WASHINGTON (CNN) – The White House will propose a new tax rate for people earning more than $1 million a year to ensure that they pay at least the same percentage of their earnings in taxes as middle-income Americans, administration and White House officials told CNN on Sunday.
Called the Buffett Rule, the proposal will be part of a comprehensive deficit reduction plan that President Barack Obama will unveil on Monday, according to a senior administration official and White House sources who spoke on condition of not being identified. The information was first reported by The New York Times.
The plan's name refers to billionaire Warren Buffett, who has complained that wealthy Americans pay less than their fair share in taxes under the current tax code.
In particular, Buffett says, wealthy taxpayers who generate significant investment income pay the lower capital gains rate on that money. Obama's proposal would be designed to prevent a resulting imbalance.
Obama will propose several tax changes, one White House official said, adding that the Buffett Rule would replace the current Alternative Minimum Tax that was created to ensure people paid a minimum percentage of their income in taxes.
According to the White House official, the Buffett Rule would impact only 0.3% of taxpayers - fewer than 450,000 individuals. The president will not specify a specific rate or details of the Buffett Rule in announcing his proposal, leaving it to Congress to decide how to calculate such a rate as part of the larger debate over rewriting the tax code, the official said.
Obama's deficit reduction plan is expected to also propose changes to the Medicare and Medicaid government health care systems for senior citizens, the disabled and the poor.
It will come out as a special congressional committee created under last month's debt ceiling agreement continues its early efforts to forge a deficit reduction plan that can pass Congress by December 23. If the committee's effort fails, more than $1 trillion in spending cuts will automatically kick in, on top of $900 billion in cuts already mandated under the debt ceiling deal.
The issue of tax increases has been at the heart of a divisive policy dispute between Democrats and Republicans. Obama wants to end Bush-era tax cuts on families earning more than $250,000 a year, but Republicans have blocked his efforts, arguing it will hinder investment.
House Speaker John Boehner, R-Ohio, last week reiterated his opposition to any tax increases being part of a deficit reduction package being negotiated by the special congressional panel.
On Sunday, House Budget Committee Chairman Paul Ryan, R-Wisconsin, told "Fox News Sunday" that Obama is essentially calling for raising the capital gains tax, which he said would harm growth.
"If we tax investment in job creation more, you will get less of it," Ryan said, calling the initial details of the Obama proposal "not a very good sign, because it looks like the president wants to move down the class-warfare path."
Another top Republican, Senate Minority Leader Mitch McConnell of Kentucky, also said raising taxes on the wealthy will hurt the economy, particularly small business owners who file individual tax returns instead of corporate tax returns.
"We're not opposed to more revenue," McConnell told NBC's "Meet the Press," adding that his party wants a growing economy to bring in more money, rather than higher taxes that he said would hinder growth.
Asked about Buffett's point that the wealthy pay too little in taxes, McConnell invited him to send in a check "if he feels guilty about it."
On the same program, former President Bill Clinton said tax reform is necessary, but that "the least harmful tax increases are the ones that Sen. McConnell and people who agree with him hate the most," in reference to ending the Bush-era tax cuts.
"Right now we don't need what the Republicans want, which is further spending cuts," Clinton said.
"Conflict seems to be better politics; cooperation is better economics," Clinton said of what he described as Republican obstruction of Obama policies, such as the $447-billion jobs plan introduced last week.
Ryan, however, argued on the Fox program that it is Obama and Democrats sowing conflict.
"Class warfare may make for good politics, but it makes for rotten economics," Ryan said.
–CNN's Tom Cohen, Dan Lothian and Lesa Jansen contributed to this report.
"Even if it were desirable, America is not strong enough to police the world by military force. If that attempt is made, the blessings of liberty will be replaced by coercion and tyranny at home. Our Christian ideals cannot be exported to other lands by dollars and guns. Persuasion and example are the methods taught be the Carpenter of Nazareth, and if we believe in Christianity we should try to advance our ideals by his methods. We cannot practice might and force abroad and retain freedom at home. We cannot talk world cooperation and practice power politics."
Congressman Howard Buffett, father of the billionaire investor Warren Buffett, was the Ron Paul of his day. He was a strict constitutionalist, opposed to the welfare-warfare state, a foreign policy non-interventionist, and a strong believer in the gold standard.
Buffett Tax? What happened to his son?
Can someone please explain to me why it's a bad thing that the wealthy pay at least as much in taxes as the rest of us do?
POLL: Are you opposed to raising taxes on those who make over $1 million so they pay the same tax rates as middle class earners?
Wealthy should definitely pay more because the country needs it. The only concern (and minor), is that higher taxes on the wealthy will discourage innovation.
