The Buffett Rule may make good politics, but it doesn't make good tax policy.
It's not hard to understand why President Obama, in gearing up his re-election campaign, has been promoting the proposal named for billionaire Warren Buffett, who famously observed the inherent unfairness that his secretary pays a higher percentage income tax rate than he does.
The proposal, which would require anyone earning $1 million a year or more to pay a minimum tax rate of 30 percent, is attractive because it is simple, does address a fundamental unfairness and places Republicans who oppose it as seeming defenders of the rich at the expense of the rest of us.
But to co-opt a famous movie phrase, simple is as simple does. Any tax policy should have as among its goals addressing the nation's runaway deficit spending. The Buffett Rule doesn't do it. It would raise $47 billion over 10 years, a few grains of sand in the deficit sandbox.
The president's policy also supposes that these super-wealthy Americans, who can hire the best tax attorneys and accountants money can buy, won't figure out how to get around it, with unintended consequences for the economy.
The Connecticut Mirror reports that more than 9,000 Connecticut tax filers report incomes of $1 million or more, ranking Connecticut among the top 5 states in term of impact from a Buffett Rule.
Of course, there will be no Buffett Rule anytime soon. The "Paying a Fair Share Act" was fatally wounded by a largely partisan Senate vote Monday. The 51 to 45 procedural vote failed by nine votes, since 60 are needed to cut off debate.
But now President Obama and his fellow Democrats will have their issue. Democratic Sen. Richard Blumenthal of Connecticut is among the bill's sponsors.
The president's presumed Republican opponent, former Massachusetts Gov. Mitt Romney, offers no credible tax policy either. He pledges a 20 percent cut to income tax rates, saying he would offset the lost revenue by limiting tax deductions, but fails to provide details.
While speaking to high-roller donors at a Palm Beach, Fla., estate Sunday, Mr. Romney offered a couple of examples - limiting or denying the mortgage interest deductions on second homes for high earners, and perhaps also limiting state income tax and property tax deductions as well. In other words, more grains of sand.
Reporters, denied access, heard the Romney comments while listening from a sidewalk outside the estate. Do you think Mr. Romney could work any harder to play into President Obama's depiction of him as out of touch with working people?
Comprehensive tax reform is needed. The federal income tax is outrageously confusing, with $1.1 trillion in tax revenues lost annually to tax exemptions, deductions and credits. Tax break upon tax break has been layered onto the out-of-control system to serve various special interests.
Needed is a far simpler tax code, focusing policies on encouraging job growth, fair competition, home ownership, savings, charitable giving and employer-provided health insurance. The goal should be a progressive tax system that boosts revenues to help narrow the growing deficit gap by dramatically reducing special tax breaks. With such an approach Congress could cut tax rates, but only if serious about largely eliminating and not reopening tax loopholes.
Unfortunately, such a sober discussion is unlikely to take place during the silly season. But with Bush-era tax cuts set to expire in December, perhaps there will be motivation for an honest, post-election tax policy debate.