‘Buffett Rule’ Posturing Peaks
Democrats Vow to Fight for Higher Taxes on Millionaires This Election Year
With a nod to the November elections, Senate Democrats on Monday began what they promised would be a recurring effort this year to boost taxes on millionaires to address what they argue is an unfair tax code.
“Today, the wealthiest 1 percent takes home the highest share of the nation’s income since the early ’20s, the roaring ’20s,” Majority Leader Harry Reid (D-Nev.) said on the Senate floor. “But while their bank accounts have grown, their tax bills have become smaller. The wealthiest Americans pay the lowest tax rate in more than five decades.”
Sen. Charles Schumer (N.Y.), head of the Senate Democrats’ policy and communications shop, said on a conference call with reporters that he believes Democrats have the upper hand in the debate.
“The GOP fears this debate because there is an emerging contrast in Congress,” Schumer said. “Republicans want to give even further tax breaks to millionaires and billionaires, while we think the very wealthy should share in more sacrifice so the burden doesn’t fall on the middle class.”
Senate Republicans, led by Minority Leader Mitch McConnell (Ky.), argued that the Democrats’ move is evidence that they are seeking to score political points rather than legislate. They oppose the effort because, they say, it would raise taxes on small businesses and make them less likely to hire — something they contend would hurt the already weak economic recovery.
But the partisan posturing was just that, given that on Monday evening the Senate defeated 51 to 45 a measure from Sen. Sheldon Whitehouse that would require millionaires to pay at least a 30 percent tax rate.
The Rhode Island Democrat argued that would be more in line with the tax rates middle-class workers pay. It was no coincidence that the vote came the day before federal income taxes are due.
The bill needed 60 votes to overcome a filibuster. Of the 51 voting in favor of the bill, Sen. Susan Collins (R-Maine) voted with Democrats; Sen. Mark Pryor (D-Ark.) voted with Republicans.
The bill would pass the “Buffett Rule,” which President Barack Obama has made a centerpiece of his tax policy and his re-election campaign. The rule is named for multibillionaire investor Warren Buffett, an Obama supporter, who raised concerns about his tax rate versus his secretary’s.
The two pay different rates because Buffett makes a larger part of his income from investments, which are taxed at a lower rate than other earned income, such as wages.
But while the measure was defeated, Schumer said Democrats would continue to revisit the issue ahead of the elections.
Schumer said that the position outlined in the House-passed Republican budget, authored by Budget Chairman Paul Ryan (Wis.), would give further tax breaks to the nation’s highest earners, and Democrats want to lay down a marker against it. He also noted that the presumptive GOP presidential candidate, Mitt Romney, has backed the Ryan proposal.
“There is no way to afford these tax cuts for millionaires unless Mitt Romney and Paul Ryan intend to raise taxes on the middle class,” Schumer said. “We intend to spread that message in the months ahead.”
Democrats said they hope that by taking up the issue over and over again voters will pressure their Senators to vote for the proposal.
Schumer said he could envision the Senate using a millionaires tax to help students pay for college, to help pay for a research-and-development tax credit for businesses, or to reduce the deficit.
But Republicans argue that Democrats and Obama are not trying to govern and are avoiding passing bills that will help jobs and the economy.
“Any time the president proposed anything in the past, he told us how many jobs it would create, whether it was the [Federal Aviation Administration] bill, the highway bill, the stimulus, you name it,” McConnell said on the Senate floor. “Apparently those days are over. Nobody’s even claiming this thing creates jobs. It’s all about the president’s idea of fairness now.”
McConnell argued that Democrats’ notion of fairness doesn’t match up with that of most Americans.
“To most people, what’s fair about America is that they can earn their success and expect to be rewarded for it,” McConnell said.
As for reinvesting about $50 billion the bill would raise over 10 years, McConnell pointed to recent government scandals, including a General Services Administration conference that cost $800,000, as evidence that the funds would help the economy more in the private sector.
“Until Washington can show that it’s a better steward of taxpayer dollars or that it knows how to invest in a winner, it shouldn’t expect people to hand over another penny,” McConnell said.