The President is right
Posted on Wednesday, April 11th 2012 at 02:03 pm
The President is right about the “Buffet rule”. I watched him in the press conference this morning surrounded by “secretaries” of “millionaires” with their heads nodding at the appropriate times. The “Buffet rule” will most likely be very good for the President politically. Who can disagree with the rich paying “their fair share”? Even though President Obama made it clear that those wealthy people (making over a million dollars a year) pay less a percentage of income tax than middle class Americans (like the secretaries sitting on the stage), most of the reporters reported that wealthy people pay “less taxes” than middle class Americans. Point scored game over. Politics is all about the magical manipulation of public opinion, whether it is democrats or republicans wielding the wand of deception. The President has conjured up a brilliant illusion; although deceptive it will be effective in wooing economically ignorant Americans. Most people don’t understand that there is a difference between tax on ordinary income (higher rate) and capital gains (lower rate). This makes it difficult to explain that someone like Warren Buffet (capital gains) paid an effective rate less than his secretary (who made between $200,000 and $500,000 per year in ordinary income). Then you have to explain that people are investing money they already paid tax on, putting at risk and then paying taxes on the gain from the investment. It is all very complex. Plus there is a plethora of tax loopholes and creative tax planning (trusts and foundations) that allow the wealthy to defer income or take tax write offs to create vehicles for giving or employment for their children. Even if the “Buffet rule” passed (which it won’t), it wouldn’t do what it intends (tax the rich and reduce the deficit). There will be new loop holes created, or income will be simply diverted using legal tax strategies. The deficit will not be reduced, but the Average American would feel better because those fat cats are now supposedly paying their fair share. The truth is our income tax system needs to be scrapped in favor or a flat and fair tax that average Americans can understand. But, if it were that simple then they couldn’t work their magic on us.