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View Diary: Obama pushes Buffett Rule passage, cites its spur to growth in weekly address (41 comments)

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  •  Buffett Tax Bill increases deficit $800 Billion (0+ / 0-)

    The Congressional Joint Tax Committee has "scored" the Buffett Tax Bill in the Senate and calculated it will increase the federal deficit by 793 Billion dollars over the next decade because it also exempts 20 million taxpayers from paying the Alternative Minimum Tax.

    President Obama's second proposal - a 30% minimum tax for millionaires - has been scored and found to generate only and additional 47 billion dollars over the next decade.

    The Bush Tax Cuts, which are scheduled to end next year, this year generated a $40 Billion tax cut for the wealthy; and approximately $150 billion for middle and lower income workers.

    The "Buffett Rule" would not automatically become law with the expiration of the Bush tax cuts because the lower rate the wealthy pay is disproportionately generated by a lower rate on long term capital gains.

    There are two primary reasons for a lower cap gains rate: First, a lower cap gains rate encourages investment in the economy and this is viewed as a good thing; and secondly, cap gains are not indexed to inflation.  For example, if you invest $1000 and after three years you sell your investment for $1,200 you've made a gain of $200.  But, because of inflation the $200 you've made is worth less than it would have been if you just spent the money on a vacation up front.  So the lower rate also is supposed to compensate for the fact that inflation is ignored in determining taxable gain.

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