Email Debate: What's Fair?

With the recent debate over the Buffett Rule and talk of economic fairness filtering into the presidential campaign, Matt and Stephen decided to get to the bottom of what we mean when we say "fair share" - and how that should be reflected in tax policy.  Let's see what happens when the emails exchanged by two people stop being polite... and start getting real.

Stephen: Matt, much is spoken about paying one's "fair share". But what does that even mean? Can you give me a principle that we could gauge future taxes on?

Matt: I actually think that "fair share" alone is a terrible political line because it sounds like something my kindergarten teacher would have said and it doesn't do anything to connect the idea of fairness to economic growth.  That being said, to me, fairness is the idea that we have the biggest economy in the world, and should ensure that everyone in the country at least has the opportunity to share in its riches.  Not a guarantee, but at least the opportunity.  We should build the best tax and government structure we can to ensure that - therefore, if you make a lot of money, you should be taxed at a higher rate in order to help pay for that structure and ensure broader opportunity for others living in the same country that nurtured your success.  

Stephen: This response does a great deal to use nice concepts and ideas. But from that I've only gained that you want a tax structure that allows everyone to participate in acquiring riches. Let's hold off on that idea for just a moment, but I'd like to get back to it later. Now, can you please articulate what a "fair share" tax systems would look like? How do we know if we achieved it? Unless it just based on ensuring broad participation in economic growth.

Matt: Something tells me that this will conclude with you arguing that the only "fair" outcome would be for everyone to pay a flat tax (i.e. 20% of your income regardless of what you make).  This is a compelling argument, but only on a superficial level.  We need to pay for a government that responds to the needs of its people, and it is our responsibility to ensure that everyone has as close to an equal chance as possible at succeeding in life.  Taxing everyone at 20%, or 30%, or whatever it is would not yield anywhere near enough revenue to pay for this.  Thus if you have more money, you should pay more.  Not an exorbitant amount, but more.  Utilitarianism 101 - greatest good for the greatest number.

"BUFFET RULE" TAX PLAN FAILS IN SENATE TEST VOTE

So, what's next?

Also, check out this assessment of the "Occupy Wall Street" movement: It's dead. Is it?

(Photo credit to Craig Hudson)

Morning Update: Daily News Headlines and Events

1) Discovery Shuttle fly-over the National Mall draws spectators, cheers, and just a bit of nostalgia over the sunsetting American Space Shuttle program. The silver lining in the cloud? Now we can go to space via private space travel. Just start saving...

Or be enlisted to save the planet. Results not typical.

2) 5 big ideas for a new economy.

3) Obama Campaign uses "Buffett tax app" to see whether you pay more or less taxes than... Mitt Romney. Like it or not, this is some pretty effective messaging about the proposed "Buffett Rule" law.

4) Speaking of "The Oracle of Omaha," Warren Buffett has stage 1 prostate cancer and gives not a single f**k about it.

5) "How you like yo eggs?" - and that's the story of how the dinosaurs went extinct

BUFF THAT: Debating the 'Buffett Rule'

Stephen and I are busy, but not too busy to take some time out of our robust daily schedules to exchange a series of snarky emails when the situation calls for it. Here is the text of our most recent exchange, a lively back and forth that started on the so-called Buffett Rule, President Obama's proposal that all millionaires pay an effective tax rate of at least 30%, and morphed into a much more in-depth tussle over taxes, middle-class prosperity, and the general role of government.

As always, these are real emails exchanged by real people:

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Matt: Steve, rumor has it that Senate Democrats plan to bring the Buffett Rule up for a vote this week. You're with Harry Reid on that one, right?

Stephen: Oh of course. You know I love nothing more than taxes that manipulate the data to appear reasonable. Although, I'm a bit disappointed Buffett doesn't understand the tax system better. I always thought he was a super smart dude.

Matt: Full disclosure - I'm not the biggest fan of the Buffett Rule either. Do I believe in raising taxes on the rich? Yes. But I think the Buffett Rule is a bit of a red herring that is more symbolic gesture than serious tax policy. Ideally I would like to see us raise all taxes on incomes above $250,000 (including capital gains) to Clinton-era levels - given the success our economy enjoyed during that period - 23 million new jobs - and the massive dent that would make in the budget deficit, I think you'd be hard-pressed to justify the argument that these moderate tax increases would hurt the overall economic situation. Indeed, they may improve it. Speaking of capital gains, is that what you mean by manipulating the data, or Buffett not understanding the tax system? Explain.

Stephen: Matt, increased taxes on all those "millionaires and billionaires" making over $250k is ridiculous. It certainly wouldn't aid the economy, you've got an accusation problem here. It also wouldn't take that much of a dent out of the deficit. How they would hurt is by cutting the savings rate which would reduce the money banks can loan, mostly to small businesses- which in turn creates new wealth and jobs. As for the Buffet rule, it will essentially bring the capital gains tax for those making over 1M to 30% but capital gains (esp long term) are basically just profits from a business... which have already been taxed at rates that the president acknowledges are the highest in the world (35%). So basically if you made 100, corporate tax would take 35% and capital gains already takes 15, leaving you 55.25... an effective 44.75% tax rate. With this it will jump to 54.5%!

More snark after the jump...