‘Buffett Rule’ is opening act in Obama-Romney election battle

The Senate won’t vote on the Buffett Rule until next week, but it dominated political conversation in what was effectively the first day of the general election race between Mitt Romney and President Obama. Felicia Sonmez wrote:

As President Obama took to the Rose Garden for an event to promote his Buffett Rule tax increase on the wealthiest Americans, Mitt Romney’s campaign launched a counter-offensive in a conference call with some of the former Massachusetts governor’s top economic advisers.

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President Barack Obama is pressing his pitch for the so-called Buffett Rule. He argues that wealthy taxpayers should not pay taxes at a lower rate than middle-class wage-earners. (April 11)

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Romney economic policy adviser Kevin Hassett, policy director Lanhee Chen and CKE Restaurants CEO Andy Puzder slammed the Buffett Rule proposal and, for a third straight day, renewed the GOP argument that the Obama administration’s economic proposals have disproportionately affected women.

The Buffett Rule, argued Hassett, amounts to a “gussied-up” capital gains tax hike and a policy move that would result in marginal tax rates “well in excess of 30 percent.”

Puzder called the proposal “obviously politically motivated” and said that it would have little impact on either addressing the country’s ballooning debt or on righting the economy.

“The recovery seems to be stagnant,” he said. “The economy seems to be stagnant. And all we’re talking about is a rule that will raise less than one percent of what we’re talking about in deficit spending over the next ten years.”

Chen contended that what is “most startling” about Obama’s record is that women account for more than 90 percent of the job losses that have occurred since Obama took office — a point that the administration disputes.

Obama, he added, needs to stop blaming others and start taking responsibility for the country’s economic downturn.

The Buffett Rule was based on a simple anecdote, but its namesake policy is more complicated. Ezra Klein posted in Wonkblog on “Why everything you think about the Buffett Rule is wrong”:

“It’s simple,” the president said on Tuesday. “If you make more money — more than $1 million a year, not if you have $1 million, but if you make more than $1 million a year, you should pay at least the same percentage of your income in taxes as middle-class families do.”

And that is simple. But it’s not how the Buffett rule actually works.

When President Obama says that “this vote is coming up,” he means that the Senate is planning an April 16 vote on Sen. Sheldon Whitehouse’s “Paying a Fair Share Act.” This is the bill that actually enacts the Buffett rule. But it doesn’t do exactly what Obama says the Buffett rule does. Here’s Whitehouse explaining the legislation to me:

In other words: The “Paying a Fair Share Act” doesn’t mean someone making $1,500,000 will pay at least the same percentage of his income in taxes as the average middle-class family. It means he would pay a somewhat higher marginal rate on the income he earns over $1 million — in this case, on the excess $500,000.

Moreover, that higher marginal rate would only reach 30 percent on income over $2 million. Between $1 million and $2 million, the Buffett rule phases in so as to avoid a sharp “tax cliff” at the million-dollar mark.