What Difference Does Obama’s “Buffett Rule” Make?

President Obama and Democrats have been talking up the Buffett Rule (a minimum 30% tax on people making over $1 million per year) for some time now. So what kind of difference does the Buffett Rule make?

I’ve seen revenue estimates between $30 billion and $40 billion over 10 years, but what kind of difference would that make in the scope of government finances?

Not too much.

79 comments

  1. jarjar says:

    So it reduces the deficit. Why are teabaggers complaining? I thought deficit reduction is a good thing.

  2. thekidslepthere says:

    What an appropriate name to make such a comment, “jarjar”. Named after the 21st Century Step and Fetch It star of Star Wars Episode 1. I’m surprised that someone so dim witted can even type out a comment. Saving $3 billion a year in the grand scheme of things is nothing.

  3. Matthew Vines says:

    You can’t say it’s nothing. It’s not much, but not taking positive steps because they don’t solve the whole problem is ludicrous. How are we ever going to overcome a multi trillion dollar deficit if we aren’t willing to take small 30-40 billion dollar steps to do it. Is this a proposition a game changer, certainly not, is it helpful, sure.

  4. JohnInCA says:

    “You can’t say it’s nothing. It’s not much, but not taking positive steps because they don’t solve the whole problem is ludicrous.” – Matthew Vines

    Well, Matthew, it is nothing because this is Obama’s BIG idea about deficit reduction. This is it. He has made this such a major part of his speeches that the average person has the impression that this policy would go a long way to helping solve the deficit problem. In reality, it amounts to not even a drop in the ocean. Then he has the nerve to criticize Paul Ryan who actually proposes serious solutions. Pathetic.

  5. […] Exit question: In honor of O’s attempt to reduce women to a monolithic interest group based on gender, here’s one for the moms out there. How do you like it that this chump keeps dropping anvils of debt on your kids’ heads and then, when asked to stop, the best he can do is offer this pathetic travesty? […]

  6. RightKlik says:

    Obama says of the Buffett Rule: “That’s how we’ll make this country a little fairer, a little more just, and a whole lot stronger.”

    I’ve run the calculations. Obama is mostly correct. With the Obama/Buffett rule, the country is 0.01% fairer, -0.001% more just, and 0.00% stronger.

  7. Dan says:

    Yeah, please make me another graph showing how much difference cutting NPR, PBS and Arts funding makes. Because that’s a Republican populist nonsense priority.

  8. Adam_ME says:

    Please tell me Matthew and Jar Jar are joking. The reason we say “it’s nothing” is because if you listen to Obama’s endless campaign speeches, this is his “balanced approach” to deficit reduction. Tax hikes. But as we can see, they do virtually nothing to tackle the deficit. So where does he eliminate the other 98% of it? He refuses to cut spending. He won’t work on a budget with Harry Reid in the Senate. He won’t offer a plan to reform entitlements. He won’t budge on Obamacare which is already now projected to cost double what the CBO originally said. What does he propose to do now that we know millionaires and billionaires paying “their fair share” makes virtually no difference?

  9. […] Thanks goes to Math­ias Shapiro, best known as the “10,000 Pen­nies Guy” for either find­ing this or putting this together. […]

  10. Lt. says:

    Matthew and Jar Jar are serious. This is what they’re proposing as “real change.” No cuts in spending, which is incurring the massive debts (they want more spending). Just punitive taxation on people they don’t like, because it makes them feel better personally.

  11. TubbyHubby says:

    To JarJar et al: Ok, let’s adopt the “Buffet Rule” for fairness. You win. Then, let’s decide to call any year after year increase in spending an increase in spending. So, we just stop increasing spending by that honest defintion. You are not allowed to scream “Draconian Cuts!!!” because we don’t increase at the rate you desire. Deal?

  12. G-ride says:

    Dan, cutting funding to those programs are just one of many things republicans want where as democrats believe the Buffet Rule is the end all be all for solving all issues. So you see, you prove yourself to be just as dumb as every other liberal on this planet.

  13. Keyser says:

    To explain jarjar’s thinking:

    If you are behind $10,000 in your house payments jarjar thinks paying the bank $100 solves the issue and no more worries about the house….because after all you paid off part of the debt.

