US President Barack Obama plans to call on Monday for a new minimum tax rate on millionaires as part of a comprehensive rewrite of the US tax code to force the wealthiest Americans to pay the same share of income in taxes as middle-class families.
According to a White House official who asked for anonymity because the proposal has not been announced publicly, Obama plans to call it the “Buffett Rule,” or “Buffett Tax” after Warren Buffett, the billionaire investor who recently stepped down from the Washington Post Co board of directors.
Buffett has long complained that the current system taxes him at a far lower rate than his employees. While wages are taxed at rates ranging from 10% to 35%, investment earnings are taxed at 15%.In a twist on Obama’s long-standing assertion that the wealthy should do more to tame the soaring national debt, the proposal would target the top 0.3% of taxpayers, many of whom currently reap huge benefits from lower rates on capital gains and dividends, which form the bulk of their earnings.
While the idea has little chance of winning congressional approval, it could help shape a populist message for Obama and other Democrats heading into the 2012 presidential campaign.
White House officials would offer no details of the proposal, which will be the centerpiece of Obama’s recommendations to a special congressional committee working to craft a bipartisan debt-reduction plan before Thanksgiving.
The “supercommittee” is aiming for at least $1.5 trillion in savings over the next decade, a target that will be hard to hit without significant tax increases or cuts to popular entitlement programmes such as Medicare and Social Security.