"The Buffet Rule" Should be Implemented by the Federal Government
This debate will be centered around whether what has come to be known as "The Buffet Rule" should be implemented in our government and society. This was introduced in early February 2012 as "S. 2059: Paying a Fair Share Act of 2012" and according to govtrack it:
"Amends the Internal Revenue Code to require an individual taxpayer whose adjusted gross income exceeds $1 million to pay a minimum tax rate of 30% of the excess of the taxpayer's adjusted gross income over the taxpayer's modified charitable contribution deduction for the taxable year (tentative fair share tax)."
According to Senate Majority Whip Dick Durbin (D-Ill), the Buffet Rule would raise around 47 billion over a 10 year period, or around 4.7 billion dollars annually (give or take). This number has been criticized as small or even paltry, with the implication being that it will not solve our debt crisis or even contribute to solving it in a meaningful way. This is an accurate assessment, yet utterly meaningless to the discussion at hand. Only considering economic or tax related topics that have a sizable impact on the economy as worthy of our attention ignores the fact that much of our spending and revenue can be broken down into smaller components. These smaller components add up, and ignoring them would be unwise if one desires a sound fiscal policy. Anyone who has ever seen their bank account mysteriously dwindle only to find out it was their repeated trips $5-$10 trips to Starbucks and the local convenience store can attest to that. If one is to follow the reasoning on that only bigger fish are worth considering, then complaining about the money lost to Solyndra or the GSA scandal should be ignored as they pale in comparison to the money that would be gained by the Buffet Rule.
Instead of whether or not it is relevant to the debt crisis, I believe we should focus on whether or not the Buffet Rule is fair and whether or not it can be of help to the United States. To that end I would like to argue for and defend the following points:
1. Government spending should not be cut to the bone; the government has a right to implement programs for the well-being of its citizens.
2. Progressive taxation is fair and certainly preferable to a flat tax.
3. The Buffet Rule would aid to the end outlined in my first point.
In order to establish my first point, I shouldn't have to go any further than the United States Constitution. I will go further, but this by itself would establish my point to be true from a legal standpoint.
Article I, Section 8:
"The Congress shall have the Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defense and general welfare of the United States. . ." [italic emphasis added].
Now I am not of the opinion this clause or the Preamble establish a "Congress can do anything" precedent. I do not believe, for example, that the Federal government can specifically target a group of individuals only for the benefit of those individuals. More specifically, as sad as this is, the Federal government cannot decide to hand me a million dollars because it likes me. A travesty, I know, but such is the case. Rather, I would assert the Federal government's actions are justified if the purpose of said action is in fact for the general well-being.
An initial reaction to this could reasonable be "Specifically helping the poor is just for the benefit of the poor, so is it in fact not allowed?" This is a misstep. Take education, for example. Quality education is linked to nearly every social factor imaginable in a positive correlation. The better educated the populace is, the less likely they are to engage in negative social (read: "illegal" or at least very damaging) behavior. A healthier populace given access to preventative health care such as mammograms or vaccines, is more likely to flourish and more importantly less likely to commute illnesses to other members of society.
At this point I would like to point out that whether the United States federal government is currently effective at promoting good education is outside of the bounds of whether or not is has the right to promote quality education. The only way this could be relevant is if it was deemed impossible beyond a reasonable doubt that a strong Federal education system could work, and given that Finland has one the best education records in the world right now without even allowing private schools to exist (even in what we consider post-secondary education) would counter that notion.
I would also like to argue that all except the most staunch Libertarians would have to agree with my reasoning if they are to be consistent. Perhaps my opponent will want to argue that Medicare, Medicaid, Social Security, should all be either be removed or should never have been built in the first place, but if he believes the Interstate Highway System was a good and appropriate measure to take by President Eisenhower then we must allow for other Federal improvements in the same vein.
As per the second point, that Progressive taxation is appropriate, I will quote someone whom I consider to be the greatest person in the world, Jon Stewart :
" . . raising the income tax rate on the top 2 percent of earners would raise $700 billion dollars, but taking half of everything the bottom 50 percent have in this country would do the same."
Note that this is not equating a tax increase to the top 2% with taxing the bottom half of the country at 50%. Rather, it means taking the value of everything the bottom 50% owns . . . yearly pay, cars, houses, clothing . . then adding up all of the value from everything they own and charging them half of it. That would get us the same level of revenue as putting the tax rate for the top 2% to the rate it was during the Clinton years.
The point here being, that if want an equitable society, we need to take into account what is affordable for citizens when we design our tax laws. $100 to the average American is not the same as it is for someone bringing in a six-figure salary, and $10,000 isn't the same for that group as it is for the top 2%. Overall taxes should be based on how much of the society's wealth you own, so that the group that owns 33% of the wealth the society they operate in afforded them, they should be responsible for 33% of the social burden.
Still, some would argue that the poor should still pay something, and I would be remiss to point out that they in fact do. They still pay medicare taxes, unemployment tax, state taxes, local taxes, social security, etc. The source of the tax makes no difference, $5 from payroll is no different from $5 from income.
Lastly, my third point, that the Buffet Rule has the capacity to aid in public welfare. This should be self-explanatory really. 4.7 billion dollars a year can do a LOT of good. Whether it is investing in education in areas were schools are under-funded, giving health-care to those who cannot afford it (and will lose the ability to work if they don't get it), or simply investing in new technologies.
I am not for pork-barrel spending, but I'm not for limiting government to almost nothing. Our society has the capacity to be great, but we have to be able to help each other out, and the Buffet Rule will be one of many necessary changes along the road to prosperity.
