“Class warfare” has been one of the prevailing themes of this election season. While nearly everyone agrees that our federal deficit is in serious need of address, there are sharp divisions between Republicans and Democrats on how best to go about it.
Both parties have acknowledged that the government needs to spend less money. However, the Democrats are alone in believing the problem also requires additional revenue in the form of tax increases.
This was the chief underlying issue in last month’s debate over the “Buffett Rule,” a proposed modification to the federal tax code designed to ensure that every American who earns at least $1 million per year must pay a 30% income tax rate. Presently, those earning over $389,000 per year are supposed to pay a 35% income tax rate, but many are utilizing loopholes to redefine their earnings as something other than income, allowing them to be taxed closer to 15%.
Democrats presented a sound argument in favor of the Buffett Rule. The United States has relied on a progressive income tax code for hundreds of years, which taxes wealthier citizens at a higher rate than those with less income. When multi-millionaire Mitt Romney can get away with paying the same amount of his yearly earnings to the federal government as a fast-food worker who makes $9,000 a year, it is a blatant subversion of the progressive tax. After all, money functions the same no matter how it’s classified by the tax code – if you want to buy a Lamborghini, the dealer is going to sell you the car regardless of whether you pay for it with earned income or capital gains.
