Why the Buffett Rule Would Kill Our Economy

First off I want to say how much I love debating the Buffett rule with someone who, A. Doesn't even know what it is (yet has an opinion) and B. Doesn't understand the stock market, investing, or where rich people make their money.


I will break down the Buffett rule in its simplest form. Currently Capital gains are taxed at 15%, the Buffett rule would effectively double that percentage. Here is the basic definition of a Capital Gain A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.


Why is this a bad thing you ask? Especially while most people support raising taxes on the rich? I will explain.

Lets say I (Joe) am make $10,000,000 per year and $9,000,000 of it comes from capital gains, and $1,000,000 is my salary. I would be taxed 30% on my salary and 15% on my capital gains.

Taxes Owed
Salary = $300,000
Capital Gains = $1,350,000

Total Taxes Owed = $1,650,000

Currently, our capital gains tax is competitive with the rest of the world. Meaning the people that make their money off of investments have an incentive to continue to invest in companies within the US, and continue to buy and sell stock in companies. This is essentially what John McCrap failed to show the average Joe when he talked trickle down. If you have a job, it is most likely because some rich person took an investment risk in the guy who started the business you work for.
Part of the decision to take that risk is the return it might yield and at what amount that return would be taxed.

If the Buffett rule went into play, it would put our country at one of the highest capital gains tax brackets in the world (I would pay $2,700,000). To an investor that banks his personal income on investments, that means one thing. Sit on my investments, and start investing out of country. The government cannot tax me on unrealized gains, and American companies do not benefit from my investment money going overseas.

If I sit on the money, not only is it not helping the economy by not circulating, and getting taxed in other areas. The government is not getting any of the taxes at all.

Not to mention, Buffett is the largest tax hypocrite of all time, he is currently in a tax battle over billions while a tax bill with his name on it is being pushed by our President. All in an effort to keep up the smoke screen that is covering his record. Keep in mind that taking 100% of the income of those he attacks still would not cover the deficit he proposes. His own party will not vote for his budgets, nor will they even create one of their own. Dems cannot face the truth that entitlements can not come from the government. But I digress. :-)

We are almost at the point of 50%. Once 50% of the people are on some form of welfare it will be the end of the American dream. Keep in mind their will still be rich people. There will no longer be a middle class.


How about a flat tax of 9% across the board. Lets make the US tax code one page long (front and back if necessary) If you have income weather it be one dollar or a billion you owe 9% on that money. That is the only fair tax.
Or two pages, page two is the active duty military flat tax. Any person receiving pay during active military duty oversees pays 0% on their income. If they are at home they pay 2%.

Why it is so easy for the majority of Americans to think that is ok, is simply because they covet the rich. They think its ok to spend everyone else's money.