If President Barack Obama has his way in 2014, the majority of Americans will be receiving significant tax breaks.

In his State of the Union Address last week, Obama mentioned several times the inadequacies of the current American tax code.

Specifically, he discussed numerous loopholes in the code, unreasonable tax rewards for the wealthy and unbalanced tax pressure on middle class families. Though he has pushed for tax reform in the past, the approach Obama proposed on Tuesday will undoubtedly help solve our current income disparity problem.

For the last several years, Obama has pointed out that loopholes in our current tax code punish American firms that want to invest domestically. This creates incentives for outsourcing manufacturing jobs.

Outsourcing then takes jobs away from American citizens. In a time where the unemployment rate is still too high, these jobs are absolutely invaluable. Obama suggests we reform the tax code to close these loopholes and allow companies to manufacture domestically without punishment.

Obama also discussed the upside-down nature of the tax breaks instituted by President George W. Bush. In its current structure, the tax code offers massive tax breaks to wealthy Americans. These breaks do not extend to middle and low-income citizens.

The reform strategy Obama presented involved taking these tax breaks and restructuring them to apply to middle- and low-income families.  This redistribution of wealth to the heart of the country’s population would result in higher overall saving and investment across the board.

The most controversial piece of reform that Obama discussed was the infamous “Buffett Rule.” Obama has discussed this rule before with limited success, but the benefits from its institution would be so great that he continues to try to push it through.

The Buffett Rule, named after investing giant Warren Buffett, calls for increased tax burden on individuals earning more than $1 million annually.

It’s difficult to see why this particular piece of reform is so controversial though.

Republicans frequently try to equate it to socialism. They claim the wealthy would be punished for the success they’ve earned through hard work. Even worse, they say, it will take hard-earned money from the wealthy and give it to the lazy, undeserving poor.

These might be legitimate concerns if there were any reason to believe that this would happen. First of all, the tax money from the Buffett Rule would go to the same place as all other tax revenue. How the government spends the tax money they receive wouldn’t change at all — it would simply have more money to spend.

Secondly, despite the increased tax burden, the lives of people who qualify would hardly be altered. At an annual income of more than $1 million, common sense says these individuals will have enough financial flexibility to maintain the lifestyle they want regardless of their tax rates.

In other words, it’s not a punishment because it wouldn’t have any discernible negative impact. As Warren Buffett himself has said, they can afford it.

Overall, Obama presented many feasible and useful ideas for reforming the tax code. Democrats and Republicans agree that the code needs to be changed and the economically sound changes introduced on Tuesday will create jobs, decrease income inequality and reduce America’s debt.

It’s hard to find a downside here. Hopefully Congress will agree and the president can continue with his plans for America’s restoration.

Chris Piemonte is a senior political philosophy major. He can be reached at [email protected].

 

Published on February 4, 2014 at 2:28 am