What's surprising is Mr. Buffett's apparently unquenchable desire for attention at his late stage of life. He seems to exult in media turns as the slightly dotty, ukulele-strumming uncle, a kind of plush-toy version of an animated Fox-TV tycoon. What's dismaying is that Mr. Buffett has reached well beyond his area of expertise to embrace a bad political idea. This Obama-Buffett idea --to soak the rich in the current economic environment -- is so egregiously bad that, remarkably, it appears to be about neither the money nor the principle of the thing. According to a recent Wall Street Journal story, the so-called "Buffett tax" would have hit only 22,000 taxpayers in the most recent year for which data are available. If the taxes on those taxpayers had been doubled -- and assume for the moment that, for the first time in history, the rich would not have mobilized lawyers and accountants to avoid the tax -- the total additional revenue to the government would have been $19 billion. Back in his role as a financial analyst, Mr. Buffett would have scoffed at this "millionaires and billionaires" tax as a serious way to close a trillion-dollar annual deficit.
If it's not about the money, then, it must be about the principle of the thing, right? As far as I can determine, there has been no argument advanced by either President Obama or Mr. Buffett drawn from economic or political principle. They do not bother to contend that the "Buffett tax" will either raise significant revenue or incentivize employers to hire more workers or in any way revive a sick economy. Their argument for the tax-the-rich offensive, rather, has been based on "fairness," which is an emotional rather than an analytical term.
The number that all sides seem to agree on is that the top one percent of earners currently pay 40 percent of all income taxes. It would not be unreasonable to look at that number and say, "Uh oh, that's too high in a society that still pays formal allegiance to the principle of shared responsibility. That's got to be unhealthy for a middle-class economy." President Obama looked at the number and concluded otherwise: to him, 40 percent appears to be intolerably low and the rich should thus be made to "pay their fair share." And what might that be, their "fair share"? Would that be sixty percent? Eighty? One hundred percent? The answer for Obama is that the rich must be made to pay enough so as to give emotional satisfaction to their fellow citizens who pay no income taxes themselves. This is not about economics, remember. This is about the politics of division, the politics of bitterness. Obama is not appealing to our better angels, which is precisely why the angelic Mr. Buffett has been so useful to him.
In the fiscal debate now unfolding in Washington there are two statistical tent poles between which are strung all of the subsidiary arguments about tax policy. At one pole is that stunning 40 percent number. At the other is the fact that fully 50 percent of the 144 million tax filers pay no Federal income tax at all. To me, that is an even more stunning number. What it means is that -- in what we still like to think of as our middle-class society -- half of the middle class (along with a handful of rich guys) pays all of the income taxes while the other half pays none. The Jones family pays, the Smith family doesn't. Forget about economics. By what standard of "fairness" is that fair to the Jones family? President Obama would respond that the folks at the bottom of the ladder deserve a break, but the numbers are clear on this point: the tax filers in the lower half are not, most of them, anywhere near the bottom of the ladder. By definition, they are, most of them, smack dab in the middle and they are in the process of becoming a powerful and self-defining political class. Call them the non-tax-paying class and understand that, almost always, they will support both higher taxes on the other half and increased government services for themselves. Understand, too, that they have centered their natural enemies in the crosshairs of tax policy: not just the few rich but the vastly more numerous savers and scrimpers and people who play by the rules.
Over the course of his first term, and with its implications now marbled through his proposed reforms and early campaign rhetoric, President Obama has made a historic decision to stand for re-election as the representative of the non-tax-paying class. Depending on the outcome of the 2012 election, that decision could play out as farce, one hopes, or as constitutional strain, one fears. Americans have always had a problem with taxation without representation, and, with Obama reinstalled in the White House, the taxpayers would be effectively unrepresented in the Executive branch of the government.”