Senator Sheldon Whitehouse (D-RI) is set to propose “The Buffett Rule”, a tax increase on everyone making more than a million dollars a year. The law named after Warren Buffett, the second richest person in the world, is also known as the “Paying a Fair Share Act.” The bill stems from President Obama’s State of the Union address where he brings up the point that it's unfair that Warren Buffett’s secretary, who makes between $200,000 and $500,000 annually and owns two homes, is taxed at a higher percentage than Buffett. To note, Buffet makes only $100,000 annually in salary and the rest from investments, which are taxed at 15%.
Warren Buffett has long called for increasing the tax on the rich. As far as practical macroeconomics, the idea of increasing the income tax during a recession flies in the face of Trickle Down Economics. Even more jarring than the affront to Ronald Reagan’s economics, is the assault on “The Other Buffett Rule”.
Howard Buffett, father to Warren, was a four-term Republican congressman from Nebraska’s 2nd District from 1943 to 1949 and again in 1951 to 1953. He was also the campaign manager for Mr. Republican, Senator Robert Taft’s 1952 bid for President.
A friend of libertarian economist Murray Rothbard, the elder Buffett was in a sense the Ron Paul of his day. He believed in a non-intervention foreign policy, opposing the Truman Doctrine and the Korean War. Buffett was also strongly against the New Deal and the emerging welfare state.
Buffett strongly endorsed the gold standard, he wrote in a 1948 article, “Human Freedom Rests on Gold Redeemable Money”, “Far away from Congress is the real forgotten man, the taxpayer who foots the bill.” He made the case that freedom was intrinsically linked to money and when Congress was free to use deficit spending with paper money, the taxpayer suffered. Buffett was the first Republican to refute Franklin Roosevelt’s case that the unemployed was the forgotten man; to Buffett, the taxpayer was in fact the one forgotten.
During his time in Congress, Howard Buffett called for the elimination of the Office of Price Administration, which imposed price control to stabilize retail consumer prices. He abhorred centralized power and totalitarianism, this included his case against income tax.
Howard Buffett said of the 16th Amendment:
“The last 40 years have seen a gigantic expansion of political power over economic affairs by the federal government. This change is linked by many scholars to the passage of the income tax law in 1913. This law has revolutionized the taxing system in two ways.
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