January 25th, 2012
05:34 PM ET
10 years ago

Democrats to target wealthy in tax reform effort

Washington (CNN) - Senate Democratic leaders said Wednesday they are determined to push tax reforms President Barack Obama outlined in his State of the Union address, saying they would roll out bills throughout the election year to highlight their differences with Republicans.

Most are aimed at increasing taxes on the wealthy while easing the burden on the middle class.

CNN LIVE: Tune in Thursday at 8 p.m. ET for the CNN/Republican Party of Florida Debate hosted by Wolf Blitzer and follow it on Twitter at #CNNDebate. For real-time coverage of the Florida primary, go to CNNPolitics.com or to the CNN apps or CNN mobile web site.

Follow the Ticker on Twitter: @politicalticker

At the top of their list is a proposal known as the Buffett rule that would sharply increase taxes paid by many wealthy Americans.

Democrats pointed squarely at Republican presidential candidate Mitt Romney, who revealed this week he paid only about 14 percent of his substantial earnings in taxes

"Republican presidential frontrunner is a perfect example of what's wrong with the tax code. An individual who makes in a two year period forty-three million dollars and pays a tax rate of less than fifteen percent suggests that maybe things need to be changed a little bit," said Senate Majority Leader Harry Reid at a Capitol press conference.

"So, it's a priority for us to act on some kind Romney, I mean Buffett rule this year," added Sen. Chuck Schumer, D-New York, purposely mixing up the names.

The Democratic leaders said they generally support having wealthy Americans pay at least 30% of their income in taxes but said it was premature to detail how they would ensure that.

Other tax reform measures the Democrats said they want to deal with this year include allowing the Bush-era tax cuts for the wealthy to expire; ensuring all corporations pay some taxes on their profits; increasing the taxes paid by hedge fund managers, and using the tax code to reward companies that create jobs in the U.S. and punish those that send jobs overseas.

Schumer said after the payroll tax cut fight in December, in which Democrats appeared to get the upper hand with the public, he is confident the strategy will succeed.

"Don't be surprised if election year pressures push Republicans to cooperate with this president more than they were planning too," Schumer said. "Otherwise they're going to find themselves on the wrong side of the middle class again and again."

Also see:

Live blog: 2012 State of the Union

New Freddie Mac contract prohibits 'lobbying activities'

Romney resets image with postcards from the edge

Gingrich gets major help

Filed under: Congress • Taxes
soundoff (38 Responses)
  1. kat

    I always thought Mr. Buffet was smart, I'm beginning to wonder, He seems more like a spoiled little rich kid. I think he's so far up BHO's bottom that he can't see daylight. Hey Buffet, If your secretary doesn't make enough after taxes, give he a raise, Figure it out Bozo. You and BHO deserve each other.

    January 25, 2012 05:38 pm at 5:38 pm |
  2. V in Chicago

    Mr. Shummer – they don't care about which side of the middle class they are on, because they all think they are ABOVE the middle class. Good luck with getting them to change their tune on taxes. The only way real change can happen is if President Obama is re-elected and we get a Democratic House and Senate.
    Vote people who work for a living – Vote. It is the only hope we have!

    January 25, 2012 05:39 pm at 5:39 pm |
  3. GI Joe

    It's the only way to raise enough revenue to make a difference. If they add 5% more to the folks making $20,000 it will mean only $1000 per year each (tho a lot for someone making less than $2000 per month).

    If they add 5% to multimillionnaires it will mean tens of thousands of dollars each.

    You figure it out.

    Or do they want the old and "underpaid/underemployed" to just die?

    January 25, 2012 05:39 pm at 5:39 pm |
  4. gt

    getting a little sick seeing this old wind bag... hey warren just right a big ck to your sec. and the feds...and shut the hell up...

    January 25, 2012 05:42 pm at 5:42 pm |
  5. Kat

    Just pay 10 – 15% on the entire amount – no loopholes, no hiding just pay on the entire amount. Pay the same % if you are making $500.00 or $5,000,000,000! Why is it necessary that you have to have a degree in Tax Law to do your taxes. Everybody says reduce stress in your life – well we can start with that one.

