The Buffett Rule is back.
In the absence of comprehensive tax reform, the Obama administration is again pressing forward with a plan to require a minimum 30 percent tax rate for the highest U.S. earners.
President Barack Obama heads to Florida today to make his case that millionaires should pay the same effective tax rate as middle-class families. The Senate is expected to consider legislation to implement the tax change as early as next week.
To help bolster its case, the White House is releasing new details today, including data that underscore how warped the U.S. tax code has gotten. The administration's report shows that the 400 richest Americans -- all making more than $110 million annually -- paid only 18 percent of their income in income taxes (excluding payroll taxes) in 2008. The reason is that many high-earners derive large sums of income from investments, which are taxed at lower rates than ordinary income.
The Joint Committee on Taxation has estimated implementing the Buffett Rule would raise $47 billion over the next decade. There's nothing wrong with trying to make wealthy Americans pay their fair share. But as we've said before, the Buffett Rule is a distraction that further mucks up an already complicated tax code. True tax reform would bring in much more revenue.
On a conference call with reporters, Obama economic adviser Jason Furman said tax reform "will be a long and difficult process." That is undoubtedly true. Yet there's little chance the Buffett Rule will actually become law. Even if the Senate passes the legislation, it would face certain death in the House. So why waste energy on a fight that, while worthy, doesn't address the core problem of a Frankenstein-like tax code?
(Deborah Solomon is a member of the Bloomberg View editorial board. Follow her on Twitter.)
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