The Buffett Rule has become a signal piece of election-year political rhetoric. It featured heavily in Mr. Obama’s State of the Union address last month. It has become a favored talking point on the campaign trail. And Mr. Obama underscored his support of it in his budget proposal. But the White House says it is a “guideline,” rather than a legislative initiative. And it says it prefers not to establish the Buffett Rule without a broader overhaul of the tax code, though it would support a Congressional effort to carry it out alone. “This is the guiding principle of tax reform,” said Jason Furman, principal deputy director of the White House’s National Economic Council. “To some degree, it’s a specific policy, where we set a floor, a minimum rate. And to some degree, it is a statement of principle of how you would like to design the tax system.” The Buffett Rule is named for Warren E. Buffett, the Berkshire Hathaway billionaire who made a point of saying that he pays a lower effective tax rate than his hard-working secretary, Debbie Bosanek, who sat in Michelle Obama’s box at the State of the Union address. It seems like an appealingly simple way to ensure that the rich do not pay a smaller proportion of their earnings than many members of the middle class. But tax experts and even the White House itself contend it might be hard to carry out. The White House asked for numerous changes to raise more revenue from the wealthiest Americans in its budget proposal. Those include allowing the high-end Bush administration tax cuts to expire and taxing dividend earnings as regular income. But the proposal stops short of suggesting an application of the Buffett Rule on top of that, instead listing it as a “principle” for future reform, alongside a repeal of the alternative minimum tax. The much-hated alternative minimum tax was initially designed to do just what the Buffett Rule would: prevent the wealthy from using loopholes and deductions to lower their tax rates. But the tax was not indexed for inflation, and therefore, each year it ensnares more and more middle-class Americans. Congress has “patched” the tax to prevent it from hitting the more than 30 million tax filers who should hypothetically pay it. Still, 4.3 million tax filers paid the alternative minimum tax last year, raising $39.1 billion in revenue. Tax experts say creating a new alternative minimum tax for the wealthy might make for good political argument, but it is less compelling as policy. “It just doesn’t make any sense to have one set of rules that applies to some people and one set of rules that applies to everyone else,” said Leonard E. Burman, a tax expert and professor at Syracuse University. “It’s really complicated,” Professor Burman said. “I’m very sympathetic to taxing capital gains like ordinary income; that’s the issue this proposal is ostensibly addressing. But the idea that we have different sets of rules for different people? It undermines the tax code.” William G. Gale, a director of the Tax Policy Center and a senior fellow at the Brookings Institution, said: “A well-designed tax system would as an artifact be consistent with something like the Buffett Rule. But trying to glom the Buffett Rule onto the current tax system? That’s going to be a mess.” There is a second reason for not proposing the Buffett Rule in the budget: It would significantly reduce revenue if installed alongside a repeal of the alternative minimum tax. According to Internal Revenue Service data, 236,883 tax filers made $1 million or more in 2009, and they paid an average rate of about 24 percent. Bringing that up to 30 percent would raise billions of dollars over time — but not nearly as much as the alternative minimum tax, experts say. While the White House has declined to make the Buffett Rule a concrete proposal, Democrats in Congress have forged ahead. Senator Sheldon Whitehouse, Democrat from Rhode Island, independently came up with the idea for a minimum tax for the wealthy, and made a proposal after Mr. Obama mentioned it in his State of the Union address. The proposed law, the Paying a Fair Share Act, eliminates all deductions for the wealthy except their charitable contributions. After that, they must pay a 30 percent minimum tax on the balance of their income. The law includes a phase-in, to avoid taxing Americans making $1 million at much higher rates than others making $999,999. If the taxpayer makes between $1 million and $2 million, the tax bill is only a fraction of the difference between taxes owed under current law and taxes as determined by the Buffett Rule. The administration consulted with Senator Whitehouse’s office on the proposal, and has said it backs it. “We’re broadly comfortable with the approach Senator Whitehouse laid out in his proposal,” Treasury Secretary Timothy F. Geithner told the Senate Finance Committee on Tuesday. “You can do it different ways, but no concerns about not going ahead with something in that broad neighborhood.” Testifying about the budget proposal on Capitol Hill this week, Mr. Geithner defended the administration’s requested tax changes and its choice not to include a comprehensive tax reform plan. He said the White House strongly recommended broad tax reform to broaden the tax base and simplify the dizzyingly complex tax code. But it recommends enacting changes in the meantime to help reduce the deficit and raise revenue from the wealthy. “We think the better way to get there is through comprehensive tax reform,” he said. “We took a run at trying to negotiate a framework like that with Republican leadership in the House,” Mr. Geithner said of comprehensive reform. “We found no basis for agreement on even the broad framework.” “We’re just trying to be realistic,” he added.