The Buffett Rule has been recently touted by its supporters as a measure that will increase "Basic Fairness" and reduce "income inequality" among the different income classes of American citizens. The rule has been used to illustrate that the rich do not pay their "fair share" in American society. It has been promoted by our current administration as a solution to the 1% paying a lower tax rate than the 99%.The goal of this argument to show three things. First that it does not achieve its stated goal and second it is not in fact "fair" The primary reason the bill should not be implemented however is that it will not and cannot perform its stated goal.
What is the goal of the Buffett Rule?
The stated purpose of the bill as seen in the first section is "To reduce the deficit by imposing a minimum effective tax rate for high-income taxpayers"
Wikipedia also mentions that it is supposed to reduce the "income inequality" between the top 1% and the bottom 99%
In order to examine the bill based on its stated goal we will start with the national deficit. According to USDebtClock.org, the deficit is currently sitting over 1.3 Trillion dollars and rising. The Bill, as HD pointed out, hopes to raise 47 billion dollars over the next 10 years. If we imagine that we run that same deficit for the next ten years without adding another penny to it. That means if we add up the deficit year over year we have run a deficit of 13 trillion dollars.
For an illustration of what we are talking about see http://www.pagetutor.com... for visual reference.
The proponents of the Buffett Rule would have you believe that every little bit counts, and if we just keep chipping away at it, we can make a real impact. However 47 billion doesn't even pretend to make a dent in this amount. This is simply not trivial, and it assumes that the money will actually be used to pay down the debt…not even HD proposes paying down the debt with it.
The problem with the thought process is not that every little bit doesn't count, because it does. The problem is the idea that giving the gov't more money will somehow encourage the gov't to spend less, when the gov't has proven itself completely incapable of handling money. There is not a single business in existence that could function with a running a deficit like this, they would be eaten alive by competitors that were better at handling money.
In the end, giving the gov't more money only encourages them to run bigger deficits, and sends the message that spending money we don't have is ok. Remember even my opponent has not suggested paying down any of the deficit with this new money, he suggests new spending on top of the money we are already spending and cannot afford.
The Buffett Rule Conflates income with capital gains
The Buffett Rule's main contention stems from the fact that Warren Buffett paid a lower percentage in taxes than his secretary. This is somewhat misleading, it sounds as if Warren's large income comes primarily from his employer, and since he's rich he gets to enjoy a lower tax rate. This however is not the case. His secretary pays income tax because her primary source of income comes from a paycheck from her employer (Warren Buffet). Whereas Warren's income primarily comes from capital gains, or money he makes from the increase in value and sale of the things he invests in.
Firstly, I have a problem with taxing income AND commerce at the same time, but without going too deep into that I'll just point out the initial money used to purchase the investment has already been taxed. Sales tax in the US is generally ranges between 5-10% depending on the state, but the top sales tax being about 9% in Washington.
While there isn't sales tax on stock investments, investors pay taxes on the other end through capital gains taxes. In fact they pay a higher percentage than sales tax from 10% all the way to about 40%. They also pay A LOT more in raw dollars. (http://en.wikipedia.org...)
Usually people start investing with income from a pay check from which they pay taxes, and choose to spend some of that income purchasing things that appreciate in value, like stock or real estate. The issue is that most people after they get their paycheck they only are taxed again on that money if they purchase a good, once they purchase the good or service, that money is no longer taxed.
If I have a paycheck that is $1000 and the gov't takes 15% of that or $150, I bring home $850. Out of that $850 dollars I spend all my money on goods and services (let's pretend I live with my parents so I have no bills to pay, so everything I spend is on "stuff"). When I purchase products I have to pay taxes in the form of sales taxes so after purchasing my stuff at the top sales tax bracket I pay 10% or $85 in taxes, which brings me to $235 in taxes I paid for that paycheck.
Without getting into the fact that the double taxing that is already going on is unjust, let's say that I have a friend named Percy and he brings home the same paycheck as I do and lives with his parents too, however with his $850 he decides to invest it all in the stock market. Now take Percy's investment of $850 dollars and he holds it in a good growth stock mutual fund for 10 years making the stock market average of around 10%. When he sells, he will end up with $ 2,204.68, of which he will have to pay 18% or ~$297.00. In the end, on the same $850, leaves him with a tax burden of $397.00 total between income and capital gains tax compared to the $235 I would have paid.
So that's not a big difference, just accounting for 2 weeks pay, so let's extrapolate this data out over the entire 10 years.
Percy and I both get 26 Paychecks of $850 or $22,100 net annual income. Our shared income tax burden would be $3,900 on our gross. I would pay $2,210 in sales tax, leaving me with a total tax burden of $6,110, a pretty good chuck of my income.
Percy however dropped all 26 paychecks into the stock market…BOOM, and paid the same in income tax. Over that same 10 years his stocks have grown to a whopping value of $409,538.79, on which he will have to pay 18% or $73,717 in taxes. Now this is quick and easy math, and there is A LOT more nuance and calculation that could be considered On its face Percy has a MUCH bigger tax burden, and he doesn't even make the million dollar mark. I'd say he pays his "fair share, and then some"
The reason long term capital gains is taxed at a lower percentage than the most income tax brackets, save the lowest, is that it encourages people to invest in the businesses that grow our economy. Businesses need capital to invest in R&D, paying employees, expansions and many other things. Without investors, things like this computer I'm typing on, the nice Galaxy Note phone I use or many of the other things that have made our life better would not be possible. We need to encourage people like Percy to continue to make those investments, because those investments don't always pan out, and it is a big risk to give your money away in hopes that you will make some return on it somewhere in the future…not every investment pans out.
