An open letter to President Obama (Part 4 of State of Union Speech 1-24-12)

President Obama’s state of the union speech Jan 24, 2012

Barack Obama  (Photo by Saul Loeb-Pool/Getty Images)

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

The Heritage Foundation website ( ) has lots of good articles and one that caught my attention was concerning your State of Union Speech on January 24, 2012 and here is a short portion of that article:

Once Again Mr. President, Warren Buffett Doesn’t Pay a Lower Tax Rate than His Secretary – Curtis Dubay

As expected, especially her sitting in the audience, President Obama trotted out again the well-worn trope that Warren Buffett pays a lower tax rate that his secretary. The President did so to defend his new version of the“Buffett Rule” proposal that no millionaire pay less than 30 percent of their income in taxes.

The President can claim success on this one even before he ends his speech tonight because the Buffett Rule is already soundly in place. According to the CBO, the top 1% of income earners pay 30 percent of their income in all federal taxes.

The whole idea of the Buffett Rule is based on a fallacy. One that Warren Buffett himself should know better than to propagate.  It originated because Warren Buffett claims he pays a much lower tax rate than his secretary. But he earns his income through capital gains from stock he owns in businesses. He pays a 15 percent rate on those gains when he realizes them. But before he enjoys those gains, the businesses that generate them pay the highest-in-the-world 35 percent corporate income tax rate. In reality, Buffett pays 50 percent on the income he earns- far above the rate his secretary pays.

It is unclear exactly how the Buffett Rule would be implemented if it became law. One way could be to raise the tax rate on capital gains to the middle-income rate of 28 percent, or as high as the top income tax rate – 35 percent now and scheduled to rise to 39.6 percent next year. This would be highly damaging to the economy because it would drastically raise the cost of capital causing businesses to buy less. Less capital means fewer jobs and lower wages for American workers of at all income levels.

A policy that is supposed to help the middle class would end up hurting them. Such is the way when Washington plays soak the rich with the tax code. A better approach would be to reform the tax code so it is simpler, fairer, more transparent, and pro-growth along the lines of the Heritage Foundation’s New Flat Tax.


I really wish you would look at the benefits of the flax tax.

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.


Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733,

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