Monday, 21 May 2012
The Buffett Rule = Nonsense
On Tuesday 11th April, in the swing state of Florida, President Obama attacked Mitt Romney (R) for not paying his ‘fair share' of taxes. This isn’t the first time that he has said such a thing; it certainly won’t be the last.
Obviously the idea of fairness is relative- what one person calls fair, another will say to the contrary. Let’s clarify the tax situation as it stands- anyone who earns $250,000+ per year must pay 35% income tax. The current rate for capital gains is 15%.
The Obama Plan
The President is making the case that anyone who earns $1million or over, will pay a higher rate of tax than middle class families which is known as the ‘Buffet Rule’ (Named after the billionaire investor and Obama supporter). Essentially this would ensure that people, who make more than $1 million per year, pay at least 30 percent of their income in taxes. Obviously there is a question that must to be asked; if the current rate of income tax is 35%, the idea of slapping a ‘fair’ tax, which is lower than the current income tax doesn’t make sense. In essence, if the ‘Buffett Rule’ becomes law, the income tax will be at 35% (stay the same) and capital gains at 30 %.( an increase of 15%) If the Bush Tax cuts expire, then the income tax will increase to 39%.
The Romney Plan
The probable Republican nominee, to face President Obama is espousing a totally different remedy for the US economy. Governor Romney is calling for an across-the-board 20 percent cut in marginal rates & an elimination taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains. The primary focus is based on lowering rates, in order to incentivise people to invest in the American economy.
The Buffett Rule - Expediency over Efficiency?
I think that this idea is complete nonsense and is proof that Obama is bereft of ideas when it comes to stimulating the economy. America needs new leadership.