It's a pretty big deal to have a bill named after you, especially if you're not a member of Congress. But, with any luck, this bill will actually soon become the law of the land.
Of course, I'm talking about the Buffett Rule, named after the Oracle of Omaha himself. It all started in a one-on-one meeting in the Oval Office, when Warren Buffett informed President Obama how crazy today's tax code is. Billionaire that I am, Buffett told Obama, I actually pay a lower rate of income tax than my secretary. And that's not fair!
Equally outraged, Obama started talking about Buffett's secretary as a textbook case of income inequality that needed a congressional fix. And now it's an actual bill, introduced by Rhode Island Sen. Sheldon Whitehouse and based on the simple premise that no millionaire or billionaire should pay a lower income tax rate than the person who cuts his hair, drives his car, or mows his lawn. The Whitehouse legislation would require individuals reporting a million dollars in taxable income to pay a minimum 30 percent tax rate – just slightly higher than what most middle-income families pay.
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And those millionaires have done quite well, thank you. According to an analysis of IRS data by economists Thomas Piketty and Emmanuel Saez, two-thirds of the nation's total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households. Since 1979, in fact, the average after-tax income of the top 1 percent has risen nearly 400 percent. Middle-class Americans, meanwhile, saw their incomes rise just 40 percent.
And that top 1 percent typically pays only 15 percent to 18 percent in taxes – while middle-class families pay an average 25 percent. The Whitehouse bill will require millionaires to pay a minimum 30 percent.
It's hard to believe anybody could vote against such a clear case of tax fairness, but Senate Republican Leader Mitch McConnell has already stated his party's opposition, based on two grounds. First, Republican critics dismiss the call for a vote on the Buffett Rule as nothing more than a "gimmick" designed to embarrass the party in this election year. Well, they're half right. Yes, Republicans will be embarrassed by voting against the Buffett Rule, as well they should be. They'll also have a hard time explaining to voters why they consistently favor tax breaks for millionaires rather than ordinary, working Americans.
McConnell and other Republicans also say they could never ask millionaires to pay more because that would violate the spirit of Republican icon Ronald Reagan, which just proves that they don't know Ronald Reagan any better than some evangelists know Jesus.
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President Reagan, in fact, did not oppose the principle of the Buffett Rule. He was the first to champion it. Speaking at Northside High School in Atlanta, Ga., on June 6, 1985, Reagan vowed to get rid of loopholes that created unfairness in the tax code. "Some of those loopholes were understandable," he acknowledged, "but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary – and that's crazy!"
A few weeks later, speaking at the White House, Reagan doubled-down on tax fairness, citing a letter he'd received from a wealthy American who, like Buffett, simply by taking advantage of loopholes, was able to pay a lower tax rate than his secretary. "He wrote me the letter to tell me he'd like to come to Washington and testify before Congress as to how that's possible for him to do – and why it is wrong!"
Again, that was no wild-eyed socialist. That was Ronald Reagan. In keeping with history, President Obama offered this week to change the name of his plan from the Buffett Rule to the "Reagan Rule," if that would make it easier for Republicans to vote for it. But, of course, that wouldn't work. Today's Republicans would rather repudiate Ronald Reagan than cross uber-lobbyist Grover Norquist, who has cowed them all into voting against any new taxes. Reagan was lucky to run for president when he did. He couldn't win a primary in today's Republican Party.
How fitting that senators will vote on the Buffett Rule one week after Mitt Romney was assured the Republican nomination for president. Over the last two years, Romney made more than $42 million and paid only 14 percent in taxes. He's the poster child for the Buffett Rule.