I just came across these over at HuffPo
Talking Points: The Buffett Rule
- On Monday, the President will lay out a balanced approach to further reduce our nation’s deficit and get our fiscal house in order, based on the values of shared responsibility and shared sacrifice.
- The government must live within its means in order to make the critical investments we need to immediately get folks back to work and put our economy on a stronger footing for the future.
- A balanced approach includes many of the proposals the President has previously discussed — closing tax loopholes for oil companies and hedge fund managers and asking the very wealthiest and special interests to pay their fair share. A balanced approach also includes difficult spending cuts and making adjustments to strengthen programs like Medicare and Medicaid for future generations.
- That is why the President is calling on the Congress to undertake comprehensive tax reform to simplify the system, make it more fair and efficient, and lay a stronger foundation for economic growth. On Monday, the President will lay out principles for tax reform.
- One of the key principles is the “Buffett Rule” — No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. The Buffett Rule applies to the top 0.3% of the wealthiest Americans.
- As Warren Buffett has said, it’s not fair for the super-rich to “pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter.”
- And Warren Buffett is not alone among the very wealthy in paying only a small share of income in taxes.
- 22,000 millionaires — making more than $1 million annually — paid less than 15 percent of their income in taxes in 2009.
- And the top 400 richest Americans, all making over $110 million per year and making an average of $271 million per year, paid only 18 percent of their income in income taxes in 2008. In fact, since the mid-1990s, the share of income paid by the wealthiest 400 Americans has fallen by nearly 40 percent, from 29.9% in 1995, even as their average incomes roughly quadrupled.
- Too many middle class Americans pay more than this — especially when payroll taxes are taken into account.
- The fact is, it’s not fair to reduce the deficit by shifting the burden on the middle class, older Americans, or those who can least afford it.
- Unfortunately, Congressional Republicans believe the burden of deficit reduction should only come from spending cuts to critical programs, including Medicare and Medicaid, and refuse to ask millionaires and billionaires to pay their fair share to get our fiscal house in order and reduce the deficit.
- To grow our economy and create jobs now, we need a balanced approach to deficit reduction.
In 2004 federal borrowing paid a nominal rate of more than 4 percent and a real rate of about 2 percent. Today it pays a nominal rate of a bit more than 2 percent and a real rate barely above zero. This means that the burden of borrowing to pay for disaster relief (or anything else) is much lower now than it was then.
So circumstances have indeed changed since 2004 — but they have changed in a way that makes offsetting disaster relief with spending cuts elsewhere a much worse idea. Cantor’s changing line has moved in exactly the wrong direction.