Warren Buffett has proposed a minimum tax for the wealthy in the November 26, 2012 edition of the New York Times. It is reprinted in the Omaha World Herald on November 28, 2012. The proposal is for a minimum tax of at least 30% on all income over $1 million.
Mr. Buffett’s proposal is amazingly similar to Mitt Romney’s tax proposal during the campaign. Mr Romney’s plan is cut everyone’s tax by 20% starting from the Bush tax rates which top out at 35%. This means that Romney’s top rate would be 28% and he would limit deductions to an absolute dollar maximum of $25,000 or so. A very high income person would pay 30% according to Buffett and very close to 28% according to Romney. The difference between 30% and 28% is minor! Shall we compromise at 29%?
Mr. Buffett’s purpose is to make the tax code more equitable and Mr. Romney’s purpose is to stimulate the economy with lower rates. It sounds like we may be able to accomplish both goals at the same time! Growing the economy, and thereby increasing tax revenue, is essential to drastically shrink deficit spending in order to stabilize the national debt. Growing the economy is also the best way, the quickest way, to create more jobs and lower the unemployment rate.
With the Buffett and Romney tax proposals so similar, perhaps Congress and the President can agree on a plan for pro-growth tax reform. This will be a big step in the right direction. In fact it is half the battle to solving our economic and fiscal problems. The other half, of course, is to make spending cuts. Progress in this area will be far more difficult and contentious but just as important, if not more important, than tax reform. The (Republican) House of Representatives will have to show a lot of leadership to make progress in this direction.