Other than in the past on a professional basis, when he wrote highly technical articles about IBM's AS/400 computer system, Brian Kelly receives no compensation for his work. Additionally, Kelly has not taken any donations or contributions other than for his US Senate Campaign of 2012. Mr. Kelly has recetly canceled his write-in campaign for the US Senate, and instead he endorses Tom Smith for US Senator from Pennsylvania v. Robert P. Casey Jr. If you would like to donate to the closed campaign to help defray costs, feel free to go to www.kellyforussenate.com and click the DONATE button. Your donations are most appreciated.
Additionally, if you would like to help Mr. Kelly in his efforts to continue to write free patriotic articles and to write additional patriotic books for the good of America, feel free to visit this site or that site to purchase Mr. Kelly's patriotic books. His latest book, Saving America, the How-To Book is available from this site. Thank you.
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Other than in the past on a professional basis, when he wrote highly technical articles about IBM's AS/400 computer system, Brian Kelly receives no compensation for his work. Additionally, Kelly has not taken any donations or contributions other than for his US Senate Campaign of 2012. Mr. Kelly has recetly canceled his write-in campaign for the US Senate, and instead he endorses Tom Smith for US Senator from Pennsylvania v. Robert P. Casey Jr. If you would like to donate to the closed campaign to help defray costs, feel free to go to www.kellyforussenate.com and click the DONATE button. Your donations are most appreciated.
Additionally, if you would like to help Mr. Kelly in his efforts to continue to write free patriotic articles and to write additional patriotic books for the good of America, feel free to visit this site or that site to purchase Mr. Kelly's patriotic books. His latest book, Saving America, the How-To Book is available from this site. Thank you.
Please enjoy the rest of this article.
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I am a TEA Party Conservative and in both of my Pennsylvania campaigns for Congress and the US Senate, I was endorsed by the TEA Party. My concern about the Buffet Rule lies in that it is a very popular notion that the rich already pay a higher rate of taxes than do the middle class. Yet, this is not true. When regular Americans learn that this is not the case, regardless of the legality or the rationale permitting it; it may cause them to take pause. When they earn that Republicans are dead set against evening up the rates, it will make them angry.
Recently Senator Toomey, my Senator from PA gave a speech against the Buffet Rule. In his speech, Toomey attacked the Buffet Rule as another attempt to further tax the rich. He also noted that the poor (46%) pay no tax, and that corporations already pay a huge 35% income tax before their dividends ever get distributed. Toomey noted that this was really a veiled Obama effort to increase the tax rate on capital gains and dividends, which would “upend decades of established law with respect to the differentiation that we have put in place with respect to dividend income versus wage income.” Toomey also suggested that nobody would make investments anymore if the Buffet Rule were enacted.
OK, the Buffet rule per se is a bad thing. I admit that because it is fashioned as a partisan attack on the rich. Republicans have been solid to condemn it as such but the arguments in my opinion are off base, and can easily lead regular people to believe the rich have pulled one over on us since we are not talking about more taxes paid by the rich, we are actually talking about a higher tax rate paid by the middle class than the rich.
Let’s say two people make another $2,000,000 dollars in a particular year–you and Warren Buffet. Yours is added to your normal $50,000 salary; Warren Buffet’s is added to his multi-million dollars in earnings that year. Let’s not count your $50,000 and Buffets several million in our analysis. Let’s just look at the last $2 million. Let’s say that your $2 million came from winning the lottery and Buffet’s was simply the last two million he earned from investments. You more than likely will never win the lottery again whereas Buffet wins this same “lottery” every year.
Is it OK (let’s not use the word fair) in your opinion that you pay $700,000 in tax (ordinary income) on your $2 million and Buffet pays $300,000 in tax (capital gains) simply because his income came from a different source?