    January 25, 2012 05:44 pm at 5:44 pm |
  6. dbbb

    There is income redistribution in this country – via government-imposed taxes – from the middle and upper middle class (who pay 25-35% in federal income taxes + payroll tax) to the super rich (who pay only 15% taxes and only on income that they are unable to hide in one of the numerous loopholes and tax shelters available to them).

    The only way to fix this income redistribution and bring tax fairness is:
    1. Tax all income at exactly the same rates. The income of the super rich (capital gains, dividents, salaries for money managers) should be taxed at the same marginal rates as regular income – just as when federal taxes were originally introduced in the USA.
    2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income (Cayman/Swiss accounts, hundred-million-$-tax-free IRAs, etc.)
    3. Reform (or, better, eliminate) the AMT to only target the super rich – as originally intended! Now the AMT mostly targets the middle class!
    4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressiv­e rates, but now there is not even a separate tax bracket for incomes larger that $1M.

    January 25, 2012 05:46 pm at 5:46 pm |
  7. Rudy NYC

    Mitt Romney's tax return casts a bright light on the grotesquely generous tax loopholes afforded to those who make their money through capital gains. There's even a loop hole that allows you to assign dividends directly to a trust fund to your kid, so that you do not have to pay any taxes and neither will the kid when he draws on it.

    January 25, 2012 06:00 pm at 6:00 pm |
  8. Four and The Door

    This is obviously election year politics and nothing to do with raising or lowering government revenues. One guarantee that you have going into it is that investment opportunities would have a tougher payback threshold to meet. In laymans terms, much less money will be invested and the wealthy in that case will just hang onto their money. Who cares? Not me. I have a job.

    January 25, 2012 06:10 pm at 6:10 pm |
  9. Como

    Wealthy Americans pay 30% in taxes. Take all their income and other assets it will not settle the federal debt or deficit. This idiots logic ignores the fact that the government has a spending problem NOT a tax revenue problem. This demonstrates a clearly an idiots understanding of capital gains and investment captial in the that the capital has already been taxed by the feds as ordinary income prior to being invested. It ignores that a significant percentage of the 51% of federal filers who do not pay an income tax, that means 0% for you less than literate liberals, can and should pay a federal income tax as they do have substantial incomes. Romney paid 14% good for him and then gave another 28% to charities or his church. Doubly good for him. And Tim Giethner, Secretary of the Treasury, paid 0% for 3 years at the IMF because he did not understand the tax codes-a blatant lie. But that was OK wasn't liberals.

    January 25, 2012 06:10 pm at 6:10 pm |
  10. Jim in San Mateo

    It's either get the tax structure in line with the incomes of the country or vote Greedy Old Party and have a country of the rich, run by the rich, while the middle class and poor foot the bill. Not rocket science.

    And if you believe the rich will stop investing because their taxes are going up, think about this: How did they get to be wealthy in the first place? It wasn't by parking lots of money in a savings account that pays less than 1%. A net gain of 70% of a 10% profit is always better than 70% of a 1% profit.

    January 25, 2012 06:20 pm at 6:20 pm |
  11. @kat

    There would still need to be exemptions for those at a certain line. 10% from someone who makes $1200/month is the difference between paying rent or living on the street; eating every day or going hungry a couple of days a week.

    January 25, 2012 06:29 pm at 6:29 pm |
  12. AK_steve

    The GOP likes tax cuts AND deficits. It's a back door to cutting social security and medicare.

    January 25, 2012 06:29 pm at 6:29 pm |
  13. mrdeshon

    Why? What could be more American than paying a little more to help your fellow Americans during one of the worst economic recessions our nation has ever experienced? The rich remain rich & get to help out someone less fortunate in turn. The only reason I can think of that would make them resistant to this idea would be one single horrible word...greed. So please stop hiding behind all the jargon & have the moxie to say it. Because there are Americans who really think you could not possibly be that selfish. I know differently as do others.

    January 25, 2012 06:31 pm at 6:31 pm |
  14. Arden Cogar

    What is the part of Warren Buffet's stance on taxes don't you guys get? He is simply bringing to light the fact that the wealthier amongst us are paying a lower percentage of their income to the U.S. government in taxes than are the middle and lower income earners. He simply feels it would be fairer to all around if everyone shared more equitably in supporting our economy. I say; THANK YOU MR. BUFFET.

