Why Obama Needs Buffett?

The U.S. President Barack Obama may have many fans. Without doubt, his biggest fan is the world’s third richest 81-year-old man – Warren Buffett.

Buffett said publicly: “I fully trust Obama!”, and raised money for Obama with his aged body. In August last year, Buffett even claimed “Tax Me” on New York Times to find Obama a way to tax the rich. That proposal was readily adopted by Obama, and was named “Buffett tax.” Recently, Buffett challenged republicans by saying as long as Mitch McConnell donates each dollar to pay down the national debt, he will donate $3.

Let us see what benefit Barack Obama will see if the rich are taxed more, regardless why Buffett is still placing himself on tax issues.

First, Obama needs the money; Employment needs money; Deficit reduction needs money. The United States needs to reduce $3.6 trillion budget deficit in the next 10 years. To achieve this goal, almost half of that amount will come from the tax increase on the rich. Since Obama does not incline to cut welfare spending, raising tax on the rich will be the only way.

Why not cut welfare spending? From the propositions of the two political parties, Democrats prefer higher tax and higher welfare spending, which is in contrast with Republicans. Buffett’s “tax the rich” will only offend 0.3% of the total tax payers in the United States, while get a lot of votes from the lower middle class. So this deal is clearly effective enough.

Besides, “tax the rich” is an attitude. Buffett represented an important message to the public for Democrats – the government is not unjust. “Occupy Wall Street” is largely due to the minority controls most of the social wealth, but did not use the wealth to provide employment opportunities. “Tax the rich” will help the government walk out of the political crisis of legitimacy, so it has great importance in both financial and political significance.

Buffett said that the U.S. needs a new tax system. This system should favor the non-investor. He believes the United States needs a tax system to take care of people who cannot well adapt to the market and the capitalist system. These people are law-abiding citizens, contributing themselves to society. At least, if “tax the rich” cannot be passed by the Congress, Obama can blame the Republicans, and he will surely win back some support from the public.

However, the future of this proposal is still uncertain. A wealth tax is still far from resolving the dilemma of the United State society. It may be just another political show. (from international.caixun.com)