Most of us will blame the Republicans for not passing a more far and equitable tax code --- or passing a "Buffett Rule" --- but there are many more reasons why the Democrats are equally to blame. In 2009 and 2010 while Obama was president, the Democrats controlled both houses of Congress; but they proposed absolutely nothing about capital gains, which has been in effect since 1921. Instead, they extended the Bush Tax cuts for two more years in exchange for extending unemployment benefits for one more year in a "compromise" with the Republicans.
“For our democracy, we cannot rely on disagreements among rich people.” -
Jonathan Soros, founder of Friends of Democracy
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Ever since the beginning of mankind, those with knowledge carefully protected their information, because knowledge is power, and power rules the masses and/or enables absolute control of the resources.
Like every ruler in past civilizations, the leaders have kept the masses "dumbed down" to retain power and to enrich themselves. Our congress is no different. I believe that with a $174,000 congressional salary (plus their many generous federal benefits), many people run for the paycheck, the inside knowledge, the prestige, and the power --- and not because they wish to do a noble and patriotic service for the country. Former Representative Jesse L. Jackson Jr. is only the latest example.
Yes, senators such as Bernie Sanders and Elizabeth Warren may be the exceptions to the rule, but many millionaires in congress weren't millionaires when they were first elected. A few used insider trading information to buy and sell stocks. When "the masses" discovered this, there was an uproar, and so congress felt obligated to pass a ban...but probably more so, to keep the people from storming the ramparts. But even then, it was only a very watered-down version of a bill.
Mitt Romney and Paul Ryan had ran for power and money; to have the power to lower their own personal income taxes --- like not taxing their capital gains at all. (We earn hourly wages, the top 1% earns their money with capital gains from such things as stocks, dividends, deferred interest and SWAG investments (silver, wine, art, and gold).
And Democrats and Republicans alike, are responsible for the 71,684 pages of loopholes in the tax code, written in legalese --- but yet publicly, they have the nerve to complain about all the loopholes in the tax code --- but then rarely do they ever propose changing it.
Or when they do claim they favor tax reform, it's usually just for show, knowing full well that any proposed bill (for various reasons and unrelated amendments that are included in a bill) will die in congress; but sometimes they propose the bill anyway, to appease their constituents. It's a game they play, to keep themselves in power.
And then after a bill fails to pass, they blame the other party and falsely declare, "Hey, I tried!"
Take the Buffett Rule as one example. The Buffett Rule was not in President Obama's 2013 budget proposal and the White House initially stressed it as a "guideline" rather than an actual legislative initiative. The rule, however, was later submitted for deliberation as US Senate Bill S. 2059 (Paying a Fair Share Act of 2012). On April 16, 2012, the bill received 51 affirmative votes, but was stopped by a Republican filibuster that required 60 votes to proceed to debate and a vote on final passage
Recently Senate Majority Leader Harry Reid had an opportunity to reform the filibuster, but refused to do so.
Currently about $1 trillion a year in personal income is not taxed at all for Social Security because of the "cap", and more than half of that (over $500 billion) is earned every year by individuals as capital gains, which is taxed at a much lower rate (20%) than regular wages in the progressive tax brackets (the top marginal rate being 39.9%) --- and is one of the biggest reasons for income inequality.
Nearly every elected Republican opposed The Buffett Rule. Paul Ryan and Mitt Romney called it "class warfare". In 2006 Warren Buffett told the New York Times, “There’s class warfare all right, but it’s my class, the rich class, that’s making war --- and we’re winning.”
Now there's a new proposal by the Democrats to compromise on the sequester cuts in the American Family Economic Protection Act (AFEPA). The information published for consumption by the general public for Stop the Sequester Job Loss Now Act lacks many meaningful details, but the actual bill is most likely written in legalese.
The bill has the inclusion of The Buffett Rule, which says would impose a minimum "effective" tax rate of 30 percent on adjusted gross incomes above $2 million. The Buffet Rule would start phasing in at earnings above $1 million, and reach the full 30 percent for annual incomes above $2 million.
The bill also includes cutting oil subsidies. (See my post, Solyndra vs. Oil Subsidies)
But this bill won't pass, even though a poll shows that 72 percent of Americans favor taxing the very wealthy at 30 percent. The Buffett Rule will never pass in any bill proposed by any member Congress. But why not?
And why isn't this provision, like most other aspects of any given bill, voted on up-and-down separately, rather than being bundled inside of one big bill? We all know that Congress isn't THAT busy --- and that they spend more time fund-raising than actual legislating.
Usually when legislation is presented on the floor of congress, there are many other things inside the bill that have no relation to one anther, and greatly increases the chances for failure of the most popular aspects of any given bill.
Say for instance a bill comes up (like AFEPA) with The Buffett Rule in section one, and has another provision in another section that cuts taxpayer subsidies to big oil companies. A member of congress (usually a Republican) may be vehemently opposed to both very popular provisions, but can SAY he favors one, but will vote against the overall bill because he doesn't agree with the other provision (he/she then has political "cover".)
A Republican can SAY they are in favor of The Buffett Rule (which we'll know to be a lie), but vote against the entire bill because their biggest campaign contributions might come from big oil companies, and they want to preserve the oil subsidies.
Another downside for not voting on issues separately is, members of congress could vote according to what is best for their largest campaign donors, rather that what the majority of the people want, and might even vote against what they might personally prefer, and despite what their constituents would have preferred, vote in favor of their biggest campaign donors. (They ran for the paycheck, not for their service to the county.)
If members of congress spent more time separating the various different issues from the bills, and voted on each one independently of the other, we would all have a much clearer understanding of who is best representing our particular concerns; and members of congress wouldn't be able to point their finger at someone else and blame them for any particular bill failing to pass (they always tend to use excuses and convoluted reasons for voting the way they do...keeping us "dumbed down").
When Harry Reid and the Democrats refused to reform the filibuster, that didn't help either. We should know exactly who rejects any particular legislation and hear their reasons why. This might be another reason why The Buffett Rule, just like many other popular bills, never passes in congress. Congress (on both sides of the aisle) probably LIKES the tax code just the way it is, and wants to keep the current status quo.
This congressional game of Three-card Monte has been going on for decades, and is played by both political parties.
The very obvious and most simplest solution for real tax reform would be, rather than impose a Buffett Rule, call capital gains for what they really are...personal income...and just tax everyone's income (whether it be from wages or capital gains) according to the current progressive tax rates that are already in place...just like a bartender's tips are currently taxed according to their annual adjusted gross income.
Another case for tax reform: Eduardo Saverin, one of Facebook's co-founders, renounced his U.S. citizenship to avoid paying income taxes on the capital gains he earned from his Facebook stock. Now Facebookis getting a multi-billion-dollar tax cut for the cost of executive stock options and share awards...can you say "un-frigging-believable!!!
Republicans and media pundits are saying the rich just had their taxes raised. Yes, they went up a little (capital gains went from 15% to 20%) but the low tax rate on capital gains still means they are not paying their fair share --- 20% is still much less than the top marginal rate of 39.9%.
Even after the last nine years of Bush tax cuts on capital gains were allowed to expire at the beginning of the year, Warren Buffett's secretary will still be paying a higher tax rate than her boss.
Related Article: Mellon: The Republican Banker Who Rigged the U.S. Tax Code