Washington (CNN) - Senate Democrats formally unveiled legislation Wednesday to ensure that all millionaires would pay a minimum federal tax of 30 percent.
The legislation comes as the relatively low tax rate for some high earners –like investor Warren Buffett and GOP presidential candidate Mitt Romney– takes center stage in both the policy and political arenas in Washington.
Follow the Ticker on Twitter: @PoliticalTicker
President Obama and congressional Democrats have made enactment of the "Buffett Rule," which they say would force high earners pay a higher tax rate than their secretaries, a central part of their re-election messages. They argue it's both a matter of fairness and the best way to reduce the staggering deficit.
Buffett supports the Democrats' legislation.
"These middle class families are really struggling to get by and then they find out that some people with really extremely high incomes are actually paying lower all-in federal tax rate than they are. That's, to them, just not common sense," said Sen. Sheldon Whitehouse, D-Rhode Island, and author of the bill. "Americans deserve a straight deal and right now they are not getting one from our tax system."
A key reason Buffett and Romney pay a lower tax rates is because most of their income comes from investments. Taxes on capital gains from investments are capped at 15%.
The legislation would apply to people earning more than $1 million a year, be it from salaries or investments or both. They could still take some deductions – such as for charitable giving – but after all is said and done, they must pay an effective tax rate of at least 30 percent of their income as federal taxes.
Whitehouse says his legislation would raise billions for the government but there is no official estimate from the Congressional Budget Office about how much it would raise.
Most Republican strongly oppose raising the capital gains tax because they argue taxing investments at a higher rate will stifle job creation and hurt the economy.
Senate Democratic leaders have not decided when they will push for a vote on the legislation, which is called the "Paying a Fair Share Act of 2012." They want to consider first a handful of bills they consider to be job creation measures, including a highway funding bill, the FAA funding bill, and postal reform bill, according to aides.
Romney: Convention or bust
Santorum looks past Florida
New anti-Obama ad slams Solyndra 'fiasco'
Romney to receive Secret Service protection
Dave is right. This bill is just politics. This bill will bring in less than $50 Billion—not even enough money to run the Federal government for a week. It puts a measly 3% dent in this year's deficit.
A part of me hopes this thing passes. That way, liberals can't complain about the rich not paying their "fair share", and we can go about the business of cutting the remaining $1.2 Trillion out of the budget to balance it for once.
For fifty years, the capital gains tax was 28%. Good times and bad times, it was 28%. The Bush tax cuts of 2002 cut the capital gains tax down to 15%. The Bush tax cuts and the two unfunded wars are responsible for the deficit of $15T. We have had a deficit since the second world war. Obama did spend alot of money, saving jobs in the auto industry, saving the bank deposits of millions, feeding the unemployed millions and providing healthcare to millions. The president did what he is suppose to do, promote the general welfare, it's in the Constitution!
The rule for capital gains should be: if you have made more than $1,000,000 in capital gains, then your tax is 30%. I don't know what these GOP people think and can prove about these people creating jobs here in the US. I'd like to see their so called proof.
"The legislation would apply to people earning more than $1 million a year, be it from salaries or investments or both"
They will never be able to tax enough to pay off the debt without cutting spending. Bring our hundreds of thousands of troops overseas back here to guard our borders and spend their paychecks here at home and let the wealthy Asian and Eurpean countries pay for their own defence.
ill care when my investments make a mill a year. btw, the dems are only doing this because they know it wont pass.
all this talk about the middle class. most people are glad they have a job, if they have one. they have downsized their ambitions. they are kind of in a daze. hope they getenough toeat and a place to stay.
@Gurgi Your fear the Buffet rule would "hurt middle class investors (like me)" is unfounded unless you earn more than one million dollars a year. If you do earn that much, you should stop calling yourself middle class.
You apparently missed the following sentence:
"The legislation would apply to people earning more than $1 million a year, be it from salaries or investments or both".
