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.
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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.
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I got so excited when I thought this was about food!!! Then the truth hit me. :-)
It's now been 1006 Days since Reid's Senate Passed a Budget.
Hey they are trying. Keystone Pipeline, well that was vetoed.
The first thing, which no one wants to address are what specifically is causing the economy issues, and no it is not the Republicans, and no it is not the Democrats. Neither party alone is the cause, and neither party is innocent. Also the people of this country are also the cause as well.
I could write out a comprehensive outline of truly all the issues with the economy in this country, but no one cares to listen nor wants to believe it.
As long as you aren't making a million a year, this won't apply to you.
This is not a tax hike or something to unfairly hurt people with money. This is letting the taxes go back to what they were before lobbiest like Mitt carved out special deals to financially benefit the rich... letting the 'special treatment' expire.
About time for the Buffett Rule to kick in. Good for you, Democrats!
I think the capitol gains tax, that by the way to lowered to 15% by GWB to reward his rich friends was set to expire in Jan of this year. It think it is supposed to go up to 20%.
I bet they will pass this rule and still not have enouogh money. Its a spending problem not a revenue problem duh.
HAHHAHAHHAHHAHAHH! "$40 – $50 billion? That's it? Is this a joke? This won't dent any deficit or debt! LOL That's like $114 per American worth of government goods or services. 1/3 of an XBox 360. LOL
What, you want to tax the job cremators at the same rate as a city garbage man?
It amazes me how many people think this might somehow increase their taxes because they invest in the stock market. This rule applies if you make more than one million dollars a year in income!!! Nobody posting here is in that category!!!
This bill would in no way affect your tax rate. The proposal, as I understand it, is not an increase on the capital gains rate. Instead, it sets an overall rate floor of 30 percent **only for those making at least a million a year**. Small investors such as yourself would not be affected in any way.
Unless your investments earns you over a million dollars per year, you will not be affected. This bill is not aimed at the middle class or working class.
What at first was plunder assumed the softer name of revenue. ~Thomas Paine
I completely agree with this. I hope it extends to all aspects of investment income particularly the hedge fund managers and PE guys. Paying their fair share is a step in the right direction as far as supporters of the "Occupy" movement are concerned.
Making millionaires pay their fair share won't cost a single, solitary job. Not one...
And you are exactly wrong on this. The very first impact of raising Capital Gains tax rates is to increase the threshold for capital investment. It's not opinion or guesswork. It is plain simple numbers. Economics 101. Every professional investment calculation factors in tax rates before a decision is made. This increase in taxes pretty much by definition will have a huge impact of slowing down investments and private sector jobs are created by capital investments. It is a very direct correlation.
Who would this new tax hurt more, the investor or the unemployed? I will give you a hint. It will not be the investor. He or she already has extra money. And he or she will keep a little more of it rather than make that next investment.
Frankly, this sounds more than fair.
What I love the most of the arguments that higher taxes "kill jobs" is that they completely ignore the hard statistics that job creation has fallen uniformly with the LOWERING of taxes, and raised with the increase of taxes. If they're going to make a point to protect their precious income, they could at least bring some evidence to the table that contradicts the evidence we have to the contrary.
Does this mean that Democrats are attempting to serve themselves more of the buffet? Mr. Buffet is nothing but an Obama butt kisser who, just like the president, don't give a hoot about the middle class and the problems they face. Mr. Buffet just wants to help get the president reelected so that he can continue making more and more millions.
Have this administration not taken enough from the already strapped taxpayers yet?
So much for Mr. Obama's promises. America, PLEASE don't be hoodwinked AGAIN!!!
So we should give our government more money because... they spent all of the money we gave them and ran up the national debt? Brilliant! And when they spend all of that they'll come after the middle-class again.
How about a smaller Federal government.
@Gurgi You are somewhat correct. The problem is that it hurts the stock market by killing the price of stocks when people stop investing (Lower demand means lhigher suppler which in turn means lower prices, and therefore a lower DJI index.
However, I would say if you are a millionaire then you aren't middle class (there are only 240,000 people in the US that make more than $1million a year).
As much as I am for Obama, this is not a good solution, especially since it only raises around 3% of the money needed to erase the national debt. As nice as it is to think that millionaires should pay more, they truly are the people investing the most capital in the economy. That doesn't mean that there aren't other ways to raise more revenue.
How is a low capital gains tax supposed to create jobs? If we want to create jobs, tax capital gains a ton and provide big tax incentives to actually start a business and employ people. Then, and only then, will money shift from the stock market to the real market. As long as the stock market is the better investment, the money will not move.
EITHER BUFFET DOESN'T UNDERSTAND TAXES, OR HE LIED. No way did his secretary pay a higher rate the Buffet. Effective tax rate is Total Tax on a 1040 divided by AGI. His secretary would be more like 11%, as most American taxpayers are. Check your own return. You'll see.
Well, Gurgi, if you are going to pay 30% tax on your investments, then you must already have over a million dollars. Thus, you are not a middle class investor as you claim. You are wealthy. So sorry for your loss.
Let's see, if it goes up about 7% for Mitt, that would mean he would have to pay another million in taxes next year! WaHaaaaaaaaaaaaaaa!