    This is liberal thinking and this is why the country has fallen apart. Liberals yearn for the destruction of the country.

  14. Bryan says:

    One other major difference between R plans and this plan, is that cutting anything is a 100% guarantee that you will reduce the deficit. Raising taxes is only a calculation, or guesstimate. It assumes that raising the percentage occurs in a vacuum where individuals and businesses won’t react to the increase, or be negatively impacted by it for that matter. My lovely state of Illinois was planning on saving itself without cuts only increases in taxes, then our state had the worst 2011 of any state in terms of unemployment. And they wonder why? Liberal don’t think out these things, they feel them.

  15. HadEnoughAlready says:

    Actually, to give liberals credit, I don’t think they all want to destroy the country. They want to keep striving for their Utopia but expect everyone else but them to sacrifice for it and pay for it. Because, after all, having to say “no” or having to cut back or do without, or making everyone pay at least a little something is just too damn hard.

  16. Jon says:

    Keyser said, “To explain Jarjar’s thinking…”, and, “Jarjar thinks…”, and, “This is liberal thinking…”

    Liberals don’t think (or do math). They’re freeloaders and only understand procrastination.

  17. Thomas Jefferson says:

    JarJar – besides getting everything else wrong – misses another point:

    Yes – it saves an infinitesimally insignificant amount in the Federal Deficit,

    But how much Cost does it ADD as a result of the Jobs and Opportunities it would KILL, since these millionaires will not have that money to INVEST in them?

  18. Pitbullll says:

    Indeed, Mr. Jefferson. Are libs really this daft? You can even show them a picture and they still don’t get it? Reeeally?…. This is like Lucy, Charlie Brown and the football. CBO, Treasury/IRS and other government statistics bear out that when US taxes are raised, revenues fall; and vice versa. We are clearly behind the “sweet spot” of the Laffer Curve. It is fact that three times during the Bush presidency, the IRS announced “greater than ever before” revenues. Liberal pols posit these absurd tax increase proposals with their static assumptions and grossly over-projected income streams that ultimately produce lower tax revenues every time. Every time. You see, the eevil rich have money. And they can move their money anywhere they want; like offshore into controlled foreign corporations beyond the purview of US taxation. Or they can and will reduce their consumer spending. Think that might effect the US consumer spending driven economy? Or they can hire accountants and lawyers to set up more tax efficient corporate structures for their businesses or create estate planning devices to shelter income or defer income into future periods. Or the working rich – those who own or run businesses, particularly small businesses, will cut their costs when faced with higher taxes. For the libs: taxes are a cost of doing business. But they pass these costs on to consumers through the sale of the product/service. They wil invariably cut their highest overhead cost which often is payroll. Yes, they will cut jobs. You don’t need a Harvard Law degree to figure this out, folks. Conservative economic policies grow the economy, create jobs, wealth and prosperity for all. Liberal ones don’t; they only restrict the economy, grow government, redistribute wealth and reduce standards of living for all; that is, except for the politically connected few. If you don’t get this, you don’t get much. Liberalism will destroy us… but only if we let it.

  19. Ariel says:

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  20. lee says:

    Cutting funding to NPR and the arts is just smaller parts of a more ambitious agenda proposed those who are serious about shrinking government. Ron Paul would ax “Department”s of anything

    The liberals will laugh off cuts to NPR and foreign aid as insignificant, then start ranting about “social darwinism” to even the perception of cuts to massive entitlement spending like medicare. But the Buffet rule is golden, supposedly.

  21. Chris says:

    Again, we are missing the point. No amount of tax increase will solve this problem (or even make a dent for that matter). Even something so trivial as limiting ourselves to the budget of 4-5 years ago (adjusted for inflation) is off the table.
    Face it. Our “rulers” will never cut spending. It is the only way. There is no middle ground, no matter what argument is drug out. All other solutions lead to making our children slaves to the almighty behemoth that is our government.
    To argue about “well 30B is a step in the right direction” is a distraction, and one that the national parties are glad to have us discussing….because then we won’t bring them to task for the 2-3T being overspent EVERY year.

  22. tiredofexplaining says:

    Here’s the real truth: We’re screwed.

