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'Buffett rule' will not hurt US economy

2012-04-15 22:13

Washington - A proposal to impose at least 30% income tax on Americans making more than a million dollars a year will not hurt the economy by stifling investment and growth, US Treasury Secretary Timothy Geithner said on Sunday.

The so-called Buffett rule, a tax plan proposed by President Barack Obama to reduce income inequality, has been vigorously criticised by Republicans who argue it will discourage people from starting new businesses as it will raise capital gains tax and taxes on investment.

"No credible basis for that argument, in my judgment," Geithner said on CBS's Face the Nation.

The plan named after billionaire businessman and Obama supporter Warren Buffett who has noted that he pays a lower tax rate than his secretary.

The United States is saddled with a huge budget deficit and there is no consensus on how to address the problem. Geithner said that although the government has committed to cut $2 trillion in spending, more needs to be done.

"But we do not see a feasible, economically sensible or fair way to do this and still preserve room for investments in education, in infrastructure, help protect the safety net, help strengthen Medicare for seniors, without asking the richest Americans to pay a somewhat larger share of their income in taxes," he said.

"And we think the most effective way to do that is to limit their ability to take advantage of deductions and exclusions, and that's what this rule would do."

There was no plausible path to tax reform that did not recognise that the economy cannot afford to extend these tax cuts for wealthy Americans, Geithner said.

"We just can't afford to borrow to do it any more, and we have to preserve room to these other priorities," he said.

60% favour new rule

The Democratic-controlled Senate plans a Monday vote on the Buffett rule, one day before the US tax-filing deadline.

Americans favour the rule by 60% to 37%, according to a Gallup poll released on Friday.

While the proposal has almost no chance of overcoming Republican opposition in Congress, it will provide ammunition for the November elections as Democrats say their rivals are more concerned with protecting the wealthy than addressing the concerns of less affluent Americans.

Geithner said the Obama administration was going to keep pushing on the rule and he was optimistic that it would pass through Congress.

"They've resisted all the things we did to take the economy out of the crisis and restart economic growth. Those are the right things to push for," he said,

"If we don't push for things that make sense, then we're not governing - that's our responsibility in this case. And again, you're going to find broad support for this across the American people because there is no other way to meet the broad challenges of the country."

Comments
  • cvh23 - 2012-04-15 23:02

    This is truly the final nail in the coffin of the american economy...

      Robert - 2012-04-16 07:31

      its all funny money anyway - Not backed by the bullion. Give 30% of something worth nothing and becomming more nothing by the day is not a bad deal. Because if it colapses you whish you've paid 40%. The value of money in the world is electronic. Ask any Bank to pay up what they owe you or you them in bullion. (Gold Bullion)- Resources are the real hard value like gold (now in doubt) silver, Oil, Platinum etc. Like buffet says why do I pay less tax than my peirs. If you are a smart business man this should not discourage you. Why do people become business people and start the same playing Field as others. To pay less tax? That cant be it.

      Fidel - 2012-04-16 09:21

      Fractional Reserve Banking! Creating wealth from thin air.

  • Mady - 2012-04-16 03:20

    Wealthy Americans should want to endorse the Buffett rule just to build a better America. How can you be against leveling the economic playing field unless you are driven by nothing more than greed?

      Mark - 2012-04-16 07:49

      Mandy the playing field are definitely in favor of the poor - 10% of Americans pay 70% of the tax -so they are paying more than their fair share to quote obama. 50% pay nothing and in fact receive benefits to fund their illegitimate offspring and drug dependencies.

      Mark - 2012-04-16 08:11

      They need to make a tax/welfare system that punishes immoral behaviour; not one that rewards it. People should get less money for every kid they have and less money and healthcare for smoking, drinking or engaging in risky behavior. Welfare should set a bare minimum of existence and should be an unpleasant experience to spur people out of it. They want to enjoy tobacco and liqour? They want to have 10 kids, a flat-screen TV and an iPhone? Then get a job that supports that kind of lifestyle. Until that time they should be a ward of the state, live in state run bunkers on a strictly regulated state supplied diet and be forced to participate in a state work program. These hypocrites want to enjoy the benefits of capitalism while being funded by socialist polices, let them 'enjoy' the latter, but we shouldn't let them drag the rest of us into it.

      Fidel - 2012-04-16 10:22

      @Mark How much of the pie are the 10% taking?

      Denny - 2012-04-16 10:26

      @Both Marks - spot on. Also something to consider about "Oh so concerned about the poor" Buffet - Berkshire Hathaway companies received around $90 billion in TARP funds from the government. The company itself owed back taxes from 2002 to 2009 at the time he started calling for his "rich" tax. The US government also accepts voluntary payments. He is either currying favour or grandstanding. Take your pick. The US is in a "reasonably" good position in that they have the infrastructure and human capital to turn things around. They also have relatively easy places they could cut government expenditure (massive military spending/bases around the world) if they can get their paranoia under control and take some power away from special interest groups.

  • Mark - 2012-04-16 03:59

    This is ridiculous... punish the successful by taking away their money, and reward the failures by giving them a handout. There are many unfortunate cases that need to be helped, but this is best achieved by private charity and voluntary donations. There are many other people that refuse to work because they come out better leaning on the taxpayer, or are just too lazy to go in for the whole 9 to 5 regime. When the government takes from one section of the population by force (pay 30% or go to jail) then all that flows from that forceful act is tainted. What you have here is that 'A' and 'B' take from 'C' to give to 'D', but 'A' and 'B' take a little off the top for themselves.

      Fidel - 2012-04-16 09:29

      Spoken like a true Capitalist. I suggest you try to empathise with peoples' plight just a bit more otherwise you risk coming across as a heartless bastard preying on peoples' vulnerability in a rigged market.

      Mark - 2012-04-16 10:49

      You say that as if I should be ashamed. Capitalism is not perfect, only a fool would try to defend that position. Emotive responses to real issues solve nothing. It's this feelgood baloney that has led us down the garden path to where we are funding people to destroy their own lives - because insofar as they fail, money is given to them and insofar as they succeed that money is taken away. Why not go and watch some Thomas Sowell, Walter E. Williams and Milton Friedman videos on Youtube? Then you may actually have some points to discuss, rather than implying that I am a 'heartless bastard'.

  • Smell - 2012-04-16 05:48

    This would only be a good thing if it was coupled with drastic cuts in government spending. But trust the self-titled "progressive" Democrats to squander this extra windfall with mismanagement and useless programs. And trust the Republicans to favor the rich, while paying lip-service to making significant cuts in spending. It would take huge gonads to raise taxes and decrease government spending to the degree that would restore fiscal health. The bitter medicine required would probably alienate all citizens. And that is where democracy reaches the tipping point to failure. People always blame the politicians, while the politicians are just reflecting the collective greed of all the voters. It is sad, but like Greece and other tottering countries in Europe, the US is going down if it cannot muster the courage to raise both taxes and drastically cut spending.

  • boramk - 2012-04-16 08:35

    Oh wow, it must hurt so much to pay 30% of your millions as tax, life must be so hard. But probably not as hard when it was 91% in the 1940's.

  • Nathi - 2012-04-16 10:42

    30% is a walk in the park. They must get over their high horses. I pay 36%.

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