As I noted yesterday, it’s unlikely that we’ve heard the last from President Barack Obama about the so-called “Buffett Rule,” a new tax proposed on higher income earners. The idea is sure to be a central part of his campaign rhetoric, a way to divert attention away from his own failed record.

The arguments for the tax were initially that it was needed to help with deficit reduction. However, the Buffett Rule would bring in around $5 billion annually — less than a half-day of spending from Washington, and virtually nothing when compared to the $1.4 trillion budget deficit for the current fiscal year. Moreover, if it’s revenue you want, then why not just legalize marijuana, which, as Philip Klein noted yesterday, would bring in more revenue than the Buffett Rule:

The Buffett tax, which failed to advance in the Senate last night, would have raised $5.1 billion in 2013 (theoretically its first full year of implementation), according to the Joint Committee on Taxation. Yet a 2010 study by the libertarian Cato Institute found that legalizing marijuana alone would save the federal government $3.3 billion in reduced enforcement expenditures per year and raise an additional $5.8 billion in revenue assuming it would be taxed. If all drugs were legalized, the study estimated it would save the federal government $15.6 billion a year and raise an additional $31.2 billion in revenue — for a total of $46.8 billion. That’s slightly higher than the $46.7 billion the Buffett Rule tax is projected to raise over the full decade. These numbers only pertain to the federal government, but the majority of the cost of the drug war is imposed on state and local governments. If governments at all levels are included, the Cato study projected that full drug legalization would reduce total budgets by $88 billion when one includes enforcement savings and new tax collections.

Of course, if legalize marijuana, then you’ll need a “buffet rule” (oh c’mon, you saw that one coming). But don’t get your hopes up on the Obama Administration backing legalization of marijuana any time soon. That, however, is a subject for another post.

And as you know, the other side of the argument for the Buffett Rule is “fairness.” Over at the American Enterprise Institute, Alex Brill explains “fairness” in the tax code and notes that the Buffett Rule has become a distraction:

President Obama took to Twitter last week to advertise the fact that 1,470 millionaires paid no federal income tax in 2009. The White House has proposed a “Buffett Rule” mandating that taxpayers earning more than $1 million pay at least 30 percent of their income in federal income taxes. However, the unfairness the Obama administration has identified is only one limited, albeit particularly eye-catching, manifestation of more systemic problems in the tax code. The president’s focus on a few thousand millionaires who avoided income taxes overlooks the fact that 5.1 million households with incomes ranging from $40,000 to $100,000 also paid no income taxes in 2009. For the 35.8 million other people in the same income range who paid, on average, thousands of dollars in federal income taxes, this is also a significant matter of fairness. In 2009, 42 percent of all tax filers paid no federal income taxes, the highest percentage of tax returns with no tax liability in more than 24 years. In fact, while the number of tax returns filed jumped from 107 million in 1987 to 140.5 million in 2009, the number of taxable returns actually fell from 87 million to 82 million. While the great majority of those who paid no federal income taxes had incomes below the median level, millions of those who escaped the income tax had much higher adjusted gross incomes (AGIs), including but not limited to the 1,470 millionaires. For example: • Of the 10.8 million taxpayers with AGIs between $40,000 and $50,000, 22 percent paid no federal income tax in 2009, while those who did have tax liability paid an average of $3,000. • Of the 18.7 million taxpayers with AGIs between $50,000 and $75,000, 12 percent paid no federal income tax. Among the remaining 16.4 million returns in this income bracket, the average tax bill was about $4,700. It is simply unfair that similarly situated taxpayers have radically different tax liabilities, but many middle- and high-income taxpayers are able to avoid the federal income tax because of the myriad of tax breaks in the tax code. Many of these tax expenditures are perfectly nice-sounding, such as the child tax credit, education tax credits, an extra standard deduction for the elderly, and the mortgage interest deduction. But, taken together, they completely wipe out tax liability for tens of millions of taxpayers. This situation is a natural consequence of Congress’s long-standing use of the tax code for social engineering. Homeowners pay less tax than renters. Parents pay less than pet owners. Charitable givers pay less than misers. Buyers of electric cars pay less than those who take the bus or ride a bike. This gives rise to genuine concerns about fairness. When some millionaires don’t pay income taxes, it irks both the less well-off who pay hundreds or thousands of dollars in taxes annually and the millionaires who pay hundreds of thousands of dollars in income tax. Similarly, a typical taxpayer with an income between $75,000 and $100,000 should be miffed that nearly half a million others with the same income avoid income taxes completely. It is more shocking to hear of millionaires who pay no income taxes, but both situations raise legitimate questions of fairness. These tax breaks for particular activities or goods not only lead to wild disparities in tax burdens among similarly situated taxpayers, but also distort consumer choices and impede economic efficiency by misallocating resources. And the resulting convoluted tax code is nearly impossible to navigate without specialized expertise. While broad-based, fundamental tax reform would best ensure a fairer and less distorted tax code, progress could also be made with more modest steps to broaden the tax base. For example, Congress could eliminate itemized deductions completely, allowing all taxpayers to claim a standard deduction based on whether they are single or married. Such a change would dramatically simplify the tax system and significantly cut down on the number of middle-income taxpayers who escape the income tax system. Yet it would have little impact on lower-income taxpayers because they rarely itemize their deductions. Part or all of the additional revenue collected by the simplification could be used to reduce marginal tax rates. There is no single solution to the faults of the tax code, but the Buffett Rule is among the least logical Band-Aids imaginable. It adds another layer of tax complexity and creates another set of economic distortions. The issue of tax fairness is a legitimate one for lawmakers to consider, but deserves a broader focus and more structural solution than the Obama administration’s attack on a small group of millionaires. The Senate was right to reject the idea. Now, hopefully, it will turn its attention to more fundamental tax reforms.

It’s also worth noting that, despite all his rhetoric on “fairness,” Obama paid a lower tax rate than his secretary (though to his credit, he did donate a lot to charity). Of course, he didn’t make a million dollars, but he did make substantially more. So does the same rule he’s apply to higher income earners also apply to him? Apparently not.

But like a crook looking for another bank to rob, Obama keeps coming back to the rich as part of his agenda for growing government because that’s where the money is; and he knows that they aren’t a group with which the average voter can sympathize. It’s not about honesty with Obama. It never has been. It’s about playing off the ignorance of voters.