New York Times reporter David Kocieniewski reported on the front of Tuesday’s Business section reported on the op-ed by billionaire investor Warren Buffett’s in Monday’s Times which has gone viral in liberal circles. Buffett called for higher taxes on rich people like him in the name of fairness, claiming his 17% effective tax rate was lower than anyone else in his office.
Kocieniewski, who in January 2005 took advantage of a book by moderate Republican governor Christine Whitman of New Jersey to attack "conservative hubris" and the Republican party's "lurch to the right,” used the flawed static analysis employed by liberal economists to prove that higher tax rates would automatically lead to higher tax revenues, as if raising rates would have no effect on how people invest their money.
With the budget deficit growing and tax rates at a 60-year low, one question will remain near the center of the political debate in the coming months: Should the federal government raise taxes on the rich?
Warren E. Buffett, the billionaire investor known as the Oracle of Omaha, pushed the issue to the forefront this week by urging members of the new Congressional supercommittee on deficit reduction to stop “coddling” him and other affluent Americans and raise their taxes.
In an opinion article in The New York Times on Monday, Mr. Buffett said he paid just under $7 million in federal payroll and income taxes last year, about 17 percent of his income, a lower percentage than anyone else in his office.
Whatever the political viability, his proposal would put a significant dent in the nation’s budget shortfall. Based on projections by the Joint Committee on Taxation, the Congressional Budget Office and the Treasury, the tax increase on all three fronts would generate as much as $500 billion in new revenue over the next decade -- about a third of what the Congressional committee is supposed to cut from the deficit.
Kocieniewski didn’t hit on points raised by David Logan at The Tax Foundation:
Mr. Buffett suggests that increasing taxes on the rich ensures that they pay their fair share. Perhaps, but while the top 1 percent of taxpayers earn 20 percent of the nation's income, they currently pay nearly 40 percent of the income taxes. That's a greater share of the burden than the bottom 90 percent combined....when the top marginal income tax rate was 70 percent in 1980, the rich paid 20 percent of all income taxes. Yet now, when the top marginal rate is 35 percent they pay twice that.
At least Kocieniewski acknowledged a populist counterproposal:
Conservative bloggers and commentators brushed aside the proposals as grandstanding or as a gimmick to usher in a middle-class tax increase, and Pat Buchanan, a commentator on CNN, suggested that Mr. Buffett visit the section of the Internal Revenue Service Web site that accepts donations.
Ira Stoll found these next paragraphs “misleading and confusing to the point of inaccuracy.”
Despite the intense antitax sentiment that has helped the rise of the Tea Party movement since Mr. Obama took office, tax rates in the United States are at their lowest level since Harry Truman was president.
In 1950, the top income bracket had a 91 percent rate; today it is 35 percent. Mr. Buffett called for two new tax brackets for high earners -- for income above $1 million a year and another above $10 million. While Mr. Buffett’s proposal did not suggest a rate, the Tax Policy Center has estimated that a 50 percent tax rate on income over $1 million would raise $48 billion over the next decade.
By following the language about "tax rates" with references to the rate paid by the "top income bracket," the Times makes it sound like today's 35% top federal individual income tax rate is the lowest it's been since 1950. But that's false. In fact, the top federal individual income tax rate that applied to income in 1988, 1989, 1990 was 28%. In 1991 and 1992 it went up to 31%. Today's 35% top rate is a 25%, or seven percentage point, increase over the rates achieved by President Reagan.
Kocieniewski pushed for raising taxes on “the affluent” (who qualifies?) to head off “severe spending cuts” proposed by the G.O.P.
Any of those measures would face intense lobbying and a battle in Congress. Indeed, Democrats were unable to roll back the carried interest tax break or the Bush tax cuts on the wealthy even when they controlled both houses of Congress. But with the prospect of severe spending cuts and another round of bitter deficit negotiations in Washington, proposals like Mr. Buffett’s call to raise taxes on the affluent are likely to become an increasingly urgent part of the discussion.