The politics of ‘get the rich’ is going global and even the rich are joining in. While
few countries have adopted the equivalent of Britain’s 50p tax, many are baring their teeth at the very well-off. In America, this is now being done by an unlikely alliance between Barack Obama and
Warren Buffet.
The billionaire investor is allowing his name to be appended to Barack Obama’s new tax-the-rich-more policy, which apparently follows the ‘Buffett Rule’. The Buffett Rule, which draws its basic principle from an op-ed Buffett wrote for the New York Times, is this: people making more than $1 million a year should pay a tax rate that’s at least the same percentage of their earnings as middle-class Americans.
If you think that’s a bit thin on details, that’s because it is. The Obama administration has not really explained how this will all work out in practical terms. The thrust of Buffett’s argument is that the super-rich make most of their money from investments, which are subject to capital gains tax of 15 per cent. His secretary, on the other hand, makes money mostly from her salary, which is liable to income tax of up to 35 per cent.
But even the NYT says that the number of people who fall under the Buffett Rule is quite small, about 60,000 people. Revenue generated from them over the next 10 years will amount to just $30 billion.
Still, the Buffett Rule is proving popular among sections of the disgruntled middle class and disaffected younger voters. It’s also raised the ire of Republicans, who are demanding to see Buffett’s tax returns. All this will probably delight the Sage of Omaha, who is said to love being the centre of attention and, as Philip Delves Broughton beautifully wrote in The Spectator recently, portrays himself “as just another Willy Loman who got lucky, while flashing his knife in the back alleys of Wall Street.”
Adds Delves Broughton: “As ordinary people are called on to make ever more sophisticated financial decisions and financiers unpick the world economy with their mathematical voodoo, Buffett’s homespun attitudes are highly appealing.”
For Obama, getting the backing of a tax-me-please billionaire couldn’t come at a better time. Because, as James points out, the President’s position is much more fragile than we realise.
PS: James Forsyth’s agenda-setting cover story, Get The Rich, is available here. To subscribe to The Spectator from £1 a week, click here.
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