Senate Democrats Unveil Buffett Bill
February 1st, 2012
04:25 PM ET
2 years ago

Senate Democrats Unveil Buffett Bill

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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Filed under: 2012 • Congress
soundoff (297 Responses)
  1. My name is Jose Jimenez

    This is simply a political stunt by the Democrats to embarrass the Republicans. It won't pass, but it will make for great campaign adds in the fall.

    Hope the Democrats are able to hang this around the Republican's neck costing them the House and a smaller head count in the Senate.

    Obama 2012

    February 1, 2012 05:59 pm at 5:59 pm |
  2. Larry in Houston

    It's pitiful that a handful ( 12) of representatives is to decide our fate, isn't it ? Isn't that pathetic ? If they can only do with 12 – why not put all the others on permanent layoff ? I mean, there is 535 right ? I say, lay 'em all off, and do with 12 . No wonder Perry wanted to give them part time work.

    Larry in Houston

    February 1, 2012 06:02 pm at 6:02 pm |
  3. Jason

    When the Republicans oppose it, It must be good for America

    February 1, 2012 06:04 pm at 6:04 pm |
  4. Anonymous

    Gurgi – You have it wrong. THe increase in tax rates only applies to those with incomes >$1,000,000 (a million dollars). You'll stay in your current tax bracket.

    February 1, 2012 06:04 pm at 6:04 pm |
  5. Balls McGhee

    since Capital gains was decreased to 15%, there has not been one net positive job created in the United States. In fact, we are in the whole a few million still. So, job creators, i'd like to hear your response to this.

    February 1, 2012 06:05 pm at 6:05 pm |
  6. Mike500

    80% of all Americans pay less than a 15% effective tax rate. 47% pay no federal income tax at all. Zip, nothing, nada. So except for a few isolated cases, millionaires, with an average effective tax rate in the mid 20% range, do indeed pay more than their secretaries and everyone else for that matter. And what exactly is Obama's 'fair share' for those who pay nothing? This is nothing more than yet another attempt for Obama to find someone to blame. Blaming Bush won't work any more, so now he has to find a new scapegoat. I've yet to see a single explaination that can factually tie more taxes to the rich with creating a single new job. Even the effect on the deficit is minimal. An election year gimmick, no more.

    February 1, 2012 06:07 pm at 6:07 pm |
  7. Ed

    Way to pick and choose which "Buffett plan" to back. Wasn't it Buffett who also suggested that in any year that congress failed to pass a balanced budget that it would make EVERYONE not eligible for re-election? Now that's a "Buffett Plan" I can get behind!

    February 1, 2012 06:07 pm at 6:07 pm |
  8. 32slim32

    "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."

    I just have one question for the Senator or anyone really; How exactly will this help Middle Class families? Seriously, if the millionaire down the road from me pays more in taxes, what benefit will I see from it?

    February 1, 2012 06:12 pm at 6:12 pm |
  9. Kude

    STUPID! ABSOLUTELY STUPID! Do these people not realize that we need millionaires and billionaires for our JOBS!?!? What happens when millionaires decide, "To hll with America. There's a small Caribbean Island with my name on it out there." These people don't have to pay the tax, because they'll leave. It's what I would do. I'm not rich, but I understand this.

    February 1, 2012 06:12 pm at 6:12 pm |
  10. mfb

    I'm sure there's some kind of loop hole the wealthy will find to avoid paying taxes. Maybe this will help create jobs and pay down the national dept at the same time. The wealthy will find some way to reinvest the money to keep it from shwing up as income, and maybe create some jobs that way. I'm sure the republicans would still try and bolck the bill. Even if it would help their rich friends get richer.

    February 1, 2012 06:15 pm at 6:15 pm |
  11. jason McCool

    Couldn't have put it any better myself BETTERDEADTHANFED. It's amazing to me how the hatred of wealthy people can get in the way of 3rd grade math. Come on liberals 2+2=4 no matter who you vote for.

    February 1, 2012 06:15 pm at 6:15 pm |
  12. mingle

    its funny to see others decide what a fair share is! all for an an amount of money that will be a drop in the bucket as far as our debt is concerned. Its all political games to show the middle class that hes tough on those big bad hard working tax paying rich

    February 1, 2012 06:18 pm at 6:18 pm |
  13. Scott, CA

    As an Independent, I support it if its coupled with spending cuts. When budget talks broke down last summer, it hurt this nation. All experts know full well that the only way to address our national debt and get the economy back on track is to both raise taxes so everyone pays fairly and to cut spending. Both parties need to swallow their medicine and hopefully this will be the year they realize that making sacrifices in the name of what's best for the nation, even if it disappoints their bases, is better than doing nothing.

