President Barack Obama says his proposed 'Buffett rule' is 'the defining issue of our time'
Washington -- In a likely preview of the fall elections, Democrats and Republicans offered sharply differing assessments Tuesday of President Barack Obama's proposal that millionaires pay a higher percentage of income than middle-class Americans. In a speech at Florida Atlantic University, the president said his proposed "Buffet rule" comes at a "make-or-break moment for the middle class and everybody who's aspiring to get into the middle class."
View full sizePresident Barack Obama delivers an address on the economy, jobs and taxes at Florida Atlantic University in Boca Raton, Fla., on Tuesday. The proposal is named for billionaire investor Warren Buffet, who says he pays a lower income tax rate than his secretary.
"This is not just another run-of-the-mill, you know, gabfest in Washington," the president said. "This is the defining issue of our time."
The campaign of Republican Mitt Romney, whose presidential nomination was virtually assured Tuesday with Rick Santorum's withdrawal from the race, continued to argue that higher taxes will stunt economic growth while accusing Obama of playing class warfare.
"President Obama is the first president in history to openly campaign for re-election on a platform of higher taxes," said Gail Gitcho, the Romney campaign spokeswoman.
Conservative and liberal economic think tanks agreed only on one premise: that the president's proposal to raise the minimum tax rate for millionaires to 30 percent won't be a big revenue-raiser, generating only about $47 billion over 10 years.
And the proposal, which is likely to get a Senate vote next week, isn't likely to pass, making it a campaign issue rather than a potential new law.
Still, the liberal Citizens for Tax Justice said the Buffet rule would bring some fairness to a tax system that currently provides far more benefits to the wealthy. Affluent Americans, like Buffet, make substantial income from investments and long-term capital gains, which are taxed at lower levels than work salaries, which most middle-class Americans rely on for almost all their earnings, according to the group.
Economist J.D. Foster of the conservative Heritage Foundation said higher taxes for millionaires would target small-business owners, many of whom record their profits under their individual tax returns. "The higher levy would confiscate from them resources they would otherwise use to start new businesses, grow existing businesses and hire more workers," he said.
In Louisiana, the debate among Louisiana members of Congress is along party lines in terms of what the impact will be of increasing taxes on the 69,000 Louisiana households with incomes of $1 million or more, according to the latest census data.
"This is just a new name on the same stale tax-increase plan, a plan that even the White House admits won't help reduce our historic deficit," said Sen. David Vitter, R-La. "And remember it was President Obama who said in 2009 that we shouldn't raise taxes during a recession. Now he apparently disagrees with himself. The good news is that folks in Louisiana and around the country see right through the President's campaign class warfare promises."
But Rep. Cedric Richmond, D-New Orleans, said the issue is all about fairness.
"Our present economic and financial state requires that all Americans sacrifice to preserve our country's future," Richmond said. "Those with limited resources are sacrificing services, so it seems only fair those that are extremely wealthy should give more than those without."
Sen. Mary Landrieu, D-La., agreed: "It is simply unfair that many middle-class families are paying a higher tax rate than people who earn more than $1 million a year. As we continue working to strengthen our economy and reduce our deficit, I support asking those who make over $1 million a year to pay their fair share in taxes."
Richmond said the tax on millionaires shouldn't be permanent, but should last "only long enough to get us through these tough times."
Rep. Steve Scalise, R-Jefferson, said that he doesn't put a lot of credence into polls that show more than 60 percent of Americans support higher taxes on the wealthy, pointing out that there's also a clear majority that believes higher taxes won't reduce the deficit and will be used to fund more government.
Scalise continues to advocate for his own legislation to create a line on income tax forms in which billionaires can voluntarily pay more taxes if they believe they aren't paying enough.
Under the bill likely to be voted on by the Senate next week, people with earnings over $2 million would face a minimum 30 percent tax rate. For those who earn more than $1 million, the rate would be gradually be phased in closer to 30 percent as their earnings grow closer to $2 million.
The proposal, however, would allow Americans to lower their reported tax income by making charitable donations.
The White House said tax fairness is way overdue. Over the past 50 years, the White House said, the tax rates for wealthy Americans were cut in half -- to about 26 percent -- while taxes for the middle class have either stayed the same or slightly increased.
Bruce Alpert can be reached at balpert@timespicayune.com or 202.450.1406.