A Populist Obama Sets Out to Increase Taxes Paid by the Rich

The measure, which only affects 450,000 taxpayers, is inspired by Buffett

Entrepreneur Warren Buffett is often called the Oracle of Omaha. However, his wisdom does not prevent his ideas from being cursed by many of his colleagues and some Republican politicians.

This Monday, President Barack Obama will take a step that approaches populism. He will do it at a moment of declining popularity, of discredit among his voters (especially the Black, the Hispanic and the young) and with alarming figures on poverty in the United States. Obama will announce his initiative of imposing a tax on the rich as an attempt to reduce the federal deficit. He will do so, inspired by a good friend, the chairman of Berkshire Hathaway.

Obama’s proposal, which has been immediately refused by conservatives, would affect people who earn more than $1 million annually (725,000 euros). His goal is to get the rich to pay the same way that middle-class taxpayers do. The latter are more punished because of the impact of the crisis, with more than 14 million unemployed and an unemployment rate over 9 percent.

To tell the truth, it does not consist of a new tax, but of an increase in the rate of taxation. Obama, who is copying commercial tactics, has named this measure the Buffett Rule. This investor has been repeating for months that the wealthy (including him) do not contribute as much to public coffers as his employees do. Hence the following theory: The secretary contributes more than the employer. Employees are more “punished” because profits from investments quote less than the income from wage earners, Buffett highlights. His speech has had an impact on other countries.

They have not explained the details, but the president’s proposal would affect only 0.3 percent of taxpayers. According to The New York Times, this would mean fewer than 450,000 citizens. This would be an option for funding the $447,000 million project that Obama has launched, a project that has few possibilities of being approved.

President Obama would include his tax initiative in his goal to cut the long-term deficit. After the clash that took place this summer in negotiations to raise the debt ceiling, the bipartisan committee created to study this task in depth will start in November.

Obama then thought about auditing taxes (those who have more have to pay more), which provoked the angry reaction of Republicans. This Thursday, John Boehner, Speaker of the House, warned that “Tax increases are not a viable option for the Joint Committee.”

His colleague, Paul Ryan, told Fox News yesterday that the White House suggestion adds “further instability to our system, more uncertainty, and it punishes job creation.” Senator Mitch McConnell talked about “class warfare,” something that “may make for really good politics but it makes a rotten economics.”

One can deduce that Obama’s proposal, with Congress being under the rivals’ control, has less likelihood of being passed on Capitol Hill. However, with a view to the 2012 elections, it shows the Republicans up and it reassures the Democrats, who are worried about social cuts to reduce the debt.

Maybe the gesticulation is arriving late. His initiative has arisen when a thousand indignant New Yorkers have been occupying Wall Street since Saturday. Some 200 spent the night on a square next to the Wall Street building. One of the most repeated ideas is that the Obama whom they voted for has been kidnapped by power, banks and corporations.