Washington – Going on the offensive as the presidential campaign heats up, the White House released a report late Monday that champions legislation to force the wealthiest Americans to pay a greater percentage of their income in taxes.
The report’s release was timed to President Barack Obama’s scheduled speech Tuesday in Florida, a key electoral state, about the so-called “Buffett Rule.” The Senate is scheduled to take a test vote on the proposal next Monday, with a procedural vote on a measure that would ensure that the wealthiest 1 percent of Americans — with incomes above $1.1 million — pay at least 30 percent of that income to Uncle Sam.
“Of the 400 highest-income earning Americans, one in three of those 400 paid less than 15 percent of their income in taxes in 2008,” Alan Krueger, the head of the White House Council of Economic Advisers, said late Monday on a conference call. “If you look at the 400 as a whole, on average they paid just 18 percent of their income in federal income taxes.”
The call and the report, called “The Buffett Rule: A Basic Principle of Tax Fairness,” were embargoed until Tuesday morning, presumably to better control the message to Floridians in a key battleground state.
The proposed minimum tax on millionaires would raise about $47 billion over 10 years, according to congressional scorekeepers, or less than $5 billion a year. The U.S. deficit, by contrast, was $1.3 trillion for the 2011 fiscal year, which ended last Sept. 30.
“We think $47 billion is actually meaningful and to most Americans would sound very large,” said Jason Furman, the deputy director of the White House’s National Economic Council.
Critics contend, however, that the Buffett Rule distracts from the more serious need to slash deficits and the burgeoning U.S. debt.
“It’s campaign fodder, nothing more. It could discredit what could be a good idea,” said Bob Bixby, the executive director of the nonpartisan budget watchdog group The Concord Coalition. The proposal should come as part of a bigger tax overhaul, not as a standalone, he said.
By trying to force a congressional vote on the Buffett Rule, the White House hopes to draw a contrast with presumptive GOP presidential candidate Mitt Romney, a multimillionaire whose own fortune would be hit by the rule change.
Romney is worth $190 million to $250 million. Most of his taxable income comes from investments rather than wages, taxed at the rate of capital gains. His tax records for 2010 show that he and his wife, Ann, had an effective tax rate of 13.9 percent of their income after deductions.
The nonpartisan Tax Foundation estimates that most Americans pay an effective tax rate, on average, of 11 percent. Obama’s family income is largely from wages and book-sale profits. More of his income is taxed at a higher rate than Romney’s is, and the Obamas’ effective tax rate in 2010 was about 26 percent.
These varying effective rates show the difficulty in drawing direct comparisons on taxation.
The Buffett Rule is named after billionaire investor Warren Buffett, who famously noted that he and other investors often enjoy deductions that result in their having lower tax rates than their secretaries do.
Playing on that theme, Obama’s campaign website touts a new “Pass the Buffett Rule” feature that includes a 30-second clip of the late President Ronald Reagan, a Republican icon. The clip showed Reagan calling it “crazy” that millionaires were paying less in taxes than a bus driver did.
The campaign singled out Romney in an email from campaign manager Jim Messina, accusing the former Massachusetts governor of wanting to “give $5 trillion in tax cuts slanted toward millionaires and billionaires while gutting Social Security and Medicare.”
When pressed Monday, White House spokesman Jay Carney said the White House wasn’t trying to score political points. But he acknowledged that by holding the vote, senators would be forced to go “on record” on an issue that has “broad support across the country from Americans of all political persuasions.”
The Senate is due back from its two-week recess next Monday. Democrats hold a slight majority, but it’ll take 60 senators to pass a procedural vote that ends extended debate. Not all Democrats are expected to support the vote, so the measure is likely to fail.
“This is yet another proposal from Democrats that won’t create a single job or lower the price at the pump by a penny but may have the opposite effect,” Senate Republican leader Mitch McConnell of Kentucky said recently about the planned vote.
© 2012 McClatchy-Tribune Information Services
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