    January 25, 2012 06:38 pm at 6:38 pm |
  15. Wire Palladin, S. F.

    Why is it class warfare if people ask why the wealthy are allowed to pay at a lower rate than the people in the middle class do?

    January 25, 2012 06:38 pm at 6:38 pm |
  16. Wire Palladin, S. F.

    The real class warfare is the wealthy attacks on the middle class wages, pensions, working conditions.

    January 25, 2012 06:40 pm at 6:40 pm |
  17. Larry in Houston

    Thanks, Chuck ! I concur with You !

    January 25, 2012 07:06 pm at 7:06 pm |
  18. george of the jungle

    hey if your rich just move your money to the caymens . oh yeah is gets taxed at the same rate. If you believe that I have a historian named Newt who will come give you free advice.

    January 25, 2012 07:12 pm at 7:12 pm |
  19. Josaphat Daniels

    Honestly the rich should be able to afford it since they send millions of dollars to these super pacs that talks negative trash
    against candidates just like the billionaire from texas that keeps sending santorum $1 000 000 every week to his super pac

    January 25, 2012 07:31 pm at 7:31 pm |
  20. Sanity

    GI Joe, tell us how many millionaires there are and how non-millionaires there are. Then do your calculations based on facts and let us know what you get.

    January 25, 2012 07:38 pm at 7:38 pm |
  21. vic , nashville ,tn

    We high tax rate true but technically not true

    Nearly 50% don’t pay tax not true but technically true

    This the real problem you can spin the story the way you want

    Time for us to pass clear clean tax reform

    January 25, 2012 07:40 pm at 7:40 pm |
  22. Keith in Austin

    Never bite the hand that feeds You! Obama now wants to DOUBLE the tax rate on capital gains income generated from investments. Seriously Barry? You want to punish the exact same people holding the ability to get our economy turned around? Charitable contributions also no longer deductible. Way to stick it to Churches, Universities and other Charities Barak! All to incite class envy and Liberal votes for your sorry reelection and thirst for reckless spending! Despicable!

    January 25, 2012 07:44 pm at 7:44 pm |
  23. Sherry Buckner

    The wealthy are not 'investing' in American jobs or business now.
    How far will we have to go?
    If they are not motivated at half the rate of their employees, will we have to PAY THEM next?
    What about wanting to get your country back to work because you are a patriot?

    January 25, 2012 07:45 pm at 7:45 pm |
  24. T'sah From Virginia

    Just pay 10 – 15% on the entire amount – no loopholes, no hiding just pay on the entire amount. Pay the same % if you are making $500.00 or $5,000,000,000!..."◄

    Is this after your standard deductions and/or dependents deduction; are there any credits for low-income people – earned income credit, child tax credit, etc.; are there interest on homes and/or property tax deductions? What about SS and Medicare deductions and state/local taxes?

    If none of the above is allowed, then a person making $50,000 a year would have to pay $7,500 at a 15% rate. They would also have to pay state and local taxes. That would be MORE than what a person is paying now @ $50,000 a year. Now if the deductions are allowed, what is left would most likely be a fair amount to pay @ 15%, including those who are eligible for earned income credit (take 15% back from the EIC credit). I guess this would work but I am not an economist or a tax expert –but it sounds EASY and there are NO loopholes!! (By the way, millionaires, of course, will have a “cap” on the homeowner interest deduction rate).

    January 25, 2012 07:52 pm at 7:52 pm |
  25. geggyg

    Kat you should read what Buffet said , he said that he paid a lower percentage of his income in tax than his secretary does , nothing was said about her not being paid enough. In regards to the flat tax proposal for someone on SS payments . losing 10% of their income would be difficilt , how pay to for housing , food and medication with less money, and dont say they should get a job , a lot of people cant due to either age , medical physical disability. the world is more complicated than you seem tto think. Stay healthy or you will be put out on the scrap heap , kist lije you want do to disadvantaged people now

    January 25, 2012 07:59 pm at 7:59 pm |
1 2