If tax rates are to be set up in an equitable fashion, if you pay 35 percent, should somebody who makes more than you pay at least the same rate? It is not class warfare to suggest the answer to this question is “yes.” It is logical that the rates be the same if neither the middle class, nor the rich are to get an edge. Nobody has a right to pay a substantially lower tax rate just because they earn dollars in a different way.
Toomey’s comment about the rich already paying the corporate income tax does change the argument a bit. I believe the solution to that is not to make the personal income tax structure unequal but instead to sharply decrease the corporate tax to 8% or less without completely eliminating it. With a low corporate tax both American Corporations and Foreign Corporations would find it attractive to do more business in America because it would be more profitable. Having the lowest corporate tax rate in the world would be noticed quickly by companies that are interested in larger profits.
Under these circumstances, the Buffet rule makes a little more sense but it is still a partisan ploy. Please see my article in Conservative Action Alerts from mid April, 2012 titled: RRR: Reduce Corporate Taxes to 8 Per Cent.
The fact is the Buffet Rule itself is an Obama convolution, which the most knowing taxpayers with the smartest tax lawyers and accountants in the world, could still scam. Upon inspection, even the Obama team is re-examining their “rule” because it is a dysfunctional creation and it not only may not improve the revenue situation, it can easily make it worse. Obama likes the rule because it makes him feel he is giving the rich the paddle in front of the classroom.
Mitt Romney suggests that nobody should pay capital gains on anything up to $200,000. Now, that is a middle class tax cut for sure, and a good one. I can see the exclusion going to $500,000 and I think that is equitable. After that amount, there would be no capital gains taxes as all amounts above the exclusion would be taxed as ordinary income. No Buffet rule; no convolutions; no cronies permitted to game the system.
By the way, if we postpone the best taxing method—the Fair Tax for a few more years while we nail all of its particulars, I would recommend that everybody who makes at least $100 a year in gross earnings pays at least a 1% tax rate, which I would apply before the graduated tax schedule. After $100.00 in total earnings, regardless of exemptions or form of income, the 1% tax should be applied. After the 1% minimum tax is taken, the normal tax schedule can be modified to accommodate it. Nobody in this scenario can keep more than 99 percent of their income. Out of nowhere, the ninety-niners would become the one percenters.
My point in writing this article about the Buffet Rule is that Republicans should not give Obama the public opinion edge by simply ignoring the fact that there is a gross inequity in the tax rates of the middle class and the capital gains class. Left alone, the Democrats will hammer the inequity in cheap ads aimed at “Republican greed,” until it catches on with the public. Then, whoosh! Obama’s lousy record no longer counts, and he wins again. Smart middle class people, who tune in to the disparity between the tax rates will get angry for sure, especially if we think that Republicans are telling us to simply grin and bear it.
By setting exclusions on income to say $200,000 as Romney suggests for a zero capital gains tax for taxpayers, with all above that amount being ordinary income, eliminates any requirement for a Buffet rule or any other Obama rule, and it again gives Conservatives the upper hand.
Finally, in my article I cite the fact that a Wall Street survey and some analysis by a trusted Wall Street reporter conclude that addressing the inequity caused by the capital gains tax will not affect business investment at all. Again, this is not about paying off the national debt or creating more investment opportunity. It is about all classes of people believing that the tax system is equitable.
Brian Kelly owns his own IT business consulting practice and is a retired Assistant Professor of Business Information Technology at Marywood University; he is married and resides with his wife of thirty-five years in Northeastern Pennsylvania. Kelly believes that limited government spawns both liberty and freedom, and is running for Senate in Pennsylvania where he has been endorsed by the Independence Hall TEA Party.
About Brian Kelly
Brian Kelly is a business owner and former assistant professor at Marywood University; he and his wife, Pat live in Northeastern Pennsylvania. Kelly ran for COngress and for the US Senate in his state and he believes limited government brings liberty and freedom. Brian's 48th book is titled, Saving America, The How-To Book. It is available at www.checkoutking.com and www.itjungle.com.