I'm a little puzzled by Jared Bernstein's April 10 blog post on the Buffett Rule. "I must say," Bernstein writes, "after careful deliberation, I’ve decided that this idea—to put a federal income tax floor of 30% on households with at least a million bucks—makes sense."
Why did a left-leaning former top economist to the Obama administration have to deliberate carefully before he endorsed the idea that people earning in excess of $1 million should pay at least 30 percent of their income in taxes? There are, in fact, some technical issues to consider. One question is whether it makes sense to tax capital gains differently for millionaires than for non-millionaires. Why can't we just make everybody pay the same tax rate for wages and capital gains? We could still have the Buffett Rule, but also get more revenue out of non-millionaires (most of them pretty affluent). (Bernstein came out for taxing capital and labor income the same in an earlier blog post.)
I'm just guessing that's one of the issues on Bernstein's mind. I have to guess because he won't say. If he's not enough of a team player to embrace the Buffett Rule spontaneously and unreservedly, then he shouldn't be too much of one to discuss its potential pitfalls.
Update, 5:45 p.m.: On his Web site, Bernstein replies: "Tim Noah over-analyzes me. As a chin-stroking, brow-furrowing econ policy wonk, I deliberate over pretty much everything (the egg salad or the tuna?? Simplify, simplify!). But I think the text above provides pretty full-throated support for the BR and that’s no BS (and I don’t mean Bowles-Simpson)." Bernstein then invites me to analyze "some of my dreams ... like this one." Sorry, Jared, your 50 minutes are up!
Update, 6 p.m.: Citizens For Tax Justice agrees that the Buffett Rule should be accompanied by a repeal of the income tax preference for capital gains, and reminds us that Ronald Reagan did just that in 1986.