Millionaire tax sought by Obama is panned by GOP as ‘class warfare’
Top congressional Republicans on Sunday accused President Obama of trying to incite class warfare with his proposal for a new tax on millionaires and said they would not support the measure because it would hurt economic growth.
“Class warfare … may make for really good politics, but it makes for rotten economics,” House Budget Committee Chairman Paul D. Ryan (R-Wis.) said on “Fox News Sunday.” “We don’t need a system that seeks to prey on people’s fear, envy and anxiety. We need a system that creates jobs and innovation and removes these barriers for entrepreneurs to go out and rehire people.”
The strong opposition by Republicans means the millionaire tax proposal is unlikely to pass Congress. But it promises to become a highly charged centerpiece in the battle over deficit reduction and job creation that will be a focus of the 2012 elections.
Sen. Richard J. Durbin (D-Ill.) showed the tack his party might take when he slammed Republicans for not supporting Obama’s $447-billion jobs bill.
“I think his team put together a positive good plan,” Durbin said Sunday on CNN’s “State of the Union. “What’s the Republican alternative? Do nothing and protect the millionaires.”
As part of his deficit reduction plan, Obama on Monday will propose a new minimum tax rate for millionaires to ensure they pay an effective federal tax rate at least as high as that paid by middle-class earners, administration officials said.
The president will call the new tax the “Buffett rule” after billionaire investor Warren Buffett, an Obama supporter who has publicly complained that tax breaks allow him to pay a lower rate than his secretary.
The White House did not release details of the proposal, so it’s not known what the minimum tax rate for those earning more than $1 million a year would be or how much additional revenue it would produce.
According to White House talking points on the proposal circulated to lawmakers, “no household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay.”
The White House said the Buffet rule would apply to the top 0.3% of wage earners, and noted that 22,000 people making more than $1 million a year in 2009 paid less than 15% of their income in taxes.
Congressional Republican leaders have said they’re open to an overhaul of the tax code, but have been adamant in their opposition to any new taxes. House Speaker John A. Boehner (R-Ohio) said last week that tax increases were “not a viable option” for the special congressional super committee that must find at least $1.5 trillion in deficit cuts by Thanksgiving.
Senate Minority Leader Mitch McConnell (R-Ky.) said wealthy individuals such as Buffett were free to pay more taxes, but the government shouldn’t impose an increase on people who help provide the investments that create jobs.
“With regard to his tax rate, if he’s feeling guilty about it, I think he should send in a check,” McConnell said of Buffett on NBC’s “Meet the Press.” But we don’t want to stagnate this economy by raising taxes.”
Obama has touted Buffett’s complaint about his relatively low tax rate as evidence the wealthy can and should pay more. In an opinion article in August in the New York Times, Buffett said his 2010 federal tax rate was 17.4% because of various tax breaks for investment managers, such as those on capital gains.
The average rate for the other 20 people in his office was 36%.
“If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine,” wrote Buffett, chief executive of Berkshire Hathaway. “But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.”
Durbin, the second-ranking Senate Democrat, said Republicans risked the wrath of the public if they opposed raising taxes on people such as Buffett.
“I wonder if John Boehner knows what it sounds like when he continues to say the position of the Republican Party in America is that you can’t impose one more penny in taxes on the wealthiest people,” Durbin said. “I wonder if he understands how that sounds in Ohio to working families who are struggling paycheck to paycheck.”
But Sen. Lindsey Graham (R-S.C.) said Obama’s millionaire proposal was simply a political move that would do little to reduce the budget deficit.
“The truth of the matter is if you raise taxes on billionaires and millionaires it adds a de minimis amount of money to the Treasury to pay off the debt,” Graham said on CNN, also raising the “class warfare” charge.
Of the approximately 140 million federal income tax returns filed in 2009, about 235,000 reported adjusted gross income of at least $1 million, according to the Internal Revenue Service.
Congress has considered higher taxes for millionaires previously, but the measures did not make it into law.
In 2009, Obama backed a House proposal for a surtax on families earning more than $1 million a year to help pay for his healthcare bill. It was not included in the final bill. And a plan late last year by Sen. Charles E. Schumer (D-N.Y.) to let the Bush-era tax cuts expire for those earning at least $1 million a year was unable to clear the Democratic-controlled Senate.
Peter Nicholas in the Washington bureau contributed to this report.