In the end, the rich are also already responsible for a larger tax burden, when you consider the raw dollars. Just because we can show a difference in percentage does not mean the tax difference is unfair.
My opponent begins by stating that he will argue three different points against the Buffet Rule. Those being that the Buffet Rule does not achieve its stated goal, that it is not "fair", and third that it cannot achieve its stated goal.
I feel it would be prudent to repeat the resolution of the debate to which my opponent agreed to: "The Buffet Rule Should be Implemented by the Federal Government".
This would mean that my opponent's 1st and 3rd points are somewhat irrelevant to the debate, or at the very least, could be granted without ceding victory to my opponent. Were we forming a new government, and a law was on the table to outlaw murder yet its stated goal was to prevent rape, the inconsistency of its goal and its outcome does not mean that outlawing murder is a bad idea. While outlawing murder will in no meaningful way prevent rape, the law will still have a positive influence on society. It is valid in the reverse: were I to prove the bill DOES achieve its intended goal, that does not mean Congress should pass it. The stated goal could be quite detrimental to our society.
Therefore the points made in this debate should only concern the positive and\or negative effects of the Buffet Rule. In this regard, my opponent's second point is quite relevant. Should the bill be considered unfair, that would not benefit society, especially in the long run.
My opponent's arguments begin by concluding that ". . . giving the gov't more money only encourages them to run bigger deficits, and sends the message that spending money we don't have is ok. Remember even my opponent has not suggested paying down any of the deficit with this new money, he suggests new spending on top of the money we are already spending and cannot afford."
Not only is this argument a red herring, but it has the added property of being inaccurate. When he claims I suggest "new spending on top of the money we are already spending and cannot afford", this implies that my position is that we should utilize a one-sided "revenue only" fix. That the only way to solve our deficit is to raise more money and that my support of the Buffet Rule is only one small step in that direction. Correct me if this is inaccurate, but it would seem that it is in fact he that would propose a one-sided fix to our debt situation, only the side is "cuts only". However I believe we should focus on both; we should find areas to raise revenue and also areas where we should cut. In addition to programs I believe should be cut, there are additional programs and revenues I believe should be implemented, and that the final balance of these should result in a profit which allows us to begin paying off our debt. Now whether these new programs are worthy and what old programs should go is a separate debate, and it is in this vein that my opponent's argument is a red herring. Unless my opponent is willing to argue there should not be a Federal Government, then there must be a way to raise revenue, and this is one way I propose we do so.
My opponent's next argument is that the Buffet Rule conflates income with capital gains. He gives us the example of someone like himself who takes his salary and spends it, and a fictional character named "Percy" who invests his salary in the stock market. He appears to be missing some numbers. For example, he claims Percy's stocks grow to $409,538.79 "Over that same 10 year period", but doesn't give any other 10 year period numbers. I have no reason to believe that was intentional, the flow of the paragraph leads me to believe it was accidentally omitted. It would seem that his tax burden over ten years would be $61,100. Since Percy doesn't have to pay sales tax in this example, we can add on $39,000 from income tax to the $73,717 number, meaning over ten years he pays $112,717 in taxes. This is almost double what my opponent would pay.
However how much profit did Percy make on his investment? My opponent's 10 year value would be $159,900; the total amount of money he has made that has not been taken out in taxes. Percy made $409,538 on the stock market, and minus the taxes he paid on that, he values at $335,821. That comes out to . . . more than double what my opponent made. He is not, as my opponent claims, paying "his 'fair share, and then some'".
Remember, value is subjective. To Mr. Buffet, my opponent's yearly salary is something he could drop out of his pocket unnoticed. Likewise, for someone living in a 3rd world country, their yearly salary could be dropped out of my opponent's pocket unnoticed. This illustrates why we have a progressive tax structure or at least why we should. What if the government required exactly $173,817 in order to operate just the basic needs of military? How would my opponent distribute that burden? Equally among the two? Each would owe $86,908, which means my opponent which, if I did my math correctly, has a per paycheck (+ sales tax) burden of $334. That's paying more than a hundred dollars more than before, meaning $200 more a month. Percy, however, now gets $322,629 instead of his original $296,821. Which of these individuals do you think will notice the difference more?
This is all somewhat irrelevant to the Buffet Rule, as the Buffet Rule would not affect the outcome of the example. Percy would have to get lucky enough for his stocks to soar and value a total of $1,000,000 when he sold. That would mean he'd only get $700,000 back (assuming he gave none to charity) while my opponent still pays his $61,000 over ten years. Must I really go into how much my opponent would have to give up on his $22,000 salary in order to raise the near $361,100 between the two? Perhaps my opponent would advocate a flat tax rate instead of amount, but what would be that rate? In order for someone with a ten year salary of $260,000 and another individual making $1,000,000 in stock market profit to give $361,100 in taxes while paying the same rate, they'd each share a 28.659% tax rate. This would mean almost doubling the low income individual's rate so that the millionaire could receive a 2% break.
Keep in mind that revenue must be raised somehow. How much we raise, what we should spend it on, these are separate issues. Arguing that we shouldn't be taking that amount of money from citizens is irrelevant. Instead, the debate is whether the Buffet Rule is an appropriate way to procure revenue, whether the proportions themselves are fair. Also keep in mind that my opponent has not entirely outlined what he feels would be a "fair" tax structure, and that I'm only assuming he supports everyone paying the same amount\rate. I would appreciate it if my opponent would put forward what he feels is a fair tax structure.
