Last week the White House admitted that the proposed Buffett Rule would make no meaningful difference toward reducing the deficit. It turns out, that even that wasn’t entirely true. Not only will the rule not help much on the positive side, it may actually make things worse:
That measure would exempt more than 20 million middle class Americans with incomes as low as $80,000 a year from getting nailed by the AMT. This year’s Obama budget clearly describes their intent: “The Buffett Rule should replace the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended.”
The Joint Tax Committee—the official scoring referee on tax bills—calculates that the combination of AMT repeal for the middle class and the Buffett tax would add $793.3 billion to the debt over the next decade. As Mr. Obama has said, “This isn’t politics, this is math.”
The Buffett tax is losing any serious rationale by the day. Mr. Obama’s position now is that we need a new fairness tax, because the old AMT fairness tax that was targeted at millionaires and billionaires isn’t raising much money from the Warren Buffetts of the world. Instead it’s siphoning income out of more and more nonmillionaires. So they argue it’s time for a new Buffett rule, that is almost identical to the old Buffett rule, and no doubt in time will have the same unintended consequences.