    This started 100 years ago, this isn’t about Obama, it isn’t just about liberals or conservatives, it isn’t about this election cycle. Matter of fact, when you only look at this situation in the vacuum of the present, you miss the point entirely.

    We have been growing government and living beyond our means on our credit cards, for many decades. Yep even during the Clinton years. Because even though you can manipulate the numbers and say ‘hey we had a surplus’, that didn’t mean that the government didn’t have any unfunded debt that they were obligated to pay and literally no clue as to how to pay for it. There was no social security locked box. There was no savings account or plan to pay for all of the aging Boomers who far outnumbered their children..the ones that will have to pay for their support. From jumpstreet it was doomed But no matter, big headlines of SURPLUS, but on the back pages of the papers, some pathetic lone politician would be quoted, meekly bleeting that Social Security was going to go broke decades hence, and NO ONE CARED.

    NOW because the bottom dropped out of the economy, suddenly people care. The left thinks that if they jack the income tax for high wage earners, that will solve the problem and it will be great since they won’t have to think about this issue. The right thinks, just give those earners a tax break, and they pray that we can cut something, but they want to decide what that something is. And then the brain dead collective people yell everytime a suggestion is made because it’s their pet thing. And they yell a lot of personal ‘shoulds’ into the camera.

    And the tea party people, who haven’t been co-opted by the far right, just sit there, look at the numbers and say …if you don’t cut the size, scope and pervue of the federal government, the only thing left in the end is being a serf to the feds. That is literally the end result. HEY DON”T TELL ME THAT! It’s depressing. You’re wrong! Give me my pork! And the media marginalizes them, and the left says get out of my way. And the right runs in front of them and pretends that this was their idea all along. And thinking people shake their heads at all of them.

    Truth is, there isn’t a tax big enough to pay for half of the country not to get off of their butts to work. I don’t care what your favorite program is. I don’t care what you believe in how it shoudl be. That is all fantasy. It’s a failure of basic math because people have deep ideas that if they ran the world, it would be a better place.

    It’s like a child bleeting ‘but I WAAAAAAAAAAANT to go to Disneyland!’ Yeah honey, your parents are broke and there literally is no money in the bank, and the cost of living is such that there is no hope in saving up for it. You’re not going. I’m sorry. And if this keeps up, Disneyland is going to close anyway, because they won’t be able to afford to keep their doors open. Vacations and luxury items will go the way of the do do bird.

    There is no easy way out of this, and you can yammer your politics all day long. You can spew theories til the cows come home and the numbers are the numbers and they don’t lie if you look at ALL of them, instead of manipulating them on paper to try to save your favorite program.

    There is not enough money either owned by the rich, nor generated by the rich to pay for 150 million people who don’t work, and a 15 trillion dollar debt that grows every minute of the day, and a 1.6 trillion annual shortfall in the budget, that has and will continue to increase yearly. The debt will grow, the shortfalls will increase….

    And like idiots, we’ll keep doing this until we literally can’t shuffle the credit cards anymore and our future isn’t bright, we’re just going to go under.

    So go ahead, re-elect Obama. Let him sell his snake oil utopia. And then get another POTUS after him to do the same. Put your hands over your ears and go la la la. I expect this. I expect people to vote for whomever is going to give them what is laughingly referred to as ‘free stuff’.

    And inflation will continue. And the employment numbers will limp. As well as the housing market and everything else… And at some point, other countries like China will have no more money to lend. And then the REAL depression will come.

    The solution is smaller government. It’s not a great solution, but it’s the real one. It doesn’t feel good, the pain will hurt and we’re going to be doing local fundraisers to fix potholes.

    However, that solution is going to come whether or not you support the tea party ideas or not. Either you do it now, and have some sort of control as to how it goes, or you wait until there is literally no choice in the matter and reality does it for you. Either way, it’s coming.

    The truth is, you cannot live beyond your means forever. True on an individual level and on a macro governmental level. You can’t. Eventually the doors get shut and lights get turned off. Cities go bankrupt, states can go bankrupt and don’t kid yourself that national governments can’t, or our’s can’t in particular.

    As to Buffet? People only listen to him because he made some money for himself. He hasn’t stopped trying. I”m sure that with every plan that he spouts for us, he’s got a plan as to how to make money off of that solution.