Lastly, my opponent argues that capital gains needs to be a lower percentage in order to encourage people to invest in businesses that grow our economy. I'd like to as my opponent what he thinks will happen to the money if tax breaks are given to the poor rather than to the rich. What would he do if he found an extra $50 in his paycheck every week? Would he argue that individuals in his tax bracket would mostly keep that $50 under their bed cushions? I think it would be reasonable to assume that, given their economic condition, they would be likely to spend it. Where would the money then go? To businesses perhaps? Then those businesses can use the profits to invest their money and create more jobs, perhaps? Instead of giving money directly to the businesses, letting people who have little-to-no discretionary income have a bit extra at the end of the month means businesses get the money anyway but the poor actually get something in return. Stock portfolio's increase as well since businesses have more customers and do better overall. Everybody wins, but the super rich only win "big" instead of winning "slightly bigger".
My Opponents opening arguments defends three propositions and gives support for those defenses.
First Government Spending Should Not be cut to the bone
Second Progressive taxation is preferable to flat taxation.
Third The Buffett Rule will aid to the end of the first point.
Proposition 1 & 3 – gov’t spending should not be cut to the bone and the Buffett Rule would aid to that end.
Every other argument must stop here, because even if HD can prove that the Buffett Rule can be used for some “good” these “goods” should not be within the purview of the federal gov’t and were not what the original framers intended the gov’t to do. If they had intended the federal gov’t to run schools, or offer healthcare or create a department of agriculture, it would have written it in there….they did not.
The problem with the thought process is two fold. First the idea that we can take money from one class and give it to another is the same problem as with the idea of slavery. Namely that we can take one group and force them to give up the fruits of their labor for the benefit of others.
Before I begin my rebuttal, I would like to briefly apologize for a few minor math errors I made in my previous argument. some of the numbers I gave were off by a small margin. I do not believe the errors made a significant difference, however, and I'll leave it up to my opponent as to whether he wants to argue otherwise.
My opponent attempts to counter each of my original three propositions, and unlike last time I will rebut his responses in the order they were given.
First, he calls into question my reading of the Constitution, stating that the end of Article 1, Section 8 mandates that "all Duties, Imposts and Excises shall be uniform throughout the United States". He is correct that the Constitution reads precisely as he quotes it, and he is in no way quote mining. Despite that, his interpretation of this phrase would seem to be inaccurate. Former Supreme Court Justice Joseph Story, a staunch conservative in his day, writes in his comprehensive work Commentaries on the Constitution of the United States about precisely this phrase (in fact, Story wrote about nearly every phrase in the Constitution). The relevant information appears in Chapter 12, § 954:
"It was to cut off all undue preferences of one state over another in the regulation of subjects affecting their common interests. Unless duties, imposts, and excises were uniform, the grossest and most oppressive inequalities, vitally affecting the pursuits and employments of the people of different states, might exist" 
Contrary to my opponent's assertion, the Constitution does not mandate that each individual citizen be taxed equally.
My opponent also references, but does not go into, the possibility that income taxes are actually unconstitutional. In response to this, I will quote the 16th Amendment:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
I should note that the Supreme Court has consistently ruled that the 16th Amendment does in fact give Congress the power to tax income .
My opponent also comments that "If they [the Framers] had intended the federal gov’t to run schools, or offer healthcare or create a department of agriculture, it would have written it in there….they did not."
This would only be true if the Framers had intended the Constitution and by extension the Federal Government to remain static and for no new departments to be created. This is shown not to be the case by the fact that Congress added the Department of the Navy (later merged with the Department of Defense) towards the middle of George Washington's second term, and it was John Adams that appointed the first Secretary to that department. Why did the Framers agree to this if they felt it was not something that was supposed to occur?
The answer is that while the Framers did not intend for a Department of Agriculture to exist, they did not intend for one NOT to exist either. They left that option, or at least the option to create a new department, up to future leaders and generations. Does my opponent wish to argue that the Founder's believed themselves to have foresight enough to know there would never be a need for such a thing? That they wanted the Federal Government to be incapable of adapting to new situations down the road? Of course they did not intend for their to be a Department of Transportation, because one was not needed at the time.
Next I will take issue with my opponents statement " . . . the idea that we can take money from one class and give it to another is the same problem as with the idea of slavery. Namely that we can take one group and force them to give up the fruits of their labor for the benefit of others."
To compare taxes with slavery is to compare trade with theft, and is made no better by adding the caveat that it is taking from one group for the benefit of the other. As I stated in my previous argument, the government can't do that, nor does it to my knowledge. What it does do is provide for the general welfare, as in the action it takes is intended to have a positive benefit on the society as a whole. We don't provide education only for the benefit of the children, but we do so because a better educated society is a better society over all. The money you spend in taxes on education goes to preventing those children from growing up to mug you on the street (among other things).
My opponent then brings up subsidies. I am honestly unclear as to why he does this. The Buffet Rule has nothing to do with how we spend the money, only how it is raised. There are many ways to spend money that does not involve subsidies, so even if my opponent was right, this does nothing to further his argument.
He also extends this to education, saying that subsidizing schools has led to more under-performing schools. He gives no sources for this claim. I would appreciate it if my opponent would provide some evidence linking all Federal money with a decrease in performance, either in that school or in others. Without this, his point is rather hollow.
My opponent was gracious enough to provide what he feels is a promising and fair tax structure. I thank him for quickly responding to my request, now we can discuss it over the next few rounds if necessary.
My opponent would suggest removing all income taxes and replacing it with a "consumption tax". My understanding of this would be very similar to a sales tax, only without the usual exemptions on food and clothing.
