by Maisie Allison
The most legitimately important loophole that allows people to avoid tax on unrealized capital gains is that when you die, your assets will have their basis “stepped up” to their value at your death, meaning your heirs avoid tax on all the gains during your lifetime. But the solution to that problem is to eliminate the step up in basis, not to introduce the Buffett Rule.
Ezra Klein differs:
The Obama administration has released a series of deficit-reduction proposals that cut or raise around $4 trillion over the next 10-12 years. Their 2013 budget, for instance, included $1.5 trillion in specific tax increases, and trillions more in spending cuts. The Buffett Rule is one particularly high-polling policy among many. Meanwhile, it’s $47 billion more in loophole-closing than either Ryan or Romney have offered.
Philip Klein counters:
As Vice President Joe Biden tweeted earlier today, "I’m for the Buffett Rule because it just makes sense. Like the President says—it’s not class warfare. It’s math." In reality, it raises just $47 billion over a decade, or less than one percent of the $6.4 trillion in projected deficits during the same period under Obama's budget. By pointing out this actual math, all critics of the "Buffett rule" are doing is showing that the proposal is, in fact, more about class warfare.
Andrew Leonard also sees the Buffett rule as a political half-measure:
It’s a rhetorical measure, designed to rev up his base and capitalize on populist resentment. That’s all well and good in an election year, but if Obama really wants to make a promise that means something, he should be shouting from the top of every hill and mountain how this time he really is going to let the [Bush] tax cuts expire … vowing to let the Bush tax cuts on the wealthy expire means something. Pushing for the “Buffett rule” does not.
Indeed, the rule would have a tiny impact on the deficit. But despite the crass demagoguery, it presents a framework for broaching the revenue debate even if the goal should be radical tax reform. As Jared Bernstein concludes:
Any time we can close a tax loophole and generate both more fairness and any level of fiscal improvement we should do so. And according to the official scorekeepers, compared to the revenues we expect to collect under current law, with the Bush tax cuts sunsetting as planned at the end of this year, it raises about $50 billion. Compared to current policy – if we leave the tax cuts stay in place – it raises $160 billion. … [T]he typical middle-income household pays about the same federal income tax rate (13 percent), as 10 percent of millionaires ($1-10 million, 15 percent), multi-millionaires ($10-100 million, 14 percent), and multi-multi-millionaires ($100 million +, 12 percent). So, yeah … I’d say that until we can overhaul our tax code, we need the Buffett rule.