Despite winning majority support in a 51-45 vote in the U.S. Senate Monday night, the so-called Buffett Rule—an Obama administration proposal to ensure that millionaires pay at least the same tax rate as middle class families—failed to pass the chamber after a determined minority used Senate procedures to prevent the proposal from receiving a straight up or down vote.
As we detailed in this space yesterday, the Buffett Rule is an important proposal restoring tax fairness and providing new revenues in support of a balanced approach to deficit reduction. Its failure suggests a strange choice has been made in who will contribute to closing the nation’s budget shortfall.
Although the proposal would not eliminate the deficit by itself, this approach does a take a first step to closing the fiscal shortfall and does so by reaffirming the nation’s long-standing commitment to the basic American ideal of fairness. It asks for a modest sacrifice from those who can most afford it, and whose contribution has been falling for decades. Taxes on high earners are lower than they’ve been since the 1920s, and taxes as an overall share of the economy are lower than at any time since the Eisenhower Administration. The top 1 percent has also seen growth in their earnings over time while those in the bottom have seen wage stagnation. For these reasons, asking millionaires to make greater contributions as a share of their income relative to those at the bottom makes sense.
In comparison, the proposal’s failure highlights the moral and financial shortcomings of other tax policies currently under debate in the U.S. Congress, including the proposed Federal budget authored by Paul Ryan and passed by the U.S. House two weeks ago. The Ryan Budget finances more than $9 trillion in tax cuts for people making more than $250,000 per year through trillions of dollars in unprecedented spending cuts to programs that aid the most vulnerable, including Medicaid and food stamps.
Given this contrast, the choices in deficit reduction could not be more clear. The Buffett amendment asks those who have benefitted most from recent times of economic prosperity pay their fair share in reducing the deficit, rather than asking the most vulnerable members of our society to close the budget shortfall on their own.