There are many problems with this, but for the moment I will only go over two. First, my opponent is incorrect in stating that the consumption tax isn't really progressive, but rather it is aregressive tax. The higher your income, the less percentage of your income you actually spend on consuming. A consumption tax would in reality put a higher tax burden on the poor and middle class. William Gale of the non-partisan Brookings Institution calculates that a switch to a consumption tax model would require a national sales tax rate of almost 60% . Even if we slashed our budget in half, that would mean poor families would be getting taxed at nearly 30%, much higher than the current rate they pay.
Second, it would immediately devalue all current long-term investments. Imagine you are about to retire. You've spent your entire life saving up, paying taxes on your income, and taxes from other sources. You've put away just enough to have a comfortable retirement. Then rolls in the consumption tax, and suddenly your money is now worth 30% less (if we're being verygenerous). My opponent's plan would utterly ruin individuals who have already saved up money over their lives. Any attempts to counter-act this by giving exemptions to the elderly or any other applicable case would be enormously complicated and very expensive.
So to summarize, the Federal Government and the Buffet Rule is not outside the bounds of the Constitution, and my opponent's plan would be devastating to the poor, the middle class, and the elderly. The only group it wouldn't hurt would be the rich, of whom would benefit quite nicely. However, implementing the Buffet Rule would be fair, and would not have the harmful affect my opponent's plan would suffer from.
 Story, Joseph L., Commentaries on the Constitution of the United States. (1833) § 954, Retrieved from:
Unfortunately due to time constraints I was not able to spend as much time on this argument as I would have liked my next argument will be much more in depth. I ask HD’s forgiveness for this:o)
To address my opponents first point, he mentions that a law’s goodness is not necessarily diminished by its inability to fulfill its intended goal. I would say that this is true, however in this instance I believe that it is prudent because the section of the constitution my opponent cited does not justify using the funds for the suggestions he made. However it could in fact support the stated goal of the bill which is to pay down the debt.
It is important to note that the stated goal of the bill is in fact constitutional. So if its intent is not to fulfill the intended purpose then the bill is pulling a bait and switch that is dishonest at best, and unconstitutional at worst depending on what the funds will be used for. Which is why I believe personally that the goal was stated as it was. Obama knows that a tax increase to pay for new spending is not going to fly.
On to the nest point.
52,000 Gross yearly income
Income Tax rate 15%
Sales Tax Rate 10%
One year Income tax on 52,000 = 7,800
One year sales tax on net = $4,420
Over 10 years Percy pays 78,000 income tax
(income tax x 10)
After 10 years at 10% interest Percy earns $774,877.58 in the stock market
Not only has Percy given more in total dollars in taxes, he has given extra capital to companies that can be used to create jobs, not only directly, but indirectly by building expansions and creating new products that would not have otherwise been created. This is a win win for the gov’t, business and Percy. The gov’t get’s more taxes than they otherwise would have on his base salary. Business get’s money that it couldn’t get through sales alone. Percy by taking this big risk loses out on all the stuff he could have gotten over that time, no video games, no cars, no tv’s and electronics or other cool stuff that he could have gotten with $1000 every week. He essentially made a bet that someone else would be able to do more with his money than he could. He chose to take a big risk (the company/’s he invested in may have failed) that paid off.
Increasing the taxes incurred on people who choose to take the risk of investing removes some of the incentive to take that risk. The more you tax it the fewer people are willing to take that risk. This is bad for the economy and bad for businesses who need capital to create the cool stuff we both like. As I mentioned before as a basic rule of economics, anything you tax, you get less of, and anything you subsidize you get more of.
My opponent has asked for forgiveness for his lat post not being as in depth as he would have liked it to be, due to time restraints. However he has broken no rules, social taboos, or injured me or a third party in any way, therefore I do not believe there is anything to apologize for. Rather, I thank him for the time he was able put in.
I will address what arguments he did make in his previous response though, to the best of my ability.
As far Con's first points in his previous response, I already pointed to the Superme Court decisions which allows the Federal Government to spend money in the ways I suggested. My opponent may disagree with the decision, but the decision is legally binding nonetheless. In addition, the bill is not misleading, as it is not citing my intentions. Let me reiterate my point, I don't believe in cutting government to the bone, I believe we should be procuring enough revenue to pay down the debt, while paying for additional social programs to help our society. Also, I believe there are a good number of already existing programs that need to go. The Buffet Rule, in addition to spending cuts, can pay off the deficit while allowing other revenue to pay for the aforementioned programs. Unless my opponent believes the intentions laid out in the Buffet Rule is a straitforward declaration that the Federal Government will not institutue any new programs in any other bills, his argument falls flat.
Next, my opponent goes over his Percy example. Suffice to say, in his own example Percy makes slightly more than double what his companion does, and is taxed slightly less than double what his companion does. Percy is only paying 0.4% more than his companion on taxes, but is making a considerable amount more than that. My opponent has agreed that a progressive tax structure is fair and reasonable, and yet this is far from a truely progressive tax structure. Therefore my opponent's numbers would confirm my original point rather than his. I would also like to point out that the numbers he gives would be exactly indentical before and after the implementation of the Buffet Rule, so the numbers where Percey is making over a million dollars would even make the results out to be much more in my favor.
You see, the only difference is not how they spent their money, as my opponent would suggest. The difference is how much was made. My opponet seems to think that selling things off that have appreciated in value does not count as income or should not be taxed, but this is simply not the case. If I buy a gallon of water for $1.00, and then a drought come up raising the value of that gallon to $5.00, is the fact that it appreciated in value mean it is exempt from taxation when I sell it? Or that only the original $1.00 I paid for it should be taxed? I see no rational for this.
