficits. In recent years, annual deficits have ranged from several hundred billion dollars to more than $1 trillion.
And if the rule were to serve as a replacement for the AMT, as Obama has proposed, it wouldn't come close to making up for the $1 trillion-plus in revenue that the AMT is expected to generate over 10 years.
What do independent tax experts think of the Buffett Rule? Tuning out the partisan rhetoric on both sides, tax experts say the Buffett Rule would further complicate an already complex tax code by adding a new minimum tax on top of the old AMT.
What's more, the evidence that the Buffett Rule is correcting a big disparity in the tax code is not so clear cut.
For example, even without a Buffett Rule, most millionaires already pay more in taxes as a percentage of their income than those in the middle class, said Roberton Williams, a senior fellow at the Tax Policy Center. Not always as much as 30%, but a higher percentage of their income than the vast majority of the middle class.
And the Congressional Research Service notes that today's tax code doesn't violate the Buffett rule as egregiously as Warren Buffett and others have asserted. Using 2006 data, the CRS found the average tax rate among millionaires is almost 30% -- with about a tenth of them paying a rate higher than 35% and another tenth paying a rate below 24%.
Lastly, tax reform done right shouldn't create a need for a Buffett Rule, an AMT or any other accessory to the tax code, Williams said. The only reason policymakers call for such measures is when they don't like the outcomes of the system they've got. Tax reform is their chance to design a better system. And if one goal is to tax the rich more, they can do that in a simpler, more effective way than the Buffett Rule.So, bottom line, Obama is promoting bad tax legislation that complicates the code further, raises little revenue and possibly increases deficits, to address a problem that does not generally exist, except for a few statistical outliers. And if anyone does not support this bad legislation, Obama and his supporters are quick to denounce them as extremists.
So this is fake centrism, ginning up a fake issue in an election year, because it could make Obama appear a reasonable centrist and his Republican opponents appear extremist. While there could be, in my view, far more principled centrism from both sides, there is no extremism in opposition to bad legislation such as the "Paying a Fair Share Act."
What is especially disingenuous here is invoking Ronald Reagan in support of legislation he would almost certainly oppose. Reagan's support of the principle behind the Buffett Rule came in the context of a campaign for tax reform, code simplification and tax cuts for all, and definitely not in support of efforts to complexify the code and raise tax rates on only a few.
If Obama were truly centrist, he would not deceptively quote Reagan in support of policies Reagan would never actually support. He might rather consider following Reagan's example: promote overall tax code reform and simplification, with an eye to fairly reducing the burden of taxation on the economy and on all Americans. That would be legitimate centrism and good policy, not just political theater.