By: Sonia Shaikh
The law of increasing poverty is the foundation for several bills introduced by the Democratic Party. Incited by Marx’s warning that certain events will form the decline of the middle class, producing a minority of large capitalists and a great proletarian majority, the party has strived to reduce the risk of centralized capitalization and the bankruptcy of small capitalists. Such endeavors include the introduction of a minimum wage, stronger antitrust laws, and active taxation. Unfortunately, this idea of the “the rich getting richer and the poor getting poorer” inherently forms America’s capitalistic infrastructure. Without, there wouldn’t be upward social mobility, nor would America retain its title as a global superpower. These virtues of free enterprise seem much too high a cost to pay, especially in addition any potential breach of true equality. As Winston Churchill wisely recognized, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” Perhaps one of the most controversial and innately contradictory bills addressing such an issue is H.R. 3903, popularly known as “The Buffett Rule”. Although it was officially introduced to Congress in 2012 and stopped via filibuster, President Obama released a budget proposal for 2015 implementing the rule’s fundamentals. American investor Warren Buffet inspired the Buffet Rule, specifically during his public statement in 2011 where he supported increased income taxes on the wealthy. It is founded on the principle of “fair taxation” and the idea that households making over a million should not be allowed to pay a smaller share of taxes than their middle-class counterparts. The Buffett Rule would limit the degree to which advantage could be taken of loopholes and tax rates, requiring those with an income of over $1 million to pay at least 30% of their income, with the exception of charitable contributions. The implementation of this rule has an immense expected payoff. The Joint Committee on Taxation estimates the rule will raise almost $50 billion in 10 years. These numbers have produced great support for the proposition, including the favor of New York Times columnist and Nobel Prize winning economist, Paul Krugman. He claims arguments defending low taxes on the rich fall back on two main fallacious arguments. First, that low taxes on capital gains are a time honored principle, and secondly , low taxes are necessary for economic growth and job creation. An overwhelming amount of evidence indicates the second argument is prone to fault. This is evidenced by the massive job creation and prosperity following tax increases during the Clinton Administration. Unfortunately, it is the first argument that seems to have more weight in dissuading the American public from giving approval. After all, does the Buffett Rule actually abide by the U.S. Constitution? In the Declaration of Independence, the American people are promised “life, liberty, and the pursuit of happiness.” Although it is obvious the rule would injure the economic state of the wealthy, it is important to note it might also infringe on the benefits the less wealthy currently enjoy, thereby inhibiting primary government promises to the American people. With the hypothetical billions raised from its ratification, the theory of the Buffett rule appears promising. However, just what are the hidden costs? Inevitably, the Buffet Rule would result in an increasingly complex tax code, which would need continuous revision. It is uncertain whether any modifications it might undergo along the way would also affect the less wealthy, taking away the very deductions the class currently enjoys. Additionally, the results on the market and economy that appear so favorable on paper have a predicted impact of increasing the deficit by 793.3 billion over a mere decade. Lastly, the Buffett Rule dose not account for other proposals under Congressional consideration that might have an even better predicted outcome. Such proposals include increase in retirement age, amending social security, and minimum wage – just to name a few. The Buffett Rule’s theory of “fair tax” is noble in theory, but prone to several imperfections. Given such conflicting information, we can’t help but wonder if the idea of “fair tax,” an oxymoron in itself, can exist at all.