Sometimes one can find a real gem in a Congressional hearing like this one from a March 5 Senate Finance Committee’s hearing on the President’s FY 2015 Budget. Senator Rob Portman (R-OH) is in a colloquy with Treasury Secretary Jack Lew over the infamous “Buffett Rule,” Warren Buffett’s contribution to tax policy which is now incorporated in President Obama’s budget.
PORTMAN: Let me ask again, Secretary Lew, about the impact of taxes on the economy. Let me give you an example to be sure you know what I’m talking about. You got the Buffett Rule in here again this year. And you say we need to increase taxes on what is really investment capital because the latest joint tax committee—an analysis of this says that it essentially creates a 30 percent minimum tax on income over a million bucks, raised $71 billion over 10 years, payroll taxes count towards the minimum, phased in.
Most of the taxes they say are going to hit capital gains and dividend income, which you know, help fuel investment that brings economic growth. Is it possible that such a steep tax increase for these kinds of investment income could reduce economic growth by even 1/40th of 1 percent? In other words, from 2.445 percent, which is projected to 2.420 percent. One-fortieth of 1 percent, is that possible, those kinds of taxes on investment income could do that?
LEW: Senator, I’m happy to go back and look at different estimates. On the back of an envelope it’s hard for me to tell.
PORTMAN: Well, the reason I ask you that is because if so, then the entire $71 billion that you’re raising through that tax is negated by slower economic growth.
It’s encouraging to have allies on Capitol Hill like Senator Portman, who has been a friend of the ACCF throughout his incredible career, when he served on the Ways & Means Committee, as OMB Director and Special Trade Representative and now as an influential US Senator.