The "Buffett Rule" and Congressional Elites: Why a Democracy of, by, and for the Rich is a Problem

The Center for Responsive Politics, a non-partisan, not-for-profit organization aimed at educating voters and making our government more transparent, recently published this article about President Obama's new tax proposal. The report lists the 20 wealthiest congressional representatives and their net worth, as well as those reps who reported capital gains in 2009. The basic problem addressed by the article is this: how can the American people trust their representatives to vote in the best interests of the economy and of their constituencies when they will be negatively affected by the new tax plan? Can we expect them to vote for legislation that will require them to pay more in taxes on their income and their capital gains?

In case you're like me and are not savvy to financial lingo, capital gains means the profit one acquires from the sale of "non-inventory assets," things like stocks, bonds, and real estate. So, a capital gains tax requires that you pay a certain percentage of this income in federal taxes. As stated in Michael Beckel's article, the Tax Policy Center reports that the richest 0.1% of U.S. citizens pay 44% of all capital gains tax, and the top 1% pay 68%.

Of course, that makes perfect sense given the fact that capital gains come from the sale of non-inventory assets. How many working-class people own and sell stock? Real Estate? Gold? Obviously, the bottom 80% of income earners have very little in capital gains to tax. But that won't stop conservative pundits from using these numbers as talking points, arguing that the rich already pay their fair share, that taxing capital gains at a higher rate is class warfare, etc. Bill O'Reilly is already trying to differentiate federal income tax and capital gains tax by using himself as an example, when the president very clearly refers to those earning income from financial markets, individuals who do not pay the 35% income tax that O'Reilly is referring to. Market investors earn their income primarily from "non-inventory assets"and so they pay the 15% capital gains tax that Obama is trying to raise.

In short, we cannot trust the rich to raise their own taxes. We cannot expect our democratically elected leaders to vote in favor of legislation that will require them to pay a higher rate on income from financial markets.

Here's the essential problem: a government that is of the rich, by the rich, and for the rich will always work in favor of the rich. The problem grows even larger when the media, that middle-man between government and the people, charged with informing the public on these incredibly complicated and jargon-laden issues, also benefits from maintaining excessive tax cuts for the rich and sheltering their money in corporate tax havens.

In future posts, I hope to go into the campaign process itself, to better understand why and how our government is filled with individuals that do not benefit from leveling the playing field. For now, let's hope that Candidate Obama (I love the man when he's campaigning, though his presidency has been somewhat disenchanting) gets his way and that his new tax proposal gets some support in Congress.