The Buffett Rule

President Obama has spoken many times of his desire to pass a "Buffett Rule".  This rule would increase the tax rate of people earning more than $1 million.  This, we are told, is in the name of everyone paying their fair share.  Here are a few thoughts on the matter:

• Warren Buffett earns nearly all of his money from capital gains as the largest shareholder of Berkshire Hathaway.  He, therefore, pays most of his taxes based on the capital gains rate of 15%.  This money he earns is based on the growth of companies that have also paid taxes at a 35% rate (their effective rates may be lower, but they likely pay large amounts of taxes).

• Buffett's effective tax rate is 17.4%.  His secretary, Debbie Bosanek, pays, according to Buffett, somewhere between 33% and 41%.

• Ms. Bosanek receives some of her income from capital gains through the stock she is given by Mr. Buffett.  To get up to an effective rate, after deductions and including the lower capital gains income, total income would have somewhere near or above $379,000 per year and would be in the top bracket.  She would also be in the vilified 1%. The problem is that nobody truly knows.

•  This situation, while it is an exception and not a rule, has been used by President Obama to show the need for a "Buffett Rule" to ensure millionaires pay higher tax rates, regardless of how their income is classified.

With the importance of this issue, and the role it played in the State of the Union Address as well as the role it is playing in the push for higher taxes, there should be full transparency and a full discovery of facts.  Debbie Bosanek should release her tax return from last year in support of her boss and his political push to pass a tax increase that many do not support.  It is absolutely necessary if this situation is to be used to push tax policy.

This political relationship between the President and Warren Buffett is especially troubling due to the recent Keystone Pipeline XL news.

• President Obama recently rejected a proposed pipeline to carry oil from Canada to the Gulf.

• The alternative to piping is to carry the oil, much more expensively, by railroad.  Warren Buffett has a great deal of investment in the railroad industry and would benefit substantially from this alternative.

The link between Warren Buffett and Barack Obama is one that benefits both and is the definition of Crony Capitalism.  It is a company using it's influence, without transparency, to advance a political cause of the President, and that President using his political power to advance a business interest of that same company.  It is wrong and their relationship is not one to be seen as a good one or one that advances the cause of America.