Thomas J. Lucente Jr.: Obama loses latest battle in his class war

The latest salvo in the class war President Barack Obama is waging fell far short of its target. However, the economic division he has spent the last three years trying to sow is taking root.The latest attack on the rich came with the Buffett Rule, named after billionaire Warren Buffett. The Buffett Rule, officially known as the Paying a Fair Share Act of 2012, would have mandated a minimum 30 percent effective tax on those earning more than $1 million. The rule was so named because Buffett made the ludicrous claim that his secretary pays a higher effective tax rate than he does. Of course, that was either ignorance, which I doubt, or a flat-out lie. It ignores the fact that capital gains taxes are a form of double taxation, it ignores the 35 percent corporate tax rate, the highest in the world, and it ignores the confiscatory estate tax that will take 45 percent of the Buffett estate when he dies.The Buffett Rule would have raised, get this, $47 billion from 2012 through 2022, less than $5 billion a year, according to a March memo from the Joint Committee on Taxation, a nonpartisan body that estimates tax changes for lawmakers. Meanwhile, the projected federal deficit for this year alone will be $1.2 trillion.Now, how can any sane person think the Buffett Rule makes economic sense?It is even worse. Obama wanted the Buffett Rule to replace the Alternative Minimum Tax. The Joint Committee on Taxation calculated that the Buffett Rule with the repeal of the Alternative Minimum Tax would increase the deficit by $793.3 billion in the next 10 years.Obama's support of the Buffett Rule was based on political, not economic, reasons. The president should try to help the economy, not score class warfare political points.During the 2008 Democratic primary, Charlie Gibson asked Obama about his support for raising the capital gains tax from 15 percent to 28 percent.“Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent,” Gibson said. “And George Bush has taken it down to 15 percent. ... In each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?”To which Obama replied, “What I've said is that I would look at raising the capital gains tax for purposes of fairness.”Fairness? What about economics?Accepting a decrease in revenue for “fairness” is the height of irresponsibility.On Monday, the Buffett Rule passed 51-45, but a Republican Party filibuster fortunately killed the bill.Of course, Obama and Senate Majority Harry Reid, D-Nev., knew the Buffett Rule was a nonstarter based on the political makeup of the Senate. Even if, by some chance, it had passed the Senate, the Republican-controlled House would have never let it come up for a vote.But this was the idea.The Senate, under Reid's leadership, has introduced one tax-the-rich scheme after another, knowing they will fail. On Tuesday, Reid said the Senate would not even propose a budget for 2013. Obama's 2012 budget was killed by the Senate 97-0.The last time the Senate passed a budget was April 29, 2009. Since then, the federal government has spent about $10 trillion, adding more than $4.1 trillion in debt.While Obama's class warfare strategy is killing the U.S. economy, it might be paying off for his political agenda. According to a recent Gallop poll, in 2008, 27 percent of low-income Americans said their income taxes were not fair. Today, it has climbed to 38 percent. Ironic, considering those Americans probably pay no federal income taxes at all. An analysis released with the poll suggested this increase is because of Obama's class warfare rhetoric.The real answer to the tax problem is to go to a simple flat tax or a consumption tax. But don't hold your breath waiting for that. After all, that would eliminate a major weapon in Obama's class war.