The White House released a new report today backing President Barack Obama’s proposed "Buffett Rule" to impose a minimum 30 percent tax on incomes of more than $1 million in advance of a speech on the subject by the president this afternoon in Florida.
Along with an embargoed conference call Monday with reporters, the report makes the administration’s argument that the Buffett Rule is needed to ensure the rich can’t pile up tax loopholes so that they can pay a lower tax rate than the middle class.
The wealthiest .1 percent of Americans paid more than half of their income to the federal government in 1960, according to the White House, and pay barely a quarter now. And the 400 richest taxpayers pay just 18 percent on average — less, in many cases, than middle-class earners, especially when payroll taxes are taken into account.
“What this is is a basic principle of fairness,” said Jason Furman, the principal deputy director of the National Economic Council. “It’s come at the expense of middle-class families.”
Furman said the Buffett Rule, which was first proposed by billionaire Warren Buffett, wasn’t intended to be the president’s entire proposal for tax reform or dealing with the deficit.
Alan Krueger, the chairman of the White House Council of Economic Advisers, said the changes in the tax code exacerbated income inequality trends and argued that the ability of some millionaires to avoid income taxes is economically inefficient because they spend more time looking for loopholes than investing or growing their businesses.
They acknowledged that the policy on its own would not put a huge dent in the deficit but said it was important on fairness grounds. It’s expected to raise about $47 billion if the Bush tax cuts expire and much more, although the White House didn’t name an estimate, if the Bush tax cuts are made permanent as the GOP has proposed.
About 77,000 taxpayers with incomes of more than $1 million paid tax rates below 30 percent in 2009, according to the White House report. And 22,000 paid less than 15 percent.
About 1,470 millionaires paid no federal income taxes at all on their earnings of more than $1 million a year, Furman said.
That’s largely because the wealthy tend to have a lot of capital gains and dividends, which are taxed at 15 percent instead of the 35 percent rate for ordinary income.
A procedural vote on Sen. Sheldon Whitehouse’s (D-R.I.) legislation on the Buffett Rule is scheduled for the Senate’s return from the Easter recess.
Republicans, meanwhile, sought to minimize the revenue the Buffett Rule would generate while dismissing the policy itself as “class warfare” and a “gimmick.”
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.