Heyl Q&A: The Buffett Ruse: Stop posturing & start prioritizing
Diana Furchtgott-Roth is a senior fellow at the Manhattan Institute for Policy Research, an economics-oriented think tank, and is the former chief economist for the U.S. Department of Labor.
She spoke to the Trib regarding a linchpin of President Obama's re-election campaign known as the Buffett Rule. Named for Berkshire Hathaway CEO Warren Buffett, it's a proposed minimum effective tax of 30 percent on anyone earning more than $1 million annually.
Q: To many Americans, the Buffett Rule seems like a good idea. In your estimation, what are its chief flaws?
A: First of all, it raises very little money -- $47 billion over a 10-year period, according to the Joint Committee on Taxation. Second, it would not result in many millionaires paying additional taxes. Number three, it would hurt small businesses on which it raised taxes.
But the main problem with the Buffett Rule is that it's just political posturing. The reason that many millionaires have lower tax rates is because they get income from (low-taxed) capital gains. The Buffett Rule doesn't mention taxing capital gains at a higher rate, and that in essence is what they would have to do in order to have millionaires pay taxes at (a) 30-percent (rate).
Q: Would it be problematic for the economy if taxes were increased on investment income?
A: It would be very problematic. There are many projects that would not be undertaken if we had a higher capital gains tax rate, (considering) we already have the highest global corporate tax rate in the world at 35 percent.
Q: Are people too focused on the president's insistence that raising taxes on the well-off is a matter of fairness and equality?
A: Yeah. I don't think (that position) is really very relevant, because you don't find Americans flocking to countries around the world such as Haiti or Cuba, where the people are equal and they are very poor. You find, on the other hand, people all over the world who want to come to America. Yes, it has more inequality than other industrialized countries, but there are also more opportunities, which is why people want to come.
Q: Do you believe these more important issues are being lost in the din of Buffett Rule discussions?
A: I think they are being lost. This is the fourth year that we've had deficits of a trillion dollars or more, so adding $5 billion (via the Buffett Rule) is not going to help our (yearly) deficit problem. We need to be looking at the increased amounts we are paying in entitlements, the waste in our budgets that show $50 billion for high-speed rail, the money we are spending on electric cars when Americans don't want to buy them, the money we are spending on mass transit when Americans don't want to ride it. These are the serious things we should be sitting down and prioritizing.
Q: So do you think the president is engaging in political sleight of hand?
A: Yes, exactly. This is being done for political purposes. What we need to do is rationally sit down and think how we can avoid borrowing $4 out of every $10 that we spend. This is a serious situation. We're becoming more and more dependent on foreign borrowing (and) while interest rates are low now, what if they jump up to the norm of 5 percent or 6 percent from the current rate of 2 percent? We're going to have real problems with our budget. We need to figure out how to manage the federal budget like households manage theirs.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.