There were people - and I think there still are people - who think Barack Obama is a cut above other politicians. He's an exceptionally intelligent person who promised to free us, as he repeatedly says, from "false choices" and to usher in a new era of progress. Hope and change. Yes we can.
He is a smart man but it turns out he that he is given to heap demagoguery.The Buffet rule is an example.
We all know the facts. It is simply not the case that rich people, as a class, pay a lower effective tax rate than the middle class. In fact, they pay a higher rate. .
Now, it is true that, depending largely on how one earns one's income, a wealthy person can wind up with a lower effective tax rate than people who earn much less. But that is not so much a function of tax shelters and loopholes as it is a product of a deliberate policy choice - one that has a long pedigree and that is common in the developed world. We tax capital gains and dividends at a lower rate than ordinary income.
There are many reasons for this. There is a sense in which taxes on capital gains and dividends can be seen as "double taxation" since corporations typically pay tax on their income before paying dividends to shareholders. Capital gains often arise from the sale of corporate stock in which the price represents earnings that have often been taxed. Capital gains are, moreover, earned over time such that the gain can have a significant inflationary element. (This can, however, be the case for certain types of ordinary income as well.)
There is also a fair amount of evidence that raising capital gains rates reduces revenue because it triggers tax avoidance and deferral strategies.
Having said all that, I actually would be open to taxing ordinary income and capital gains at the same rate as long as we indexed the basis for capital assets. Maybe one can even make a case that the current capital gains rate (15%) could be raised a bit without causing disproportionate economic harm.
That's a debate that we could have but it is not the debate that the President has called for. Instead he wants a new form of Alternative Minimum Tax which is almost always a mess. It results in marginal rates that are opaque and often steep. Even if you want to raise taxes on the rich, it's the wrong way to do it. Economists of differing views think it's bad policy.
And it will bring in very little money.
But it polls well.