Today at the White House, President Obama made another speech to sell the “Buffett Rule,” which would establish a minimum overall tax rate, 30 percent, for Americans making more than $1 million a year. Perhaps disappointed by the support so far for his calls for “fairness,” he cited Ronald Reagan as a likely supporter, saying,
I’m not the first president to call for this idea that everybody has got to do their fair share. Some years ago, one of my predecessors traveled across the country pushing for the same concept. He gave a speech where he talked about a letter he had received from a wealthy executive who paid lower tax rates than his secretary, and wanted to come to Washington and tell Congress why that was wrong. So this president gave another speech where he said it was “crazy” — that’s a quote — that certain tax loopholes make it possible for multimillionaires to pay nothing, while a bus driver was paying 10 percent of his salary. . . .
What Ronald Reagan was calling for then is the same thing that we’re calling for now: a return to basic fairness and responsibility; everybody doing their part. And if it will help convince folks in Congress to make the right choice, we could call it the Reagan Rule instead of the Buffett Rule.
#more#Further, Reagan’s tax reform emphasized simplicity, via eliminating tax deductions, and lower marginal rates — just two brackets, in fact, with the maximum one being 28 percent, lower than Obama’s proposed minimum rate (on those two broad principles, in fact, Paul Ryan’s plan, not Obama’s, resembles Reagan’s). Obama’s rule, on the other hand, is calling for significantly higher marginal rates on many taxpayers who make more than $1 million a year, making it very different from President Reagan’s proposal, under which they might have faced higher overall rates, but definitely lower marginal ones. (In fact, the most recent iteration of the Buffett Rule has overall minimum rates ramping up to 30 percent for taxpayers earning between $1 million and $2 million — avoiding an absurd tax cliff at $1 million, but creating, for some people, potentially very high marginal rates from which a supply-sider like Reagan would recoil.)
The Buffett Rule’s only possible similarity to Reagan’s policies is that it would, for some tax payers, practically speaking, tax capital gains and earned income at more similar rates than before. These rates were equalized at 28 percent under Reagan’s tax reforms, but over time, capital-gains rates have been cut, and earned-income rates have been raised, allowing some wealthy taxpayers who earn most of their income in capital gains to pay less than less wealthy citizens who earn it in salary.