Taxes should also be raised on entertainment professionals too: actors, musicians, artists, athletes. Entertainment is the first thing I cut in the family budget to save money, so here's another area to gain more revenue.
And the US should pass a 5% Federal goods and services tax. This helped pay down Canada's deficit and it'll work for the States too.
Yes, of course. More Taxes for the Rich, Less jobs for the poor. Seems fair to me. Now why didn't I think of that. The question is, why didn't the stimulus lower the unemployment rate. It would seem that Obama would start singing a new song rather than trying the same thing over and over. It appears that jobs are a long time coming back. Sorry..
Well the additional spending was $500 billion spread over 4 years or about $130 billion year or less than 1% of our GDP, why should the stimulus have done more than it did? Which was just to reduce the bite out of unemployment. The stimulus did fine for Rick Perry after all and allowed him to cover a $25 billion dollar deficit and avoid cutting hundreds of thousands jobs in Texas. So I guess even if it was a small amount it worked wonders for a dishonest politician or two.
Then explain why the Bush tax cuts didn't create jobs? He had a few more years for it to work than Mr Obama's stimulus (Which actually SAVed AND CREATED jobs). Same tired GOP rhetoric.
It seems the unemployment rate under Bush was about 4.5 to 5.6 percent. Unemployment didn't start to go up until the people voted the democrats back in charge of the Congress. The Housing Fiasco was a big part of that, persumibaly. Small business probably won't do much hiring until they know what their expenses are. With the Bush Tax Cuts expiring in 2012 and Obama Care breathing down their neck High unemployment is likely to continue. Unemployment was up 11,000 last week. This week, who knows? But we will see, won't we?
People who say they will always support Obama, not matter what, are traitors to America.
America is MORE important than Obama.
A President should only receive continued support, based on his performance ... and,
Obama's performance has run America's economy into the ground.
SAVE AMERICA ... DUMP OBAMA ... AND, HURRY UP, WHILE THERE'S STILL AN AMERICA TO SAVE !!!
It's about time someone developed a little bit of sanity regarding taxes. In 2000 before Republicans took control of both houses of Congress and the Presidency taxes accounted for 20.6% of the GDP and federal spending accounted for 18.2% of GDP producing a surplus of $250 billion. By 2009 the last year of G.W.'s presidency tax receipts had declined to 14.9% of GDP and spending rose to 25.0% of GDP. And yes FY2009 starts in October of 2008 for the Federal government so it was Bush and the Republicans tax and thanks to 2 wars, the most expensive benefit plan in the form of the prescription drug plan since Medicaid and other Republican spending initiatives that caused most of the additional spending, oh and the TARP plan which was Bush's after all. In other words irresponsible Republican behavior led to this crisis, and proposing a small tax on Millionaires to help balance out irresponsible GOP spending and tax cuts is necessary.
A decrease in the tax rate from from 20.6% to 14.9% equals approximately $855 billion in reduced taxes which is the lion's share of the deficit. Imagine that an $850 billion tax cut produces the worst growth in our history. The facts are in tax cuts by themselves do not produce increased growth, other factors are far more important. And most importantly yes taxes will need to be increased to bring the budget back into balance. Especially after the additional Republican spending on national security and medical care through the prescripiton drug care plan medicare advantage and other expense long term Republican programs.
Tax the rich, feed the poor
Till there are no rich no more
I am a Conservative, however on this issue I will agree with the president. Not because I think it is a good idea, but because I think it will not make a difference. The rich will find a way to make a profit, the government will find a way to waste the money and Barry will find a way to blame President Bush. Just like matter, no jobs will be created or destroyed. Lets not get bogged down in an idealogical fight.
As Conservatives we have spent too much time trying to educate Liberals on the merits and practicality of capitalism. For what ever reason they just do not get it. In fact they take pride in their ignorance. "Evil big company", "Greedy rich", are their battle cries. Let the president have his fun poking holes in windmills. We Conservatives will move past this issue and concentrate on job creation.
Alvin Lee, Ten Years After.-WOODSTOCK. The Capitalists worst nightmare still lives !
Looks like we have been feeding the rich pretty well on all the "welfare for the rich" tax breaks they receive. Time for them to quit bellying up to the trough, and start pay a few more taxes.
Ahhh if only conservatives new the first thing about capitalism. What pro-capitalist ideology said fighting two wars, passing the largest social program since Medicare in the 1960s while simultaneously having the largest tax cuts in history was smart or intelligent? It would seem to me it is the Republican Party that needs to be educated in Capitalism. That is unless conservatives are claiming credit for being experts in Crony Capitalism which would be about right.
