The rich respond to Obama’s “Buffett Rule” 22 Sep 11

Billionaire Warren Buffett's comments have caused quite a stir.

Once the debt ceiling rancor faded, financial gurus and observers had little reason to think debate on taxing the wealthy would ignite again before Nov. 23. That’s when the 12-member congressional super committee issues its recommendations on finding at least $1.2 trillion in deficit reduction.

Then came President Obama’s announcement on Monday of the “Buffett Rule,” a plan to raise taxes on American households making more than $1 million annually. Suddenly, the millionaires who support such a plan — like Warren Buffett himself — had cause for hope after many months of anti-tax furor and tax hike inaction.

“It’s an excellent policy proposal,” says Wealth for the Common Good co-founder Chuck Collins. “The defenders of wealth and power are going to crazy over this proposal, but our job is to help balance the story. We’re already putting out calls; our members will call their legislators; they’ll organize their peers; they’ll write letters to editors.”

Yet it was also as though the Buffett Rule came with an unspoken corollary: Where proposals to tax the rich come, rhetoric and strong words on both sides of the issue will surely follow.

“The President’s speech today drew a clear line in the sand between patriotic Americans and people who just use the United States as a place to park their planes on the way to St. Bart’s,” says Agenda Project founder Erica Payne, who has worked closely with Wealth for the Common Good. “This issue is not complicated. It is not nuanced. If you care about your country, you pay taxes. If your country is in trouble, you pay more taxes.”

Under the President’s proposal — spelled out in a 67-page report issued by the Office of Management and Budget — the Buffett Rule (named for billionaire Warren Buffett) would mean that “No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. As Warren Buffett has pointed out, his effective tax rate is lower than his secretary’s. No household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay. This rule will be achieved as part of an overall reform that increases the progressivity of the tax code.”

Indeed, the 2,500 folks of high net worth who make up Patriotic Millionaires for Fiscal Strength would definitely agree — though not all of them find the President’s latest proposal exciting, let alone revolutionary, even though it’s sure to meet stiff opposition from anti-tax Republican lawmakers.

“The President’s proposal is way too modest,” says Charlie Fink, an entrepreneur, producer, activist and board member of the Agenda Project. “But it’s a start, anyway.”

Fink takes issue with those who claim that higher taxes on those in his wealth bracket would inhibit economic growth. “I have built and run businesses large and small over the past several decades, through booms and busts,” he says. “Only one thing creates jobs: demand for your products or services. Taxes were never, ever, a factor in my decisions about hiring.”