    Instead of looking at his plan for us, how about looking at the plan that he has for himself. I’ll betcha it looks a lot different. Rich people don’t run their businesses in the red. But we do.

  23. bflat879 says:

    It’s not the increased revenue I’m against, it’s the fact that it will not be used to reduce our debt, it will be used to fund more Solyndras. The President keeps talking about increased revenue, but hasn’t proposed a budget that will pass and has allowed the Democrats to avoid passing a budget, in the Senate, for 3 years. Until you can show me what you’ll do with the money, you shouldn’t have it.

  24. dave c says:

    All this will do is cause capital flight. These people first have to.pay the highest corporate taxes in the world, then pay capital gains taxes, and now punitive income taxes. Worse, if the profits were earned overseas, and foreign taxes paid, the US will tax them again, one of very few countries to do so. The rich make 25% of the money, but already pay 40% of the taxes. Demonizing our job creators is financial suicide.

  25. JJ Chester says:

    This is great…saving $3bn per year will allow congress to spend an additional $6bn per year.

  26. OhNoObama says:

    TOTAL SPENDING BY YEAR TOTAL DEFICT PER YEAR
    2007 2.7 TRILLION 2007 160 billion
    2008 3.0 TRILLION 2008 460 billion
    2009 3.5 TRILLION 2009 1.4 TRILLION
    2010 3.5 TRILLION 2010 1.3 TRILLION
    3011 3.6 TRILLION 2011 1.3 TRILLION
    2012 3.7 TRILLION 2012 1.1 TRILLION
    http://www.usgovernmentspending.com/federal_deficit
    Senate will not pass a budget, 3 years running. What are they hiding, and
    Why don’t they want you to see where it’s going?

  27. OhNoObama says:

    In 2009 we bailed out banks for 700 billion and 2 car companies for 60 billion.
    Where is the extra 760 going for 2010 11 12 and beyond? That is why the senate won’t do a budget. They’d have to spell it out. Go back to 08 levels!

  28. Little Joe says:

    It is quite funny that the libs are saying that this little bit will help, yet at the same time they say that all the money wasted on green energy is just a little bit and therefore inconsequential.

  29. Pig Bob says:

    Warren Buffett is spitting in the face of the model that made enabled him to become rich. I have zero respect for the cheap old man that is Warren Buffet.

  30. […] The blog Political Math has a terrific chart exposing the Buffett Rule for what it is: […]

  31. USModerate says:

    Oops, you haven’t quite got the facts correct. That’s between $30Bill and $40Bill PER YEAR CTJ estimates $50Bill /Year!
    http://www.ctj.org/taxjusticedigest/archive/2012/01/ctj_calculates_buffett_rule_wo.php
    Remember, Michelle Malkin isn’t an economist

  32. David says:

    I really like the data presented on this website. And the data is true that only 40-50 billion a year would be raised from the Buffet rule, but when this was calculated it assumed some things.
    One of the big things assumed is that President Bush’s tax cuts for the top wage earners would expire and the then the Buffet rule would kick in. This 40-50 billion is supposed to be on top of the 300-500 billion a year that come with the expiration with the Bush tax cuts.
    If the Bush tax cuts expire and the buffet rule goes into place then there would be a larger drop in the bucket.

  33. politicalmath says:

    US Moderate:

    My estimate based on the Joint Congressional Committee On Taxation estimates. Your estimate is based on a liberal think-tank with no link to how they came by their estimate.

    I’m sad that you assumed a lack of research on my part even while committing that same crime yourself. You should aspire to be better.

  34. Ryan says:

    i think this might be wrong. either because we have $1.2T deficits every year right now so $40 B over ten years is comepletely negligable next to the $12T in ten years with the status quo or because it’s actually $40B a year. either way, it’s not worth the loss to society that taxation creates. that’s why it’s better to cut spending. cutting spending doesn’t stifle economic growth and prosperity so we can use growth to pay down the debt. increase taxes slows growth, thus reducing private growth or rather prosperity. this gives the democrats more fuel to argue for more spending and more taxation thus exacerbating the problem. the only way to fix the deficit and the root cause of the problem is to cut spending and limit the role of government as intended.

