WH class-warfare argument for the "not class warfare" Buffett Rule

Just two weeks ago, Barack Obama insisted that the Buffett Rule that he is pushing has nothing to do with class warfare — no, not a bit.  As he has consistently argued since first proposing the surtax on income earned over a certain threshold (originally $250,000 per year, later raised to $1 million), Obama said in his weekly address on March 31st that it’s all about fairness and budget discipline:

That’s not fair.  It doesn’t make any sense.  Do we want to keep giving tax breaks to the wealthiest Americans like me, or Warren Buffett, or Bill Gates – people who don’t need them and never asked for them?  Or do we want to keep investing in things that will grow our economy and keep us secure?  Because we can’t afford to do both.

Now, some people call this class warfare.  But I think asking a billionaire to pay at least the same tax rate as his secretary is just common sense.  We don’t envy success in this country.  We aspire to it.  But we also believe that anyone who does well for themselves should do their fair share in return, so that more people have the opportunity to get ahead – not just a few.

First, as we have noted on several occasions, the Buffett Rule will raise — at best — less than $5 billion a year, and as little as $3 billion.  Put that against the monster deficits that Obama has run over the last three years and the monster deficits he proposes to run in the near-to-midterm future, and the claim that this is all about investment is ludicrous.  Obama spent $3 billion in three weeks on Cash for Clunkers, which did for the auto economy what all of his other gimmicks did for the rest of it.  The revenue from the Buffett Rule in the best case scenario will cover two whole days of deficits in Obama’s proposed FY2013 budget ($5 billion against a $900 billion deficit).

Put that aside for the moment, and put aside the fact that highest-income earners do in fact pay a much higher median effective tax rate than middle-class earners do, which negates the entire argument anyway.  Let’s just take on the oft-repeated claim from Obama that this isn’t class warfare, apart from the fact that the rest of his argument is factually deficient.  What kind of argument does the White House make on its website for the Buffett Rule?  Last September, Gene Sperling offered this argument on fairness, which was caught by blogger Jeryl Bier recently:

And, at the margin, a middle-class family can pay 15 percent, 25 percent or 28 percent of what they earn in income taxes — plus additional payroll taxes on top of that. That’s far higher than the less than 15 percent of income in federal taxes that some of the most well-off Americans pay. Does it seem right that an American who makes over $110 million pays an effective tax rate of about 18 percent, but if they had a fire at their house, those who would be risking their lives to put the fire out, could be seeing far more taken out of their every additional dollar earned while they are risking their lives?

Note the construct of “can pay” in this argument.  There is a wide range of what taxpayers can pay in taxes, based on a large number of factors — how they earned the money (salary, capital gains, etc), renters or homeowners, single or married, children in the household or not, retirement investment, medical bills … the list goes on and on almost endlessly.  That’s why we use median effective tax rates, and as I wrote yesterday, this is the data:

Never mind that the top one percent already pay a much higher median effective tax rate at 29.6%, as the President’s own economists noted this year, more than double that of midrange earners’ 13.3%.

But the argument itself is nothing more than a class-warfare call to arms.  The peasants are dying for the rich! Gene Sperling cries, using hypotheticals built on hypotheticals — and using a pretty dumb argument anyway.  Firefighters do this work voluntarily; no one drafts them into the job.  Also, while some firefighters might pay a higher effective tax rate than the person owning a house on fire, that salary gets paid by other taxpayers — including the people whose house would be burning in this scenario, whose property taxes are almost certainly much higher than those of the middle class.  That doesn’t take anything away from the bravery and sacrifice of the firefighters, but it is the job they voluntarily pursued, and they do get paid by these same taxpayers to do it.  If compensation fairness is the issue, then the local jurisdiction would be the proper place to discuss it, and not in federal surtaxes.

The Buffett Rule and its White House apologetics are nothing but class warfare — and vapid class warfare at that, and even worse economics.

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