I love how the media trumpets Buffett's secretary as an example of fairness towards the middle class when she makes over $200,000 a year herself.
"Most Republicans strongly oppose raising the capital gains tax because they argue taxing investments at a higher rate will stifle job creation and hurt the economy."
One of their biggest complaints about the current president is his jobs record. But... Obama kept the taxes as low as Bush did. So really, they're complaining about themselves? Therefore, Romney hates Romney, Gingrinch hates Gingrinch, etc.
A poor man goes out to work for his money.
a rich man sends his money out to work for him.
Your civic responsibiliy is the same. Certinly not less.
So why do we have a progressive tax? You all know the answer... On the low income end there is very little disposible income so a flat tax would be regressive. On the high end there is the assumption that is was just too easy. There are some very deep roots that honor real work. ...and our world is shifting to honor knowledge. So how do we honor this? We lighten your civic responsibility (slightly). BTW when I refer to knowledge, I don't mean knowledge of how to exploit the markets, resources, or people.
This will never pass the Republicans. They would have to agree with the majority of Americans, which they have been tone deaf to so far. The only way is to get all the Democrats back in in November 2012. Then this will happen along with the Bush tax cuts. Then this country will have the revenue it needs to improve our infrastructure and create jobs at the same time.
I'm sure this will make a lot of people feel better. It won't boost tax revenue, though. It's not like those who are well off need a whole lot of income to keep their lifestyle up; the amount of investment dollars they actually cash in is quite small. Should they decide to use some of that wealth to actually do something large, there's now a strong disincentive to cash any of it in, and the potential return required to offset such a shift will need to be almost impossibly high.
What I don't understand is that most people don't understand how a economy works. Most of the younger generation was forced to take a government or economics class in high school, so they want to vote for Ron Paul. Which means they are making an "educated" decision. Where most just pick and choose people because of how they look, or if they are the same party as themselves. Which is complete bull. I for one think the idea of the Buffet Bill is a good start, but a bad decision. I agree, however, with the poster that said something along the lines of a flat tax. I'm pretty sure someone's son has already proposed that, Rand Paul maybe? Most politicians don't like you to know that they are making plenty of money. Most voters don't know what a Federal Pension really entails. A congressman who automatically gets a Federal Pension for doing a few years in office, makes about $115,000 a year of our tax money. That's ALL after he's not even doing anything for the tax payer anymore, messed up huh? Count up all your congressmen, senators, represenatives, and even the presidents since I believe it was somewhere in the 50s or 60s that are stilll alive and getting that Federal Pension. Then multiply that number by just the $115,000 and see how much every single year we as taxpayers would save our country, if their own greediness was gone. So, raising taxes gets us around 40 to 50 billion dollars a year extra. Problem is, that money will just get spread out across all the people sitting at home getting a fat check. What I think is going on, is that someone proposed getting rid of the Federal Pension, and now the politicians are getting worried, so they're trying to make up some money to keep it. I'm sorry, but I'm in the military and I have to serve my country for 20 years, risking my life along the way, and I don't get a full federal pension. Why should a politician be allowed to serve ONE term and get one? I'm not asking for a pension because I feel like I should work for my money, not get a check for free. If I'm not helping out, why should I get free money? No politician I don't care if you're the president should be getting a pension or any pay, unless they are in the position as long as a soldier would have to be to get 100% pension.
@ Kris Craig
@Four You're citing outdated economic theories that have long since been disproven. In fact, they have been disproven over and over and over and over again. What you're saying may look good on paper, but that's not how it pans out in reality.
In fact, the capital gains tax has been raised numerous times in the past and it has never caused a decline in job growth. Not once. Why? Because the tax applies on RETURNS of investment, not on the investment itself. That's why it's called the capital GAINS tax. As you said, it's Economics 101.
