President Obama still thinks taxes need to be raised because the ultra-wealthy CEO of Berkshire Hathaway isn’t paying enough to Uncle Sam. “If you’ve done well - I’ve done well - then you should do a little something to give something back,” Mr. Obama said while standing under a Cincinnati bridge on Thursday.
Mr. Obama and Mr. Buffett both want bigger government and wealth redistribution. Neither claims raising taxes on job creators and investors will solve the $14.7 trillion debt crisis; they just speak vaguely about being “fair” - a term Mr. Obama read seven times in his bridge speech. Mr. Buffett told PBS’ Charlie Rose in August, “I don’t think we should cut spending dramatically now. I don’t think that what I’m talking about on taxes solves the deficit gap at all. But I think fairness is important.”
The top 10 percent of income earners making over $100,000 a year pay 70 percent of all income taxes. “We already have a very steeply progressive tax system,” said Ryan Ellis, tax-policy director of Americans for Tax Reform. “There’s nothing fair about it now. Technically, if you want to be fair, you’d raise taxes on the poor and decrease them on the wealthy.”
Congressional Republicans realize this and are calling the billionaire’s bluff. Texas Sen. John Cornyn told The Washington Times on Friday, “If Warren Buffett’s taxes are going to serve as the basis for national tax policy, in the interest of transparency he ought to disclose them.” Rep. Tim Huelskamp, Kansas Republican, fired off a letter to Mr. Buffett challenging him to release the forms.
From what we know so far, Mr. Buffett’s arithmetic doesn’t work out. The tax returns he waved at the PBS host only raised more questions. Mr. Buffett gives himself a salary of $100,000 and claims that the average Berkshire employee pays a 36 percent rate compared to his own 17.4 percent rate. He justified the discrepancy by claiming the majority of his income from dividends and capital gains does not get hit with the 13.3 percent payroll tax. “That alone is higher than the tax rate on capital gains or dividends,” he told Mr. Rose.
That’s not accurate. Employees are only responsible for 5.65 percent of that tax, which is significantly less than the capital-gains levy of 15 percent. “He’s is assigning the entire payroll tax to be paid by his secretary, when in reality, his company pays half,” Mr. Ellis explained.
The tax expert also pointed out that, “It’s not like she’s paying those taxes and nothing ever happens again like with income tax. She gets Social Security and Medicare benefits later.”
Internal Revenue Service figures show a person making $60,000 a year had an average tax rate of 11.6 percent. So adding the payroll tax, Mr. Buffett’s secretary is likely paying 17.2 percent, which is still less than her boss.
The “Buffett rule” is being built upon a lie designed to fan the flames of class warfare and allow Mr. Obama to bring his liberal base back into the fold for 2012. The quickest way to end the speculation is for Mr. Buffett to release his returns for all to see.
Emily Miller is a senior editor for the Opinion pages at The Washington Times.