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
The government can't properly spend what they get now, what makes you think they'll do better with more? That way they can put more people on da welfair!
@citizen – Yes, say Buffet pays 100 million. Now say he pays 300 Million. He still has 700 million dollars. If you tried to take any more from his secretary, she can't send her kids to school or has a hard time eating. We have to pay the bills so how and you can't cut all of it away.
How about the Senate pass a budget. 1000+ days without one now. Once they show they're mature enough to do that, then we'll talk about taxes.
A millionaire is someone whose net worth is over $1 million. This bill targets annual incomes over $1 million. Apples and oranges.
The Democrats will not let the half who pay no taxes bear the burden of the other half who do not pay their fair share.
The GOP doesn't get it... it is demand that will move the economy and create new jobs. Businesses could hire now but there is now demand for their goods and services!!!
Todd: you are thinking about it the wrong way. Don't think of the tax rate as it applies to your total income, but merely your disposable income and you will see that a flat tax is actually a regressive tax.
For example, if a family making a combined salary of $50k pays an effective tax rate of 20%, this would be 10k. If you figure that $20k of their $50k is disposable income, the effective rate is 50%.
If a millionaire pays 20%, however, they would be paying 200k in taxes. If you figure that $900k out of their $1 mil is disposable income, their effective rate is just 22.2% (and notice, I gave a more generous amount to the millionaire, $100k vs $30k, to live off of).
Therefore, a flat tax is not a fair tax. It is a regressive tax as the more money you make the less effective tax rate you pay as a result of your disposable income.
the top 10 percent can stop paying the majority of our costs when they've created jobs and put the money they've taken from us all with their subsidies, bailouts, and tax cuts AND PUT IT BACK INTO THE HANDS OF THE MIDDLE AND LOWER CLASS THROUGH ACTUAL WORK.
THAN we can return to a more reasonable tax line. But until then, they've been merrily shipping off jobs over seas despite RECORD LOW TAXES. When they were gifted these RECORD LOW TAXES by Reaganomics, their income increased THREE HUNDRED PERCENT while middle and lower class only increased AT INFLATION.
So in short, your idea how this works is incorrect. Get an education.
Fact is that working men/women in this country pay the 99% of property and sales tax. The 1% always yell they pay more taxes (Income) but they don't want to talk about property/sales. Maybe we should balance these taxes.. homes that cost above the norm should have their taxes adjusted by a few thousand percentage points (just to be equal you know). It's time that the Rich understand they go that way MOSTLY from being given it (Mitt as an example) by their family and those that earned it did so by making use of labor and infrastructure provided by the 99%. Mitt is the perfect example of a man gamming the system...thought Bain Capital (his company) he lead a lobbying effort to reduce long term capital gain to 15% which is where the 1% are parking their money... unfairly... ok that and off shore to avoid taxes all together.. somehow to them contributing for the good of all is just wrong. This bill works to close some of those give aways to large donners and help the country as a whole.
Funny how easily people get confused. Will try to clear something up on this. It is not a raise on capital gains tax. The only way you pay more is if you make over $1 million. So if you make all of your money from capitol gains but make only $995k you pay 15% taxes. This won't hurt the middle class at all in that sense. You could make the argument that it will stifle investment but I think that is crap. They still make more doing the investments than not and thus it will continue...end of story.
So they could not even think up their own plan, they had to go to one of those evil rich people that run a big corporation? Pathetic.
That's kind of odd that there are people still under the idiocy that wealthy don't create jobs, the reason I find this odd is cause of all my years working I have never worked for a poor person. I don't think I would want to work for someone which couldn't pay me. As far paying a fair share of taxes then remove all the tax brackets and have just one percentage for everyone, and then if you scream "What about the poor!!" easy if they make zero dollars nothing to worry about. And this business about freezing the federal workers pay that's fine BUT you do realize our military will be the ones hit by this and not the X amount of congressional aides etc or your typical federal civilian (non-military)
No matter how much we raise taxes, it wont work. We already have tax rates set high for rich people. What we need to change is the tax codes. Just get rid of tax codes then we will see the revenue goes up. Too many tax breaks, too many tax deductions, etc. According to About.com 2011 tax rate schedules, a person earning over $379k will have to pay 35% tax.
