While the so-called “Buffett Rule” is the talk of the week, Megan McArdle notes that the White House isn’t pushing a policy that would impose more taxes on Warren Buffett, a guy that could send a gift to the government if he feels he isn’t paying enough: (emphasis mine):
[I]n the White House document that I read, I saw no proposal to set some sort of AMT on millionaires. Instead, it claims to do this, while rehashing a bunch of things that the administration has long proposed: allowing the Bush tax cuts to expire for those making more than $250,000; changing the treatment of carried interest income accrued from capital gains; and altering the treatment of deductions for very high earners. If all of these things were passed, guess who would still pay a lower effective tax rate than his secretary? Hint: his initials are WB, and he lives in Omaha, Nebraska.
If a “Buffett Rule” is such a great idea, how come the administration doesn’t actually propose enacting one?
Presumably for some of the following reasons: it would add complexity to the tax code; it might not be possible to do in a way that would stand up even in our very IRS-friendly tax courts; it would have upsetting effects on the market for various forms of capital, particularly municipal bonds; it might well involve taking away deductions that less well-heeled voters currently enjoy, and they’d freak out. Note that I do not include “Republican obstructionism” on this list, because the existing proposals won’t pass the house; there’s no reason not to include a real hard “Buffett Rule” if they think such a thing is even vaguely workable. From the fact that they didn’t, I infer that they thought the idea maybe had some problems.