To nobody's surprise, the Buffett Rule — which would have imposed a 30% marginal tax rate on income over $1 million — failed to gain 60 votes in the Senate yesterday, and so did not come to the floor for debate. Given that the bill was nothing but political theater, and never could have cleared the House had it by some miracle passed the Senate, nobody much gives a damn.
Anyway, a 30% marginal tax rate on income over $1 million is entirely too low. Even during the first Reagan term, the rate was 50%, and in terms of garnering revenue, it was a step back from ending the Bush tax cuts for those earning over $250 thousand. If the Obama administration really wanted the very rich to pay their fair share, it would push for a return to taxing dividends and capital gains at the same rate as earned income. (Capping those rates at 15% was one of the contributions of the "liberal" Clinton administration.)
Recently, Simon Johnson and James Kwak suggested that all the Bush tax cuts be allowed to expire at the end of this year. I agree. Stopping new legislation, as the Republicans have demonstrated over and over, is a lot easier than getting anything positive done, and the tax cuts Bush provided to the middle class really are small enough to be negligible.
Nevertheless, absent some grand bargain, I think we can count on Congress to extend them all — perhaps even make them permanent. If Obama is serious about deficit reduction, and a bill like that reaches his desk, he'll veto it.