Bloomberg View: The Flaws in Basel; In Defense of Millionaires

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The Buffett Rule Isn’t Sensible Reform

In the White House Rose Garden on Sept. 19, President Barack Obama proposed a tax increase on Americans with incomes of more than a million dollars. This has become known as the “Buffett Rule,” after Warren Buffett, who has argued for raising taxes on the well-to-do.

It’s easy to admire Mr. Buffett while still opposing a special tax on millionaires. Not because it’s damaging to the economy in and of itself, but because it’s silly. And silly can be dangerous if it stands in the way of sensible reform.

A special millionaires’ tax would affect three taxpayers out of 1,000. Absurdly, it would let people making, say, $900,000 off the hook. We have no idea how much revenue it would bring in—exact figures aren’t available because Obama is leaving the tax’s exact structure to the so-called supercommittee of senators and representatives that grew out of last month’s debt-ceiling jamboree. Graduated rates are important to make any tax system fair: People with higher incomes should pay more. That’s why comprehensive reform, rather than mucking around with the current tax code, should be a priority.

Politically, the Buffett Rule plays right into Obama’s tendency to vilify people and institutions (medical-insurance companies, banks, etc.). The criticism may be appropriate, but the vilification isn’t. There’s nothing inherently evil or objectionable about making $1 million a year. In accusing his critics of wanting to put “all the burden for closing our deficit on ordinary Americans,” Obama casually expelled the rich from “ordinary” society.

Taxes are not a punishment, nor are they an instrument of class warfare. They are, as Oliver Wendell Holmes Jr. famously put it, the price we pay for a civilized society. And that price needs to go up for everybody, not just for millionaires.

To read William D. Cohan on Solyndra and Jeffrey Goldberg on Israel and Palestine statehood, go to: Bloomberg.com/view.