My opponent finishes his rebuttal by claiming that it is wrong to deincentivize risk takers, and that the buffet rule would do that. I find this quite difficult to believe. What you would have to believe in order to accept Con's argument, is this thought process: "Well, l think I could make a a lot of money doing this, but now I won't make quite as much money due to taxes. I guess I shouldn't make that money then." We're only talking about people that profit one million dollars a year. I see no reason that they would shy away from investment opportunities because, when they make money, they won't make quite as much of it. In fact, economist Joel Slemrd would agree with me . I'm sure my opponent can cite an economist or two that would agree with him, and we could go on and on with dueling economists, but without a definitive answer his rebuttal of deinsentivising investment does not hold.
In addition, as I've stated before, we do require revenue. My opponent has made it quite clear that at least we need revenue to pay down the debt. So, how do we get this revenue. Well, if we needed . . say . . 700 billion dollars . . . as I pointed out we could either raise taxes on the top 2% a small amount, or take half of EVERYTHING the poor owns. Clearly, we should not be relying on the poor to get revenue, as it is simply not practical.
So far, my opponent has only advocated a consumption tax that I've shown to be a rather damaging idea for the poor and senior citizens, and that the Buffet Rule be a fair tax on millionaires, allowing for relief to go to the poor and middle class. I do not believe my opponent has raised any significant challenges to my position.
My opponent begins his argument citing my note that he left out a piece of Article 1 Section 8 of the constitution. Granting that I have made no mischaracterizations of it he goes on to note that my interpretation seems to be wrong. Yet I believe my opponent missed that the important points I was trying to make were about the general welfare clause. I was making no comments about taxation and its uniformity. Nor does my argument rely on it in any way. However were HD to turn back few pages on in Story’s book he would find that he does in fact agree with my interpretation of the General Welfare clause as not granting any power to Congress accept for those specifically enumerated within the clause.
“§906. The constitution was, from its very origin, contemplated to be the frame of a national government, of special and enumerated powers, and not of general and unlimited powers. This is apparent, as will be presently seen, from the history of the proceedings of the convention, which framed it; and it has formed the admitted basis of all legislative and judicial reasoning upon it, ever since it was put into operation, by all, who have been its open friends and advocates, as well as by all, who have been its enemies and opponents. If the clause, "to pay the debts and provide for the common defence and general welfare of the United States," is construed to be an independent and substantive grant of power, it not only renders wholly unimportant and unnecessary the subsequent enumeration of specific powers; but it plainly extends far beyond them, and creates a general authority in congress to pass all laws, which they may deem for the common defense or general welfare. Under such circumstances, the constitution would practically create an unlimited national government. The enumerated powers would tend to embarrassment and confusion; since they would only give rise to doubts, as to the true extent of the general power, or of the enumerated powers.”
My adding of that phrase was not intended to highlight the words in it, but to place the general welfare clause in context. The sentence structure and preceding statements which Madison points out in Federalist Papers 41 are also of importance here.
"But what color can the objection have, when a specification of the objects alluded to by these general terms immediately follows, and is not even separated by a longer pause than a semicolon? If the different parts of the same instrument ought to be so expounded, as to give meaning to every part which will bear it, shall one part of the same sentence be excluded altogether from a share in the meaning; and shall the more doubtful and indefinite terms be retained in their full extent, and the clear and precise expressions be denied any signification whatsoever? For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power? Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars. But the idea of an enumeration of particulars which neither explain nor qualify the general meaning, and can have no other effect than to confound and mislead, is an absurdity, which, as we are reduced to the dilemma of charging either on the authors of the objection or on the authors of the Constitution, we must take the liberty of supposing, had not its origin with the latter.”
Also important as Story points out is the fact that the framers went through so much trouble to enumerate the 18 powers given to congress. This beggs the question, if the framers meant what HD seems to think they meant by the general welfare clause then why did they go through the trouble of enumerating the powers of it….why didn’t they just stop at general welfare like HD stopped? If they intended for powers to just be granted to Congress all “willie nillie” why create Article V as a way to amend those powers and grant new ones?
Let it be stated that it is completely irrelevant that the Supreme Court or congress has done and continue to do things outside of the Constitution. The question and the point of the debate is should they. It is my contention that even if unconstitutional things have been done in the past and continue to be done today, that does not mean the gov’t should continue to do so, or be allowed to do so again. Doing so is what has gotten us into this debt mess in the first place. Even if HD can advance an argument that shows the Gov’t should in fact take part in these programs, the Buffett Rule still shouldn’t be enacted for HD’s suggested purposes without first crating a Constitutional amendment that allows the gov’t to have these powers in the first place.
HD comments on my statement that: “if the framers had intended for federal gov’t to be involved in social security, welfare, schools and the like, they would have added it into the Constitution.” To this HD replies:
“This would only be true if the Framers had intended the Constitution and by extension the Federal Government to remain static and for no new departments to be created. This is shown not to be the case by the fact that Congress added the Department of the Navy (later merged with the Department of Defense) towards the middle of George Washington's second term, and it was John Adams that appointed the first Secretary to that department. Why did the Framers agree to this if they felt it was not something that was supposed to occur?”
Yes HD, you are right, the framers intended for the gov’t to be malleable and expected it to change over time, so they created a process for that. It’s outlined in Article V of the Constitution. As far as the department of the navy is concerned, the Constitutional authority for it is enumerated in the Constitution under Article 1 Section 8 #13 “To provide and maintain a Navy”.