If anything, a higher capital gains tax would motivate investors to put more money into the market in order to offset the reduced returns. That, in turn, will lead to more jobs, not less. Nice try, though
You are now my Blog HERO.. Thank you for this post .. i get so so tied of Four and THE Same o'l everyday job creation BS .. If what she/he says is so tru then we would be swiming in JOBs by now.. due to all the CUTS the Bush era gave to the Rich and Super Rich.. But thanks for that post .. Luv it ..
I cannot believe many of the comments in this section. Too many folks have not done their homework on what has happened in the past to bring us to the point we are at now. Folks, this started during the Clinton Administration when NAFTA was signed into law. This law allows large companies to outsource the jobs you are referring to here. H. Ross Perot was against this, as he knew what the future of this law would bring to the USA in the near future. If Obama were truely the President he should be, and our Congress was truely the leaders they claim to be, this law would have been repealed when Obama became President. It did not get repealed because the Congressmen/women are too invested with their financial portfolios to really care about the people they are supposed represent. Now we are faced with jobs being outsourced to overseas contries where the labor is indeed cheaper, but so is the quality of their workmanship. Want proof? CNN just ran an article about Airline Companies outsourcing the maintenance of commercial aircraft to overseas shopping locations. These locations are out of jurisdiction of FAA Inspectors. Any wonder why so many of the commercial aircraft are having safety issues? When you pay for cheap labor, you get poor workmanship. This in turn relates to poor quality of service, and poor quality in general.
So ask yourselves this. Was NAFTA really worth it? Lastly, NAFTA was enacted by a Democrat Politician. The proof is in the signature from Bill Clinton!
Mitt Romney said he can fix the economy if elected POTUS! Well, just imagine Mitt Romney looking you straight in the eyes and telling you that he can do what a collective team of financial experts in America and Europe couldn't do and that is fix this global economic crisis overnight! Mitt Romney is either drinking or smoking something really really bad. Prior to passage of this administration's economic stimulus bill in 2009, the Obama administration had met with financial experts from around the country and the general consensus was that in order to stabilize the Americon economy and prevent it from slipping into a catastrophic depression and help Americans get back on their feet was to pass the economic recovery bill.
Furthermore, these financial experts didn't say that this crisis would end overnight and that 10 million Americans were going to get re-hired the next day. No, what they said was that the economy would improve gradually but jobs will eventually resurface and economic growth will materialize as investors and manifacturers re-gain confidence in the economic environment. But what Mitt Romney is trying to tell the American people is that he has a magic wan that can fix this global economic crisis and return 14 million Americans back to work tomorrow. And what is more outrageous about Mitt Romney's position here is if elected, he intends to do so with the very same ineffective, failed and misguided economic policies that led to our economic downfall in the first place. Mitt shame on you!
And the Republican/Tea Party House of Representatives? They don't seem to have a clue either because two plus years later they're yet to create one single American job. Shame shame shame!
Its unbelievable how many times people commenting on here have to remind others (republican minded ppl) how it doesn't apply to people making under 1 million and yet it's like talking to a wall. What's going on with your thought process is what I want to know. How much more simple do you want it? People are tired and degraded with brown nosing the rich, we want equal opportunities. Equal opportunity should outweigh an individuals greed any day especially with claims for love of this country. Take care of our country and this earth.
Why should the rich pay a smaller percentage of their income in taxes than skilled middle class workers?
"If I understand this correctly (I'm no financial expert by any means), it could broaden the gap between the rich and middle class. If I have it wrong, someone explain it to me please."
Gurgi, if both the middle class and the rich are investors in your scenario, then the gap stays the same, since both are taxed the same. If there is a surtax that kicks in only for higher earners, then the gap is reduced. I also don't understand why anyone would not invest solely based on tax rates. Historically, there have always been investors, even when the top rates neared 90%!
Two thirds of America wants this to pass! Guess who will be the main opposition? That's right, the party that cares only for the greedy, and not the needy.
The Dems always want to tax someone, I don;t think they can even spell "cut expenses."