  35. I write a quarterly economic commentary and would like to use one of your charts. Is this possible ? Please email or call me at 818 781 9300. Thank you

  36. […] of the dreaded and omnipresent secretary this time. However, perhaps the White House should take a look at this graph summarizing how the Buffet Rule will not reduce the deficit before it takes to Twitter to push its lame and tired class warfare […]

  37. Tim Mauch says:

    The question is, Does the increased revenue help enough to offset the deficit without decreasing the amount of investment into the economy by the same rate payers? Is it fair, considering the top 50% of income earners already pay all of the Federal Taxes? The answer to both questions is probably, no, but it gives the allusion of doing something.

  38. jeanne says:

    Yeah, but… you cheated by making the left axis so big.

  39. Bill says:

    @tiredofexplaining
    Relax, it’s *much* worse than you think. You neglected the flight of the manufacturing sector to climes with cheaper labor, looser regulation in all areas of endeavor, and an *actual* rule of law.

    You’re right, we’re completely, irrevocably, irredeemably screwed. There’s no fixing this. Even *if* we were to start doing all the “right things”, cutting regulations, a LOT, cutting spending massively, etcetera, we would still be screwed.

    So, yeah, we as a nation, are dead. Question is how to salvage what we can. That’s why I am going to vote Romney. Regardless of how much that displeases me, despite the fact that he is a snake oil salesman just like Obama. Because there is *one* battle that we *cannot* lose. We *must* keep the second amendment. When things get bad, and get bad they will, there’s a tendency for government to revert to tyrannical forms. There is exactly *one* antidote to tyranny. A well armed populace.

  40. […] while remaining mysteriously silent about actual numbers, you need to do the math. Fortunately, Political Math did the math…and produced this image to show just what the Buffett Rule would do to raise […]

  41. […] touts it as a deficit-reduction idea, it would actually raise just $47 billion in new revenue, barely a dent in the $15.6 trillion […]

  42. […] know what an embarrassing sham that is in terms of deficit reduction — look no further than this graph — but how many rich people are we talking about here, exactly? Must be an awful lot to […]

  43. […] Like I said before: totally worth it. I saw it first at Real Debate Wisconsin, which found it at Lakeshore Laments, who found it at Political Math. […]

  44. Edgar says:

    so this is all it takes to tackle the deficit ? what else ya got Mr. O, pass the bill, raised their taxes, then whats the next step. what else can u find money? Jan 1st , alot of companies will be leaving to a cheaper overseas tax rate.

  45. aaron ripley says:

    The only real way to reduce the deficit is to cut spending. I love the way the president always says that any tax cuts must be paid for. Why the class warfare. The people who work in this country and make lots of money have worked very hard for what they have and taken many risks. Why does the government think it’s entitled to take it away and give it to people who CHOOSE to do nothing to make our society a better place to live.

  46. GPearl says:

    I see a few comments here from liberals stating that some reduction is a good thing. The problem here is these job producers who happen to be successful and wealthy, will reduce expenses to compensate. The biggest expense in any business is labor/jobs. Jobs will be cut first. Second, prices go up, third, the business cuts back on buying, fourth, the business reduces services that are outsourced to other companies, and fifth, the business stops expansion.
    I have worked as the COO of a private business owner. Believe me, I know how they think. Whenever there is a government imposed expense or tax, the next word out of their mouth is “how are we going to pay for it”?

  47. Gene says:

    It’s like giving a homeless man a penny. but the government can say they did help out the homeless guy by giving him a penny.

  48. Bob says:

    The reason this is such a monumental joke is that this is the best he has to offer. I voted for this clown in 2008 and he is doing his best to make us Greece. If we don’t wake up and fix the overspending in this country, when our debt crisis hits the rioting in this country will make Europe look like a birthday party. Either we have some pain now, or the bond markets will force a whole lot of pain on us later.

  49. What’s the point of taking more money out of the private economy just to send more of the nation’s wealth to Fairfax County, Virginia and then increase the deficit on top of it? (More revenue will just be used to leverage more debt.)

  50. Jeanne Barber says:

    Believing Dems that they will cut spending if taxes are raised is just like playing football with Lucy.