The Buffett Rule and the Art of Taxing the Rich

What is the Buffett Rule

Good framing is central to successful political persuasion and tax reform is no exception. Recently, the Obama administration proposed a new tax on the extra-rich. Whatever the merits of the proposed reform, its framing is perhaps more interesting than other aspects. Some call it the millionaires’ minimum tax, but the Obama administration ingeniously calls the Buffett Rule, after the billionaire investor Warren Buffett.  Taxation has been an ulcer of American politics and it will be interesting to watch whether persuasive framing through the Buffett Rule  will be enough to sway those who oppose this tax.

The Buffet Rule: Framing through Disinterest

Buffett is not poor – in fact, he is the third richest person on the planet. And this is why the framing is persuasive: it relies on disinterest. The Obama administration could call the proposed tax “social fairness through extra taxation of the rich” or  “the Forbes Billionaires Tax.” (And the republicans could call  it “the tax on paradigm shifting innovators who revolutionize industries”.) But instead it choose to call it after Buffett, because if the reform would succeed, Buffett would stand to lose more than almost anyone else. Even so, the Wizard of Omaha supports the reform that would only take away more of his dollars.

Research shows that people in general are notably swayed by disinterest. So the Buffett Rule probably prompts people to think along these lines: either Buffett is stupid and crazy (which is unlikely) or the proposed reform is so rationally compelling that he feels compelled to accept the losses.