Report: Buffett Rule would raise less than $50 billion over decade

Legislation codifying President Obama’s “Buffett Rule” would not raise enough money to replace the Alternative Minimum Tax (AMT) and would put a relatively small dent in the federal debt, according to a new study by an official congressional scorekeeper.

The Joint Committee on Taxation (JCT) said, in an estimate provided by Sen. Sheldon Whitehouse's office on Tuesday, that the measure would raise close to $47 billion between 2012 and 2022. 

That projection revised an earlier estimate circulated by Sen. Orrin Hatch's office that said the Buffett Rule legislation, known as the Paying a Fair Share Act and introduced by Whitehouse (D-R.I.), would bring in roughly $31 billion over that time span.

Congressional Republicans leapt on that earlier finding, with Hatch (Utah), the ranking Republican on the Senate Finance Committee, saying it proved the Buffett Rule had no economic rationale.

“Now that we have this analysis, I hope the president will stop the class warfare and start leading by putting out real proposals to bring down our debt, get rid of the AMT and reform our broken tax code,” Hatch, whose staff requested the JCT analysis, said in a statement. 

President Obama rolled out his Buffett Rule — named for billionaire investor Warren Buffett — last year, and he later specified that he believed those making more than $1 million a year should pay at least a 30 percent tax rate.

In his fiscal 2013 budget, the president also called for using the Buffett Rule as a replacement for the AMT, which was designed to ensure that wealthy taxpayers didn’t game the tax system with loopholes.

But the AMT now ensnares more middle-class taxpayers and frequently receives a patch from Congress to rein in its reach.

Democrats have also suggested that the rule could be used to reduce deficits and said the idea underscores that they have a more balanced approach to bringing the federal debt in line.  

For their part, Republicans, who have long resisted raising taxes on the highest-earning Americans, call the Buffett Rule a political gimmick and say that lawmakers should concentrate on reducing spending.

Whitehouse noted on Tuesday that other studies had found his measure raised more revenue.

The nonpartisan Urban-Brookings Tax Policy Center, for instance, said the plan would raise roughly $114 billion over a decade, though the group also said Whitehouse’s bill would fall far short of offsetting an AMT repeal.

“No matter how you slice it, that’s real money that could help bring down our deficit,” said Whitehouse, whose measure would phase in the Buffett Rule for taxpayers making between $1 million and $2 million a year. “Most important: It’s simply the right thing to do.”

JCT, in its analysis, assumed that a host of current tax provisions would expire, as scheduled, at the end of the year.

If the Bush-era tax cuts expire at year’s end, the top marginal individual tax rate would rise to 39.6 percent, from its current 35 percent.

Capital gains and dividends, which are now taxed at a top rate of 15 percent, would rise to top rates of 20 percent and 39.6 percent, respectively, in 2013.

The Tax Policy Center’s $114 billion estimate is also based on tax provisions expiring as scheduled. The group found that Whitehouse’s proposal would raise $264 billion over a decade if current tax policies were kept in place.

For comparison’s sake, the Congressional Budget Office has said that the president’s budget would tack $6.4 trillion onto deficits over that same time span.

Rep. Paul Ryan (R-Wis.) has said that his new budget would reduce deficits by more than $3 trillion more than the Obama budget.

This post was updated at 8:03 p.m. to include the revised revenue estimate.

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