If this alone was the only factor, those arguing against raising CGT may have a point, but our tax system is so complicated and multi-layered, I really see other things happening. So....the argument is that raising the CGT will lower investments and kill job creation (as if they were really related anyway since CG's are PERSONAL income). Let's say that this is true. Raising the CGT lowers investments. Hmmmm... well, what is a big way for corporations to get tax deductions and to lower their taxes???? <-- Expenses!!! And what does more expense mean: (1) it means either the corporation is spending more money, which is likely to create jobs somewhere or (2) they are hiring more people to generate more expense to get tax cuts. I guess they could in theory just spend even more on CEOs, but that probably wouldn't be really good publicity. All-in-all, it doesn't make much sense to assume that raising the CGT will hurt job creation. All it really means is that the super-wealthy will pay a fair share of their PERSONAL income tax. That's one thing to realize here...CGTs really mostly affect INDIVIDUAL tax returns since corporations pay tax on all of their income according to the federal tax rates - with the one exception of dividends - not the same as a capital gain. Also, a person who has losses gets to offset the gains with those losses, and if the losses exceed the gains, they get a deduction against their income which would be taxed at the FULL tax rate. Furthermore, for the most part, small businesses and small business owners probably aren't doing a WHOLE lot of investing as a key part of their income. So....what is the argument exactly? I'm not sure I'm buying it. Alas, maybe I'm just wrong.
Elitist (n): A liberal who believes that extremely wealthy individuals such as Mitt Romney and Warren Buffett should pay the same percentage or a higher percentage of their income in taxes as their butlers, secretaries and chauffeurs.
The problem the DEMS are causing on themselves in this election period will be grave. All those wealthy multi-millionaires will be sending far more millions to the super pacs this time, in addition to what they wanted to spend already.
Romney is backed by high flying rich, mostly Wall Street guys and they don't mind spending 100 million each to get him in the White house. The first the DEMS should do is try to overturn the courts rule allowing super-pacs and unlimited funds.
If Obama wants to win, he will need at least two billion, not one as he thought would work.
Politics is a sin and the only winners are the very wealthy. The middle class and poor are suckers for the rich and they still vote against themselves.
Whatever. Pathetic this is the best our leaders can do. All this bleeding heart cr*p about fairness.....Capitalism is not fair or equitable. And Billions more for the gov't is not going to solve anything.....our politicians are not good enough.
why go only to 30%, if 30% is good, why not go to 50 or 60%-particularly if you live in NY, CT, or MA, this way you can give almost all you earn to the democrats to mess up
Lets not worry about the deadbeats sponging off the system. Lets go for the rich! They got the cash!
Why do you or the President think you are entitled to another's money? and what is fair in taxing one group more than another? If you want a real fair tax – go flat tax with no write-offs. That way renters don't pay for others to own homes or you don't pay for the next door neighbor to have another child Don't argue it stimulates the economy – same argument is used for the 15% capital gains tax. It seems to me people are irresponsible these days and believe it's easier to raid another's finances instead of fixing their own. The current administration speaks fairness but doesn't come close to establishing it.
God forbid a bill be proposed that just closes the current loopholes and simplifies our tax code. I have no problem with the rate increase but why doesn't Congress (Dems and Repubs) address the real issue – the tax code's complexity? Do we really need billions of pages to tell each citizen and business how much they owe in taxes?
Just a backdoor way of raising the capital gains tax. I despise the lack of integrity regarding fiscal matters with Obama and the Democrats in Congress.
Two Words: Deferred Compensation
Democrats, we have a SPENDING problem NOT a taxing problem.
How will raising taxes on some one help the middle class?
Why not cut the middle class taxes to 7% and keep the capital gains tax at 15%?
THAT would help the middle class.
Pass a balance budget amendment.
THAT would help the middle class.
We don't need the Federal Government to take our CHILDREN'S money and spend it for us.
We need the Federal Government to let us keep our money and let the future citizens keep their money.
THAT would help the middle class.
That is the most bizarro rationalization I have ever heard. Of course he would pay more, he makes 500x more. Let me put it another way. The same secretary makes 60k and pays 0%. She still has 'only' 60k to live on. While Buffet even if he's paying 30% of 1B would have 'only' 700m. Who is better off?