In his increasingly desperate attempts to pander to a population that has by now entirely given up on the hope, and barely has any change left, Obama is going for broke (or technically the reverse) by setting the class warfare bar just that little bit higher. This time around, his targets are millionaires, who according to the NYT are about to see their taxes soar. Or not: nobody really knows if the proposed "Buffett Rule", affectionately known for crony communist #1, will impact just millionaires income tax, which incidentally is the same as what everyone else is paying, or, far more importantly, their Investment Income, which is where the bulk of America's wealthy income comes from. Which incidentally makes all the sense in the world: two and a half years after Bernanke has been desperately doing everything in his power to raise the "wealth effect" if only for the richest 1% of the US population, it is, from the government's perspective, time for the taxman to come knocking and demand his share of the capital gains. Yet what is lost in this ridiculous proposal are the unintended consequences, which always follow idiotic decisions arising out of central planning, number one of which would be a market crash as those who have paper gains since the market lows of 2009, scramble to lock in the old capital gains tax rate of 15% instead of holding on to paper profits that could end up being as high as 35% (or more): an event that would cut actual income by over 25% should one wait to cash out! And since 25% is substantially more than anything that Twist and QE3 and 4 could hope to achieve, it is all too conceivable that those holding on to profitable positions will have had enough, and take their profits, likely converting them into physical and non-dilutable assets along the way. As to whether they would subsequently relocate to far more hospitable countries, such as those that don't foment class warfare, and implicitly invite a civil war, that remains yet to be seen.
In the meantime, here is how Obama just made sure his already record low rating is about to plumb depths unseen since the time of Jimmy Carter, via the NYT:
President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.
With a special joint Congressional committee starting work to reach a bipartisan budget deal by late November, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts from Medicare and Medicaid.
Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.
Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise. But his idea of a millionaires’ minimum tax will be prominent in the broad plan for long-term deficit reduction that he will outline at the White House on Monday.
In other words, another typical Obama ploy: let the details be ironed out in the future, but for now we just want to accentuate the class animosity. After all, it is all too obvious that those millionaires, like Buffett, who so desperately want to show their patriotism for America, are in no way aware that the Treasury has this thing called Pay.gov which allows such uber-patriots to whip out their credit cards and pay down America's record debt, in essence voluntarily doing what Obama plans to enforce for everyone else. We are certain that Mr. Buffett will promptly demonstrate to the public his receipt from precisely such a patriotic transaction.
As for the proposal, to say that it is doomed would be optimistic:
The Obama proposal has little chance of becoming law unless Republican lawmakers bend. But by focusing on the wealthiest Americans, the president is sharpening the contrast between Republicans and Democrats with a theme he can carry into his bid for re-election in 2012.
It could also reassure Democrats who have feared that Mr. Obama would agree to changes in programs like Medicare without forcing Republicans to compromise on taxes.
The administration wants such a tax to replace the alternative minimum tax, which was created decades ago to make sure the richest taxpayers with plentiful deductions and credits did not avoid income taxes, but which now hits millions of Americans who are considered upper middle class. Mr. Obama has said that many average Americans could see a tax cut if the system is overhauled, since ending many tax breaks would allow for lower rates while raising more revenues from the wealthiest.
The millionaires’ tax is among several changes Mr. Obama will propose in urging Congress to overhaul the federal income tax code next year, both to raise revenues for reducing deficits and to make the tax system simpler and fairer, said the administration officials, who agreed to speak in advance of the president’s announcement on the condition of anonymity.
The millionaires’ rate would affect only 0.3 percent of taxpayers, they said. That would be fewer than 450,000; 144 million returns were filed for 2010.
That's wonderful: in other words it is very few of the people who, mostly through years of hard work, have succeeded in breaking through the vaunted 7 digit net worth figure. But the good news is that Buffett, instead of focusing on his own share of philantropy, believes that it is his centrally planned duty to enforce his strict lack of moral code on everyone else. Too bad the other millionaires do not have the billions necessary to become one with the TBTFs and know that whatever they put their money in, Uncle Sam will never let it blow up.
If Obama wants to enact a Buffett Rule, how about instead of addressing taxes, said rule makes it clear that capitalism is coming back to replace the crony communist regime we have all grown to love and enjoy for the past 3 years, and individual failure is once again an option, instead of the socialist risk phenomenon that Buffett, more than any one individual America has grown to symbolize and represent?
Furthermore, when the $1MM cutoff fails, which it inevitably will (the rich are rich for a reason: they tend to be, for the most part, quite adept at finding loopholes), and those targeted promptly "offshore" themselves, what will Obama's next "rich" cutoff be: $500,000? $100,000? $25,000? Those on Earned Income Tax Credit? Sooner or later, you know Obama is coming for you.
Lastly, and presumably comically, considering that 41.2% of the "middle class" pays no income taxes, we wonder if this is not just a ploy by a wily Buffett, who knows the loophole in the tax code better than anyone, to make sure that nearly half of all millionaires pay... absolutely nothing.