President Obama proposes a new tax on millionaires in his deficit reduction plan.
President Obama unveiled today his proposal for a new tax on millionaires as part of his roughly $3 trillion debt reduction plan. The so-called “Buffet Rule” is a reference to billionaire investor Warren Buffet’s New York Times op-ed last month, in which he called on Congress to raise taxes on those who earn more than $1 million.
"While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," he wrote.
President Obama’s plan seeks$1.5 trillion in tax increases on “the wealthiest Americans and biggest corporations.” Under his proposal, $800 billion of the $1.5 trillion in tax increases would from allowing the Bush-era tax cuts to expire as scheduled for wealthier taxpayers, while extended them for individuals who make less than $200,000 annually and families earning less than $250,000. In his speech, Obama said he would veto any debt reduction legislation “that puts all the burden on ordinary Americans.”
In this prolonged economic downturn, tax increases are of increased concern to Millionaire investors, according to a 2011 wealth level study conducted by Millionaire Corner. Seventy percent cited it as the most compelling national issue, up nine percentage points from last year. Of these, 77 percent were business owners, who are considered the job creators and engines of the economy.
The president’s proposal for a new tax on millionaires is a populist approach that would raise political pressure on Republicans to agree to the tax hike. But Republicans are not buying. In a speech last week, House Speaker John Boehner said that tax increases “are not a viable option” for the 12-member bipartisan supercommittee that has been charged with trimming at least $1.5 billion from the deficit. Their deadline is Nov. 23.
South Carolina Sen. Lindsey Graham and Wisconsin Rep. Paul Ryan have called the new tax “class warfare.” In his speech, Obama countered, “This is not class warfare, it’s math.”
Obama’s plan also includes entitlement cuts and war savings to bring the deficit down by $3 trillion over the next decade.
White House estimates that the president’s plan would reduce debt to 73 percent of the size of the economy by 2021. It also estimate the annual deficit that year would fall to 2.3 percent of gross domestic product, down from the 5.5 percent currently projected, CNN reports.