So while my opponent is correct when he stated “while the Framers did not intend for a Department of Agriculture to exist, they did not intend for one NOT to exist either. They left that option, or at least the option to create a new department, up to future leaders and generations.” He overlooks the fact that power for those departments must first be granted by the Constitution. HD seems to be ok with gov’t completely circumventing the Constitution to create such departments. I would understand his argument if there was a power laid in the constitution that said something similar to the navy’s provision about agriculture, like “to provide and maintain the nation’s agriculture” or something like that, but there is not. So it will remain unconstitutional until it is ammended to make it Constitutional.
I must ask my opponent; if “What it [gov’t] does do is provide for the general welfare, as in the action it takes is intended to have a positive benefit on the society as a whole.” What limit does the gov’t have in benefiting the society as a whole? Where does this power stop? It clearly does not stop in your opinion with the enumerated powers in the Constitution, so what power stops the gov’t from mandating, exercise, eating vegetables or whatever it pleases at the time for the good of the society as a whole? I believe his idea is flawed, Govt’s function is not to take actions that have a "positive benefit on society", Govt’s job is to protect our individual rights from those who would take them away and the Constitution was created to make sure the gov’t was limited to doing just that.
HD has been unsuccessful in showing that the general welfare clause grants the gov’t the power to use the money generated by the Buffett Rule in order to fund his suggestions. Second he has not shown how the money generated can in any way significantly reduce our debt or deficit. In order for HD’s contention that the Buffett Rule Should be past to stand, he must prove one of those things if it does neither then it should not be passed.
I am glad to see my opponent was able to work his schedule to give a more in-depth rebuttal to my arguments. It will certainly add to the value of the discussion.
My opponent has pointed out that had I continued to read on in Justice Story's Commentaries, I would clearly see that his Honor agrees with Con's position on Article 1, Section 8 "The General Welfare Clause". The minor point is that § 906 comes well before my citation of §954 in Story's work, not after, but this has no bearing on the veracity of his argument.
I will have to agree that indeed § 906 of Commentaries does quite clearly state that the General Welfare clause was not intended to be an independent and substantive grant of power. It was not intended to create an unlimited national government. This interpretation of Story's work is not in question, especially when this is precisely what I've said from the beginning.
However, my opponent goes further. He claims Story "does in fact agree with my interpretation of the General Welfare clause as not granting any power to Congress accept[sic] for those specifically enumerated within the clause". My opponent suggested I should have read on a bit further in Story's work, however it is in fact my opponent that should have done as he suggested. Had he done so, he would have seen that Story actually agrees with my position, not his. Sections 907 through 911 and beyond , show this to be the case. Let me quote an excerpt from § 910:
"§ 910. It is no sufficient answer to say, that the clause ought to be regarded, merely as containing 'general terms, explained and limited, by the subjoined specifications, and therefore requiring no critical attention, or studied precaution;' because it is assuming the very point in controversy, to assert, that the clause is connected with any subsequent specifications. It is not said, to 'provide for the common defence, and general welfare, in manner following, viz.,' which would be the natural expression, to indicate such an intention." 
What Story is saying here, is that were the Constitution written to only give the Federal Government the specific enumerated powers and nothing more, they would have used different language.
Story was a Conservative according to the politics of his time, but his work was not considered to be overly partisan. His judgment of the "General Welfare" clause was to give a swift kick in the pants to both extremes of the political spectrum. As my opponent so eloquently put it, it was not a substantial power grab, as the Federalist would want it to be. However, according to Story, it also was not (as Madison argued) limiting the Federal Government to only the enumerated powers. Political Science Professor John Vile also cites Justice Story as arguing with the likes of Alexander Hamilton's position which opposed Madison .
I am not surprised that Madison agrees with my opponent. History shows the Founders were split on how strong the Federal Government should be, which is why they broke off into the Federalists and the Anti-Federalists. Our country can often be defined by this struggle between these two groups, and it by no means is the struggle over. It is my contention that the Constitution was a compromise between the two, allowing for the two sides to pull at one another so that neither side would win out overall. That is how I also believe it should be.
Con has challenged me to show where there would be any limit to Federal Power. If my interpretation is true, then the Federal Government can mandate exercise or the eating of vegetables. My opponent misses the word "provide" in Article 1, Section 8. Regulating how people act against each other, and giving services to the public, fit nicely with this word. Telling people what to do in their personal lives (assuming it doesn't directly affect others [i.e. making a bomb]) does not fit under that definition.
However, this topic is little more than a red herring. My suggestions were little more than that: suggestions. The intent was to show what exactly 4 billion dollars a year could buy; even by my opponents reading of the Constitution there are still things we need to buy. Without that, there is still debt to pay down, and while it won't make a large contribution, as I said (and my opponent agreed*) every little bit helps.
Then there's my opponent's rebuttal that the Buffet Rule is not fair. Now I will note my opponent has agreed that a progressive tax rate is fair. I will also note that his only attempt at a system that would raise more income while being more fair than the Buffet Rule, removing all tax in favor of a single Consumption tax, was rebutted by me as being unfair to the elderly and actually regressive on poor people. My opponent has had two opportunities to respond to my criticism on this and has chosen not to, so I believe that point must be conceded to me, as this is the final round.
What we have left is his example with Percy. The example seems to show that someone who makes a large amount of money is not paying much more of a percent than someone who makes very little money. This is not the progressive tax structure my opponent says would indeed be fair, and as I've pointed out repeatedly, his example does not use numbers which would be affected by the Buffet Rule. When I showed the numbers that the Buffet Rule would actually have some effect on, it showed that without the rule, the burden on the lower-income worker was even greater. His latest response does not address this either, so it would seem he has no argument against the fairness of the Buffet Rule either.
