Question: Do the rich pay their “fair share” in taxes?
Non-Answer #1: First, let’s set aside that “fair” is a highly subjective word. Your definition of fairness and my definition of fairness are likely to be different. Fair…to me…would be everyone paying the same percentage of their income in taxes.
Non-Answer #2: Let’s also set aside that the top 1 percent of income earners pay 38 percent of income tax…while nearly half of US households pay nothing in income tax… and whatever effect that has on your concept of fairness.
Answer: And now let’s submit that it’s possible that some millionaires pay less in their effective tax rate than their secretaries, as Warren Buffett contends. If true, that scenario would simply join the many unfair aspects of the monstrosity that is the US tax code. Things like:
- It’s not fair that the tax code rewards homeowners (mortgage interest rate deduction, temporary tax credit) at the expense of renters.
- It’s not fair that people who get their health insurance through their employer aren’t taxed on those benefits while those that buy health insurance on their own are taxed on those benefits.
The point is that all of the unfair aspects of the tax code (and there are many more) are symptoms of a deeper sickness. And the sickness is a tax code riddled with complexities and deductions and exemptions and loopholes.
Obama’s Buffett Rule millionaires’ Alternative Minimum Tax (details of which are not clear) does nothing to cure this sickness. Instead it is simply another line, another page, another section in the 14,872 pages of the tax code. And do you know who knows how to negotiate a complex tax code the best? Rich people and their accountants.
The only way to make the tax code fair is to simplify it dramatically. Do away with all the tax expenditures and deductions and loopholes. Both Jon Huntsman and Herman Cain have suggested doing just that and lowering income tax rates.
Obama has given lip service to simplifying the tax code in the past. The Buffett Rule shows that his primary motivation, though, isn’t to make the tax code more fair or more simple. Rather to add another complexity to go get the rich guys.