We do not need a Warren Buffet tax or any other tax. We tax too much and we spend more than we tax.
We do not need another layer in the tax code, but we do need to tax equitably and all should pay their fair share.
It is time to dispose of our impossible to understand and ridiculously complex tax law, with all of its credits and deductions, and replace it with a simple flat tax – 15%, 20% whatever percent is right. Warren Buffet, his receptionist, you and I can then quite simply pay our fair share.
The "Job Creators" are not creating jobs because of uncertainty. They don't know how much taxes they have to pay etc. Well President Obama is about to tell them. What will be their excuse then? The fact is they can pay more like they did under President Clinton they just don't want to. Why? Because they want to make President Obama a one term president. It's that simple. They want the White House so they can deregulate, not raise taxes, deunionize, and continue their class warfare on the poor and the middleclass. They want it all because of Greed. Again it's that simple. The Conservatives think we are Stupid. We're not . It is so transparent.
Gosh if it were that Simple. The Liberals/Democrats were in power over most of the last 75 years. But we are in a huge mess. Ever wonder why? And if all those Big Social Programs were such a sucess, why do we have a 14.5 Trillion dollar debt, between 9 and 17 percent unemployment, 15 percent of the people living below the Poverty level, 46 million on Food Stamps, etc. And if we are still in a big mess I have to ask all the liberals/democrats, what happened? All this was supposed to be fixed now. The liberals forced the banks to give people housing loans they knew they couldn't afford. They were called Liar Loans. Well you see what happened. But all that will be swept under the rug and the blame will be put on, (You Gussed it), The Banks, The Brokers, Wall Street, everyone but where the blame belongs, the people that applied for the loans and the politicans that forced them. Better look out for youself because no one else is.going to.
well 4 me is a good idea,d obama is doing a good job,cutting d rich to give to the poor,it is a good start.
There is nothing stopping Warren Buffet from donating his entire fortune to the US government if he so desires. Of course, the US government would spend Buffet's entire fortune in a matter of hours since its spending is so outrageously out of control..
It's not Class Warfare.... It's called fix the loop holes. Congress stop taking from the Middleclass and giving to the Rich, those over 1 Million would not be a bad start.
Notfooled; good post. I agree. Hi Jean!
@Derrick; Good post...I agree! However, the system as set up now, isn't concerned with that as an idea; a GOOD idea! This aggregious, begrudging system is more interested in styfling the purse-strings of the entertainers; the athletes, musicians, actors, artists, etc! They'd just as well see them lose their livelihoods, which are their 'businesses', than to be cognizant of the fact that YES! The more these people make, the more we can tax! The envious clowns would rather see them back in poverty or jailed!
...Most of these people, if not all are at the minimum, MILLIONAIRES; or at least on their ways to becoming millionaires! Look at what the system does to them: Especially athletes! It stomps around behind them, looking for any and everything that could potentially turn their lives up-side down; cost them their jobs, stunt their opportunities, lose their wives, husbands, causing them to have to pay alimony/child-support, pay for 2 home/lifestyles, lose sponsorships, sicks IRS on CERTAIN ones indescrimantly.
@Derrick, all of these Americans are the ones who usually fall quickly into the 250K bracket and way above; but NO! The 'elite supremasts' want to be the only ones with that kind of money, so what do they do? Through the 'feds' they come up with the idea of instituting laws for 'salary capping'. Anybody in their right minds knows it's a target agenda too! Oh, they'll cap a few whites to knock out all the blacks. Talk about government interferring with the private sector! They'll start on HOLLYWOOD next!
How 'communistic' of them! And then they have the audacity to call PRESIDENT OBAMA a communist, and a socialist! Oh yes..he's also a muslim! We know this whole idea of salary capping came from the envious conservative base...I heard Foxnews screaming about it for days! Heard it being broadcasted on 'con' radio stations. You're cutting off your stupid noses to spight your stupid faces! I would think these are also ones who like BUFFET, could be contributing their fair share to the countrys' revenue problem!
Life isn't fair. If the USA is to successfully pay down its debt, it will have the tax the rich proportionately higher. I suggest specific occupations over others in order to minimize the pain. Hollywood is not essential to national security...it, as well as professional sports, music, the arts, etc., are safe areas to take greater revenue from in tough times. When balancing a family budget, entertainment is almost always the first to be cut.
Also, to successfully pay down the US debt, taxes will have to go up across the board. Not just the millionaires, but the middle class and eventually the poor too. It's just reality.
You have a point and that may have to become reality; but I do still believe that, 'To whom MUCH is given, MUCH is required'.