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How do you define fair share?

 

President Barack Obama is in campaign mode right now. It’s an election year, and since he is a politician, he will say, do or deny anything to get reelected. Enter his latest attempt to woo lower-class voters by targeting the upper class: The Buffet Rule.

The Buffet Rule receives its name from capital investor Warren Buffet, who is often in the news claiming that he pays a lower tax rate than his secretary. The Buffet Rule would require households earning over $1 million to pay a minimum of 30 percent of their income in taxes.

Buffet has released reports saying he pays an effective tax rate of about 17.4 percent (after using just about every tax loophole possible). According to an article published in Forbes magazine, in order for Buffet’s secretary to pay a rate higher than 17.4 percent, she would have to earn between $200,000 and $500,000 in taxable income, hardly the downtrodden middle-class woman Obama made her out to be in his State of the Union.

The hoopla surrounding the Buffet Rule hinges on Obama’s use of the term “fair share” when referring to increasing tax rates for the top earners. Essentially, Obama defines a fair share as the small percentage of top earners paying the largest percentage of taxes. By this, I don’t mean they pay a higher tax rate, but they pay a higher percentage of the total income tax revenue for the country.

I would argue that Obama’s definition is slightly flawed. The Heritage Foundation released a report that showed that the top 10 percent of earners paid 71 percent of the income tax revenue reported by the IRS despite earning 43 percent of all income. Meanwhile, the bottom 50 percent paid only 2 percent of the federal income tax revenue while earning 13 percent of the income pool.

If Obama was really concerned about things being fair, then he would be advocating that the bottom 50 percent of income earners contribute 13 percent of the tax revenue since that is their percentage of income earned. Instead, since he is grasping for votes, he chooses to shift attention away from pressing issues like gas prices and the jobless rate by misrepresenting information about income taxes based on a flawed definition of fairness.

As for Mr. Buffet, the solution is quite simple: If he feels that he does not contribute enough in income taxes, then he should stop using the loopholes to lower his rate. No one is forcing Buffet to pay a lower rate. In fact, if he feels so inclined, I’m sure the government would not mind a donation similar to those made by the tycoons of the late 1800s. Though Buffet would most likely cite that donation as a tax write-off.

 

Trenton Winford is a public policy leadership sophomore from Madison.