Senator Sheldon Whitehouse on His "Paying a Fair Share" Act
On February 1 of this year, Senator Sheldon Whitehouse (D-RI) submitted a new bill to his colleagues, the "Paying a Fair Share" Act, which would end the era of big bosses paying a smaller percentage of their annual incomes to the IRA than do their employees. The act is known informally as the "Buffett Rule" tax bill.
Today the Senator participated in a conversation about this act as well as in general building an economy that is fair to all, at the Center for American Progress. Others speaking with him included Jason Furman, Deputy Director of the National Economic Council; Michael Ettlinger, Vice President for Economic Policy, Center for American Progress Action Fund; and moderator Tom Perriello, President and CEO, Center for American Progress Action fund.
Senator Whitehouse began by denying that he is an economist, but that many see the issue of income equality as political as well as economic. The Buffett Rule, recently publicized and already a household word, makes sense in the context of the present tax code, weighted so heavily toward big bosses rather than lower-level workers.
We are supposed to be providing examples to the rest of the world rather than caving in to special interests, he said.
Tom Perriello said that when he was in England, the people there saw the U.S. economy as concentrated on wealth, with soft- and hard-power implications overseas.
Jason Furman noted that where fairness and growth are present, the situation is win-win. Having worked on all four of the Obama budgets, with the most recent one the most difficult, he pinpointed the underlying deficit as a major consideration.
The Buffett Rule is a no-brainer rather than a tough choice, he continued. What is needed from wealthy citizens earning more than $1 million a year are fewer itemizations on tax returns and an increase in the capital gains tax. The four hundred citizens who paid the highest taxes in the country paid at a rate of 15 percent, Furman specified later to an audience questioner.
Fifty years ago, wealthy people fell into the 50 percent tax bracket, which no longer exists, while the middle class paid a rate of 15 to 17 percent. At that same time, the economy here flourished, with high productivity its hallmark.
Since then, specifically the Reagan-era onset of trickle-down economics, income inequality has grown for decades.
Michael Ettlinger reiterated the point about the fall of the middle class as income inequality increased. The regressive income tax is a tried and failed method; the Bush tax cuts were built on unsustainable debt, which raised the deficit astronomically.
The bottom line of Whitehouse's new bill is simple: Add another line to tax forms requiring all those with an income in excess of $1 million to pay 30 percent of it in taxes, period. They can also calculate their taxes according to traditional methods, including loopholes and deductions, compare the totals, and then pay the larger one of the two.
Said Whitehouse, economic trends between 1960 and the present and the 1990s compared with the 2000s prove that his bill will be effective.
Michael Ettlinger made the point that it is a bad idea to raise taxes during a recession. Nor is this the time for spending cuts, which adversely affect economic growth and deficit reduction.
We need investments that will grow the economy.
Tom Perriello said that the Whitehouse bill has garnered a great deal of support from Independents. Whitehouse added that while Republicans on Capitol Hill grumble and complain, those in his home state of Rhode Island support his bill; the public sees them as "slam-dunk common sense."