In the end, my opponent lays out a challenge to either prove the Federal Government has the power to do as I suggested, or to show that the Buffet Rule would make a significant contribution to the paying off the debt. The former I spent a good deal of time defending, but still assert it is irrelevant to whether the Buffet Rule should be passed. The latter, is guilty of moving the goal posts. My opponent has already agreed* that every little bit helps, so if in response to the resolution "The Buffet Rule Should Be Implemented", his is only left with "it may help a little bit, but not a lot" that is not sufficient reason to not implement the rule. It would raise 47 billion dollars, and that is a good starting point, if nothing else. I would argue that Con has not refuted all (if any) of my reasons for implementing the Buffet Rule, and has not given any sufficient reason not to implement it. I would also argue that I have outsourced him, having correctly cited Justice Story, as well as cited several court decisions and scholarly works in my favor. I urge you to vote "Pro" in all applicable areas.
A sincere thank you to my opponent for his time and effort.
 Story, Joseph L., Commentaries on the Constitution of the United States. (1833) § 907 - § 911, Retrieved from:http://www.lonang.com...
 Vile, John R. The Constitutional Convention of 1787: A Comprehensive Encyclopedia of America's Founding. p 302 Retrieved from: http://books.google.com...
* "The problem with the thought process is not that every little bit doesn't count, because it does."
This has certainly been an interesting experiance for me. Debating in a formal format was certainly a fun challenge and I appreciate HD's time and patience with me through the debate.
While I will concede HD’s point that Story leans toward his interpretation more than mine, however I do not at all concede that this is what the founders intended, as HD has pointed out, this is a much debated topic and the debate still rages on. The point that HD did not address that his interpretation got us into this mess, while my interpretation did not. Since the Federalists have had the edge, they also take shoulder the responsibility for a country saddled with a $15 Trillion national debt and a $1 Trillion budget deficit. My primary argument in my opening remarks was that the Buffett Rule does not achieve its intended goal, and if what it achieves instead is unconstitutional then it should not be passed. Through HD’s argument he has not shown that it is constitutional to use the money for his “suggestions”, rather he has shown that Story’s commentaries lean in his favor, however what he has not done successfully is show that outside of my interpretation, Gov’t has any real limits on its power. The closest he comes is to point out that the word “provide” does not give gov’t license to tell people how to live their lives. Unfortunately Obama care stands poised to change all of that, by forcing people to purchase health insurance, and since our legal system, as HD points out, works off precedent, if it is passed we may soon look forward to a gov’t mandated diet as well.
Which leaves us with fairness; something I did not defend in my last two rebuttals. HD argues “Percy is only paying 0.4% more than his companion on taxes, but is making a considerable amount more than that. My opponent has agreed that a progressive tax structure is fair and reasonable, and yet this is far from a truly progressive tax structure.” Which begs the question…what is a “truly” progressive tax structure? Currently the income tax rate caps at 35% for families making ~$380,000 or more. I would say that the current tax system is progressive though I would say it’s unfair, because ~5% of Americans pay for over 50% of the total tax’s. (http://ntu.org...). In fact if HD wants a “truly” progressive tax structure, the Buffett Rule should be asking for much more to make it “truly” progressive for millionaires and billionares. You see by quoting me and implying that I agree, HD assumes that my definition of “progressive” is the same as his, thus straw manning my position. Though I don’t believe he is doing so intentionally. When I say “progressive” I simply mean that those who are richer should pay more, this doesn’t necessarily mean that the percentage of their income should progress as they make more money. This already happens today, though not in a way I support.
The way it stands the bottom 50% of Americans only pay ~3% of America’s total taxes…this is simply unfair. The Buffett Rule only increases the disparity between the tax payers and the non tax payers.
Lastly, HD again tries to use a quote of mine to strengthen his position, and again he misuses my comment and straw man’s my position. HD quotes me as saying I agree that every little bit counts, but fails to cite my qualification for that statement given in the prior paragraph.
“The proponents of the Buffett Rule would have you believe that every little bit counts, and if we just keep chipping away at it, we can make a real impact. However 47 billion doesn't even pretend to make a dent in this amount. This is simply not trivial, and it assumes that the money will actually be used to pay down the debt…not even HD proposes paying down the debt with it.”
The point being though figuratively every little bit does in fact count…what we’re talking about here is SUCH a little bit that saying that it counts is to fail to see the gravity of the problem. I pointed out in previous arguments that the budget (if it stays exactly where it is) is poised to add another 13 TRILLION dollars to the debt, ON TOP of the 15 TRILLION we already have. That’s near 30 TRILLION DOLLARS of national debt that we will be settled with and we are supposed to believe that 47 billion dollars in tax increase is supposed to help us somehow? This is the real problem…the Rich simply don’t have enough money to fix this problem, we could literally take every cent and liquidate all their assets and we STILL wouldn’t have enough to pay for even a single year of our spending. The Forbes 400 top wealthiest people in America are only worth about 1.4 Trillion dollars. (http://en.wikipedia.org...) The current budget according to (http://en.wikipedia.org...) is 3.721 trillion. This is what I have yet to hear from any one…exactly how much do we have to tax the rich to pay for this ridiculous amount of spending? The answer is it’s impossible.
I ask that you vote “con” because I have shown that the Buffett rule is unfair due to the rich already being overtaxed, I have proven that the bill Cannot achieve its intended goal, and I have shown that any other use for the funds would be unconstitutional and there should be a constitutional amendment prior to using the monies for HD’s “suggestions”.
I thank HD for his time and his respect during this debate, it has been fun and he is a formidable opponent. I look forward to the feedback from the peanut gallery :o)