To deal with our deficit, Obama is making the case for the Buffett rule to go into effect. It states that any taxpayer making over a million bucks should pay a minimum tax of 30%. Buffet made his case for this in a NY Times op-ed piece where he points out that most millionaires and billionaires like himself have effective tax rates lower than 30%.
Many millionaires receive their income from dividends that are taxed at 15%, capital gains that are taxed at 15% and municipal bonds which are exempt from federal tax. Put into perspective, many low and middle class taxpayers have effective tax rates that are higher than the millionaires.
I say we think of our deficit as a business where there are two ways to cut debt: cut spending and raise revenues. Sometimes you have to make tough decisions to cut costs like letting go an employee or discontinuing a product line. And business owners are always looking for ways to grow revenues.
As a country, we need to reduce our deficit by following that example — simultaneously raise taxes and cut spending. As an entrepreneur, I can vouch for the fact that consistently increasing profits is not easy. It takes focus and discipline but that’s what we need to do as a country to get us out of this mess.
I do think that higher wage earners should pay more taxes than they are currently paying but it shouldn’t be by such a wide margin. Why? Think of it this way. Before self-made millionaires became wealthy, they were average Joes or Janes. These average Joes and Janes made a conscious decision to create a better financial future for themselves. Should they be penalized for the risks they took in their businesses and lives to achieve some wealth? They stuck their necks out, thought differently, went for it and made it.
Regardless of how we got here, we’re here with this crazy, insane deficit. But it’s our deficit. Everyone needs to own this problem, from million dollar to low income wage earners. Our kids and grandkids cannot inherit this deficit and financial future. They must be given an equal opportunity like we had.
Look at the above chart. Our deficit was way lower than today. What happens if our kids and grandkids tax rates go up to 60%. That would be a real stinker.
What if our deficit doubles in size? Our currency will be worth nothing (many of you think that’s already the case,) and we won’t be the great country we once were.
It’s time that we treat our deficit as a business so our financial future will be better than it is today. Congress, that means you too. Enough with the class warfare. Nothing is changing. Treat our deficit as a business. For us and our kids.