Reposted from Bruce Krasting’s blog with his permission.
The Senate torpedoed the Administration’s Buffet Rule.
This was a dumb piece of legislation. The joke was that it would have only raised $5b a year. That’s chump change. It never had a chance of passing. It was a show pony for the November election. Shame on Obama for making a circus out of what is (was) a necessary debate.
If I were running the show, I would have proposed a tax that socked the top 5% for some additional money. I would have earmarked that extra tax money to pay a portion of the country’s annual Disability Insurance Fund (DI) benefit payments.
The Social Security Administration (SSA) started a program in 2008 called the Compassionate Allowance initiative. Severely disabled people who qualified for the program – by being diagnosed with one of the listed diseases – could get expedited benefits, sometimes within weeks.
The list of severely disabling conditions covered by Compassionate Allowances (CAL) has been growing. It started with 50 conditions. In 2010, the SSA added another 38, and another 52 conditions will be added on August 13, 2012. (Link to all conditions)
Total DI benefits in 2011 were $130B. The number of beneficiaries increased by about 500,000 during the year. Of those, 60,000 were Compassionate Allowance cases. This data suggests that the CAL cost is approximately $20B a year. I want the top 5% to pay for this cost.
In 2009 the top 5% of income earners had income of $2.5 Trillion. There were seven million individuals in this income group. They paid a total of $507 billion in taxes. The average tax rate was 20.3%. The extra $20B for the CAL would raise their effective tax rate by a lousy 0.7%. In good years, where capital gains can be had, like 2010 and 2011, the cost to the rich folks would be an extra ½%.
I would like to hear one of those fat cats standup and oppose this plan. What would they say?
“It’s not fair! Just cause I made a Mil+ last year doesn’t mean I should pay more! I don’t care about those kids who get Neuroblastoma (#25) or Non-Hodgkin Lymphoma (#26). I shouldn’t have to pay for the fifty-year old who gets Gall Bladder Cancer (#49) and I don’t give a damn about those who have suffered Heart Transplant Graft Failure (#56)”
Same for the politicians. On what basis would they argue against this? I would love to see one of them try. They would get creamed in the next election if they did.
Folks with big incomes know that higher taxes are coming. If you asked this group if they favored a Buffett Rule that put more money in the government’s general coffers or a tax that was earmarked to pay for people with disabilities, they would point in the direction of my plan. It would make them “feel” better.