President Barack Obama’s proposed “Buffett rule” would use the U.S. tax code to combat widening income inequality, said Alan Krueger, chairman of the White House Council of Economic Advisers.
“At a time when the market is driving more income into the hands of the highest-income earners, that’s a time when it’s easier for the top income group to bear higher income taxes,” Krueger told reporters on a conference call.
The White House released a report today on the proposed minimum tax rate, named for billionaire investor Warren Buffett, who said the preferential tax rates on investment income should be increased.
Obama will focus on the proposal today in a speech at Florida Atlantic University in Boca Raton, Florida, on his 15th trip as president to the state.
According to the report, 22,000 households made more than $1 million in 2009 and paid less than 15 percent in income taxes.
The report cited an Internal Revenue Service study on the 400 U.S. taxpayers with the highest incomes in 2008, at $110 million or higher. Those people paid an average tax rate of 18.1 percent, excluding payroll taxes, down from 29.9 percent in 1995. Families in the middle 20 percent of the income distribution paid 16 percent in federal taxes in 2010, according to the report.
$2 Million Mark
The Buffett rule proposal would boost tax rates paid by households with incomes between $1 million and $2 million, phased up to a 30 percent minimum tax rate for those making more than $2 million a year. Taxpayers would be able to deduct charitable contributions.
The measure is scheduled for a procedural vote in the Senate April 16. The tax proposal would increase U.S. tax revenue by $47 billion over the next decade, assuming that George W. Bush-era income tax cuts are allowed to expire at the end of the year as scheduled.
Under current law, ordinary income is taxed at rates up to 35 percent. Capital gains and dividends are taxed at no more than 15 percent.
Jason Furman, deputy director of the National Economic Council, said the Buffett rule is part of Obama’s plan to reduce the federal budget deficit and change the tax code.
“This is the simplest, most common-sense of those ideas to put in place tomorrow,” he said.
Obama plans to hold three fundraising events in Florida today, raising money for the Obama Victory Fund, a joint committee to benefit his re-election campaign, the Democratic National Committee and state Democratic parties.
The first fundraiser is a 60-guest luncheon in Palm Beach Gardens with tickets starting at $10,000. An 850-donor event at the Westin Diplomat Hotel in Hollywood is to include a musical performance by John Legend, with a limited number of tickets at $250 for youth voters. A 60-donor nighttime event at a private home in Golden Beach is $15,000 per person.
Tax fairness will be a central theme in the election, Obama campaign manager Jim Messina told reporters yesterday.
He said Republican candidate Mitt Romney’s policies are based on protecting special tax rates for Wall Street investors and looking out for “people just like him.” Romney, the co- founder of Bain Capital LLC, paid 13.9 percent of his income in taxes in 2010, according to tax returns he released in January.
“President Obama is the first president in history to openly campaign for re-election on a platform of higher taxes,” Gail Gitcho, Romney’s communications director, said in a statement. “He has already raised taxes on millions of Americans, but he won’t stop there.”
The bill is S. 2230.
© Copyright 2016 Bloomberg News. All rights reserved.