Intermarkets' Privacy Policy
Support


Donate to Ace of Spades HQ!



Recent Entries
Absent Friends
Bandersnatch 2024
GnuBreed 2024
Captain Hate 2023
moon_over_vermont 2023
westminsterdogshow 2023
Ann Wilson(Empire1) 2022
Dave In Texas 2022
Jesse in D.C. 2022
OregonMuse 2022
redc1c4 2021
Tami 2021
Chavez the Hugo 2020
Ibguy 2020
Rickl 2019
Joffen 2014
AoSHQ Writers Group
A site for members of the Horde to post their stories seeking beta readers, editing help, brainstorming, and story ideas. Also to share links to potential publishing outlets, writing help sites, and videos posting tips to get published. Contact OrangeEnt for info:
maildrop62 at proton dot me
Cutting The Cord And Email Security
Moron Meet-Ups






















« Shocker: If You Like Your Plan, Tough Cookies, You're Going To Lose Your Plan | Main | The Place For Politics: Three Weeks On and MSNBC Still Hasn't Covered Solyndra In A Single Segment On A Primetime Show »
September 21, 2011

The So-Called "Buffett Rule" Wouldn't Even Touch Its Ostensible Target, Warren Buffett

Gee, it's almost like a friend of the administration had a hand in drafting the law proposal vague noodling with stick figures and imaginary numbers.

The very rich pay a smaller effective tax rate than some wage-earning poorer folks primarily for two reasons:

1, the bulk of their income is derived from capital gains.

2, much of their income is derived from tax-free state and municipal bonds.

Let's look at both of those. Capital gains are taxed at a lower rate for a couple of reasons, the most frequently-cited one being that capital investments lead very directly and efficiently to higher economic activity (more jobs, and ergo more tax revenue) and so we wish to encourage these.

The only way to prevent a Warren Buffett type from paying less in taxes on his capital gains is to jack up the capital gains tax rate (or impose an Alternate Minimum Tax on millionaires, which would have the exact same effect).

State and municipal bonds pay much lower rates of returns than other bonds. So why do people buy them? It's not that they're particularly safe -- many corporations have equivalent or better credit ratings, and in fact right now a great many municipalities, and a handful of states, may default.

They pay such low rates, and have eager buyers, because their rates of return, while low, are tax free, meaning the effective actual rate of return is higher. If you earn 3% from a municipal bond but it's tax free, that's the same as (I'm simplifying here; I don't do math) 6% from a corporate bond in which you're being taxed at 50%.

This is, of course, a boon to states and municipalities, who can borrow money and pay dirt-cheap rates of return for it.

Now, if Obama was serious about making sure "millionaires and billionaires" would pay at least, say, 30% in taxes on all income, he could impose some kind of millionaires ATM.

However, doing so would mean that municipal bonds were no longer attractive at such low rates (you'll wind up paying that Alternate Minimum Tax, defeating the whole purpose of holding low-rate but tax-free bonds in the first place) and the cost of investing in capital would go up as well.

What havoc this would play with the economy, who knows.

Fortunately, however, Obama is not, apparently, at all serious about a Buffett Rule. If he were, he might endeavor to make certain the so-named rule would actually hit Warren Buffett.

In fact, he's just calling a series of unrelated and non-Buffet-targeting tax hikes, previously proposed and previously rejected, a "Buffet Rule," and hoping you won't notice.

This is not an economic plan; it's an electioneering plan. This isn't about thousands of jobs, but instead only dozens: Barack Obama's and his staff's.

Thanks to spongeworthy.

Spelling Corrected... "Buffett," not "Buffet" as I kept writing.



digg this
posted by Ace at 02:01 PM

| Access Comments




Recent Comments
Wenda: "Re: concussions: there's also chemo-brain. After I ..."

runner: "If people don't vote, because listen to the "Vote ..."

Eromero: "334 Too many blows to the head. It's catching up n ..."

gKWVE: "I rented the "John Carter" movie at RedBox and was ..."

San Franpsycho: "Yup. When you're young and you bleed from your ear ..."

BourbonChicken: "A Princess of Mars https://youtu.be/5I1ymCjN1iI ..."

Notorious BFD: "Loved Chicago back in the day. What a clusterfuck ..."

Miklos does pretty good, considering: "Every time my memory misbehaves I think about the ..."

runner: "It's no longer Chi-town. It's Chicago Teachers Uni ..."

Polliwog the 'Ette: "You guys wanna see what MAGA in Chi-town looks lik ..."

mila kunis sex tape: "A non-cease spherical of television, radio, and mo ..."

Yudhishthira's Dice: "Every time my memory misbehaves I think about the ..."

Recent Entries
Search


Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
Powered by
Movable Type 2.64