President Barack Obama’s State of the Union speech Tuesday night called for unity he won’t get, but had some concrete proposals Congress should turn into law.
Let’s put the Buffett rule in place now, he urged. Let’s make certain, he said, that anyone who makes $1 million or more a year pays a top rate of 30 percent, just like the rest of the population does.
The rule is named for billionaire Warren Buffett who has loudly complained that he pays at a rate lower than his secretary does because of a warped tax code.
As he spoke, the camera turned to Debbie Bosanek, Mr. Buffett’s secretary, who was a special guest, to make the point.
With the news of Mitt Romney’s 13.9 tax rate on his $27 million 2010 income still fresh in the public’s mind, this proposal for a higher tax on investment income should be seen — and raised.
Why Republicans have decided to arm themselves to the teeth and mount a do-or-die defense of indefensible tax breaks for the super rich, the 1 percent, defies both political and moral sense.
Mr. Romney, by the way, is not only in the top 1 percent, but the top one-tenth of 1 percent. To argue, as is the specious claim, that he and those equally rich, are the “job creators” who must be given a lower tax rate than those who actually work for a living in order to keep the economy going is simply not true. Romney’s millions, for example, are invested by professionals who manage the family’s blind trust. He is not in the job-creating business. Creating and protecting wealth is the blind trust’s goal.
It can be said the president is pushing the Buffett Rule for political points. Well, sure. The math is there. It is good politics to be on the side of the 99 percent.
But let’s also look at the nation’s budget problems. The Bush tax cuts of 2001 and 2003 reduced federal income from Clinton era years by about $100 billion a year. It was Bush who lowered the tax on capital gains and dividends to 15 percent. The rich paid 25 percent on those sources of income when the economy was doing very well in the 1990s and the job-creators were creating jobs. That’s when the budget was balanced.
H-e-l-l-o!
Raising the tax on capital gains and dividends to where it was such a short time ago is not only good politics, it’s good economics, good for the country all around. It shouldn’t be a partisan issue.
THE PRESIDENT followed that plea with a proposal to reward companies that create jobs in the U.S. and to repeal provisions in the tax code that reward those who expand overseas. At present, companies with overseas investments can produce profits which are not taxed in the U.S. While the president didn’t get specific last night, he said he will propose a minimum international tax that U.S. corporations would have to pay on profits made abroad.
“My message is simple: It’s time to stop rewarding businesses that ship jobs overseas and start rewarding companies that create jobs right here in America. Send me these tax reforms and I’ll sign them right away,” he said.
This is not a new thrust. He made a similar proposal when he came to office but it was scotched by lobbyists who claimed it would make their companies uncompetitive on world markets. How Congress will treat a re-run in an election year will be interesting.
HIS THIRD emphasis last night was tougher regulation of Wall Street and the financial firms widely blamed for tipping the economy into recession in 2008. The nation needs, he said, tougher laws against securities fraud, a special financial crimes unit to prosecute cases of large-scale fraud and greater ability to police financial markets to prevent new fiscal crises from developing.
When the president spoke in Osawatomie in December, he said: “Too often, we’ve seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there’s no price for being a repeat offender. No more. I’ll be calling for legislation that makes those penalties count so that firms don’t see punishment for breaking the law as just the price of doing business.”
How Congress will react in the remaining months before the election to this call to crack down on the nation’s financial giants, which are also among the nation’s biggest contributors to political campaigns, is a question that triggers cynicism.