    February 1, 2012 06:19 pm at 6:19 pm |
  14. Mike Fairly

    The problem with the logic here is that an assumption is being made that the dividends or capital gains are coming from investments in the stock market. Investments in the stock market are not very risky at all and likely should be taxed based on normal income tax rates. The ability of an investor to divest limits risk. It is the investments in start-up and/or private companies which are risky. There is no way to get your money out once it is in. Those risks should be rewarded with lower tax rates because, contrary to what was stated above most business decisions are based on Return on Investment, not on EBITDA. ROI is negatively impacted by tax rates because the returns are lowered, which means marginal investments in businesses which are not "home runs" would be shelved solely due to higher tax rate.

    February 1, 2012 06:20 pm at 6:20 pm |
  15. Joshua Ludd

    Funny how we always hear about how raising the taxes of the wealthy will have such horrible consequences and thus we must not do it... but creating a huge underclass of working poor (to make the wealthiest even wealthier) never gets a single word of press for its horrible consequences. If you think this will have negative consequences for our economy, then look back at what tax rates were on the wealthiest before the Reagan era... back around the time when our middle class came about in the first place. Ever since St. Reagan started the trend towards failure to tax the wealthiest the wealthiest have also enriched themselves with higher and higher executive pay and shareholder dividends... so success wasn't enough of a reward... they needed to reward themselves with more money.. and have government reward them yet again for their success with incredibly low tax rates on their fortunes. This of course means that all of us who are not wealthy are by those standards "failures". Teachers, soldiers, police, fire fighters... all of them utter failures... because they aren't wealthy. Sound right to you?

    February 1, 2012 06:21 pm at 6:21 pm |
  16. a fair wage

    Most of us are lucky to get 1% on savings. But the rich should get 20% or more return on there money. The rich will still invest 10% is better then 1%.

    February 1, 2012 06:21 pm at 6:21 pm |
  17. Richard

    My new goal in life is to make $999,999 a year. Gonna beat the system. This entire debate makes no sense the sheer amount of money that these extremely rich are paying is an insane amount anyways. Yes they can afford it, but on principle it makes it seem that success is going to be punished. How does that make sense?

    February 1, 2012 06:26 pm at 6:26 pm |
  18. warrendumffet

    IF buffet wanted to pay extra taxes the IRS has a volunteer program.

    I smell some lies coming from DUMFFET

    February 1, 2012 06:26 pm at 6:26 pm |
  19. Josh

    If you look back over the last 100 years to the creation of a stock market (and really even further beyond that) history shows investment did not decrease when taxes were increased. Investment has steadily risen even during economic downturns. As an investor myself, I do not shy away from a good investment because of taxes. As a matter of fact, I don't even think about it. The only thing lowering rates has done over the past 30 years is incrased wealth for top earners by 250%

    February 1, 2012 06:29 pm at 6:29 pm |
  20. Eric

    Im looking for the text of the bill, but this bill needs to have an inflation table added to the tax code. Investors have always paid half of the top tax rate (give or take), because you have to factor inflation in. So to keep things simple, they just make Cap Gains half. Having said that, a 5 to 10% increase could be nice.

    February 1, 2012 06:29 pm at 6:29 pm |
  21. pj

    If it worked for Reagan and for Clinton, if corporations are making record profits, if the top 1% control more of the nation's wealth than ever before, then I am in favor of returning tax rates for the wealthy to Clinton era levels. The rich want to go after entitlements that people depend on to stay alive. while arguing that they are overtaxed. It will not sell with me.

    February 1, 2012 06:29 pm at 6:29 pm |
  22. Todd C

    They chose a terrible name for the bill. They're just asking for screams of "socialism". They should have named it something like "The Progressive Tax Reform Act". People like tax reform. Progressive makes it sound like we are moving forward, not looking back. I haven't heard any conservative blow-hards using "progressive" as a pejorative.

    February 1, 2012 06:30 pm at 6:30 pm |
  23. LiberalNN

    TAX ME TAX ME TAX ME! I make too much money! Tax me and give it to illegal aliens!

    February 1, 2012 06:30 pm at 6:30 pm |
  24. CTMan

    Maybe we can bring back the Clinton economy...Republicans control both houses and thus all spending bills and budgets and a second-term President turns moderate in order to create his legacy. Clinton had the benefit of cutting a million from our military at the time and he passed the Republican's balanced budget amendment and welfare reform. Obama is too divisive to be a Clinton, though. Every time he talks he rips apart half the country.

    February 1, 2012 06:32 pm at 6:32 pm |
  25. Blame Bush

    To whom much is given, much is expected.

    Our government spends tremendous sums per year to run the world's remaining super power. Those make great sums of money need to pony up to cover a fair share of those costs, be it for the highway system over which their goods travel, or the huge DOD that keeps this nation free to practice free enterprise and capitalism.

    There are thousands of poor boys who've been horribly wounded in the recent wars and who need care, and the wealthy who live wonderful lives behind their protective shield need to pay their fair share of what it costs to restore the broken bodies and minds of our veterans.

    We also should stop taxing capital gains at 15% as most of these wealthy people have done nothing but trade stocks in the markets, few if any of them have ever really created any new factories like the idiot Bush said they would in 2001.

    February 1, 2012 06:35 pm at 6:35 pm |
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