President Obama and the Democrats are finally happy. Liberated from thoughts of compromise with Republicans, they can fully indulge their most lascivious pleasure -- trashing rich people. "We simply cannot afford these special lower rates for the wealthy," President Obama declared in his Rose Garden message Monday.
"Give 'em hell, Barry," cheered Hendrik Hertzberg of The New Yorker. Hertzberg was chipper. Not so of Paul Krugman from The New York Times, the Democratic Party's choleric scold: "The rage of the rich has been building ever since Mr. Obama took office," he glowered. ". . .And among the undeniably rich, a belligerent sense of entitlement has taken hold: It's their money, and they have the right to keep it." Imagine.
The president, brimming with indignation, asserts that hedge fund managers are paying taxes at a lower rate than teachers and firefighters. "How can you defend that?" he demands.
You don't have to defend that, because it isn't true. This synthetic outrage about the taxes paid by the super-rich -- the so-called Buffett Rule -- is the greatest waste of political time and energy in recent memory.
As Stephen Moore, an economics writer for The Wall Street Journal, has observed, we cannot know with certainty what Warren Buffett paid in taxes. (And he is certainly free to write a larger check to the IRS.) But "according to the Congressional Budget Office, middle-class families in 2007, earning between $34,000 and $50,000, paid an effective 14.3 percent of their income in all federal taxes. The top 5 percent of income earners paid 27.9 percent and the top 1 percent paid 29.5 percent. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32 percent of their income in federal taxes in 2005 (the most recent year for which data are available)."
In 2008, Charlie Gibson questioned President Obama about his desire to raise the capital gains tax. Gibson reminded candidate Obama that presidents Clinton and Bush had reduced the capital gains tax rate. "And 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?"
"Well Charlie," Obama replied, "What I've said is that I would look at raising the capital gains tax for purposes of fairness."