Charles Krauthammer just did the math to see if our President was simply presenting facts or politicking when he defended the Buffett Rule:

“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. … And that basic principle of fairness, if applied to our tax code, could raise enough money” to “stabilize our debt and deficits for the next decade. … This is not politics; this is math.”

After doing the math using the numbers of the Joint Committee on Taxation, we see that the Federal government would add between $4 billion to $5 billion a year. Krauthammer goes to real math again and finds that if we were to collect that amount for 250 years we still would not pay for what Obama added to the deficit last year alone! You decide if our President was just doing math or playing politics. Do not put words in my mouth…

This is assuming the absurdity that raising taxes on producers would not have a deleterious long-term effect in the collection of taxes from them. History confirms the opposite, when you lower taxes, revenues increase over time. So, only a “Hail Mary” argument would make those $5 billion dollars per year materialize. Obama’s health care farce alone will cost much more and add much more to the debt in those same ten years to make the Buffett Rule become what it really is, a joke.

What about the argument from fairness? Let us, for a moment, use some logic.  If person X makes more money than person Y but pays a lower tax rate than person Y, does that necessarily mean that person X pays too low of a tax rate? Let us see the logical possibilities here. Maybe,

A. Person X pays enough but person Y pays too much;

Or,

B. Both person X and Person Y pay too little but Person Y still pays more;

Or,

C. Person X pays enough but person Y pays too much;

Or,

D. Person X pays too much and person Y too.

As we see, in purely logical terms it does not follow that if Warren Buffett pays a lower tax rate than his secretary then Warren Buffet pays too little. If we place some context to the logical exercise, we can surely discard alternative B, as I do not think anyone would say that person Y pays too little (although some will argue that person X does).

In terms of fairness, it simply does not follow that the fact that the secretary pays more means that the boss should pay more. When we see the secretary paying a higher tax rate we ought first to examine her tax rate. In fact, altering her tax rate will bring a tangible benefit to her while just moaning about the tax rate of her boss will only satisfy a false sense of anger, revenge, or envy but not justice.

As history tells us, again, that lowering taxes on producers increases tax revenue over time, and that lowering taxes on certain investments help the economy, it makes sense (and justice) to offer incentives to producers as to generate greater revenue.  The state is not unjust in providing such incentives that benefit the economy, and employees such as the secretary. If Buffett wanted to be fair (under his preferred vision of justice) he could abstain from applying for such benefits and pay whatever rate he needs to pay, without incentives (yes, what they call “loop-holes”).

These are not automatic benefits, you actually need to decide to ask for these exemptions. Buffett can tell his cadre of well-paid attorneys and accountants to just forget any exemptions and withdraw any legal actions he is now taking not to pay his “fair share.” To benefit from them and then ask for his hands to be forced to be just is passing the buck of justice to an impersonal entity that is not responsible for his actions; He is! It is preferring compulsion and confiscation to voluntary compassion (again under whatever view of compassion Buffett adheres to). But the state is not being unfair and the tax code is not unjust simply because it offers incentives for the expansion of the economy through benefiting certain investments.

As for me, I think that the answer here is alternative D, but that is another can of worms…

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