Buffett Rule

File:Distribution of Average Tax Rates (Individual Income Tax and Employee Payroll Tax) Buffett Rule.JPG

The Buffett Rule is named after American investor Warren Buffett, who publicly stated in early 2011 that he believed it was wrong that rich people, like himself, could pay less in federal taxes, as a portion of income, than the middle class, and voiced support for increased income taxes on the wealthy.{{Cite news|url=https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html|title=Stop Coddling the Super-Rich|last=Buffett|first=Warren|date=August 14, 2011|work=The New York Times|access-date=April 16, 2017}} The rule would implement a higher minimum tax rate for taxpayers in the highest income bracket, to ensure that they do not pay a lower percentage of income in taxes than less-affluent Americans.{{cite news | url=https://www.bbc.co.uk/news/world-us-canada-14962769 | title=US economy: New Obama plan to tax wealthiest | work=BBC News | date=September 18, 2011 | access-date=September 18, 2011}} In October 2011, Senate leader Harry Reid (D–Nev.) proposed a 5.6 percent surtax on everyone making over a million dollars a year to pay for new stimulus provisions, but the change did not go through.Jake Tapper. [https://news.yahoo.com/buffett-rule-tax-set-30-percent-obama-speech-023903437.html "Buffett rule tax set at 30 percent: Obama speech’".] {{webarchive |url=https://web.archive.org/web/20120128110435/http://news.yahoo.com/buffett-rule-tax-set-30-percent-obama-speech-023903437.html |date=January 28, 2012 }} Yahoo News, January 25, 2012.

A White House statement released in January 2012 defined the rule as part of "measures to ensure everyone making over a million dollars a year pays a minimum effective tax rate of at least 30 percent ... implemented in a way that is equitable, including not disadvantaging individuals who make large charitable contributions." The White House also stated that "no household making more than $1 million each year should pay a smaller share of their income in taxes than a middle-class family pays."{{cite web|url=https://obamawhitehouse.archives.gov/economy/buffett-rule |publisher=White House |title=The Buffett Rule | The White House |date=April 10, 2012 |via=National Archives |access-date=2012-04-17}}

The Buffett Rule was not in the President's 2012 budget proposal and the White House initially stressed it as a guideline rather than a legislative initiative.Annie Lowrey. [https://www.nytimes.com/2012/02/17/us/politics/white-house-sees-buffett-tax-rule-more-as-a-guide.html "The Buffett Tax Rule Is Really More of a Guideline".] The New York Times, February 16, 2012. The rule, however, was later submitted for deliberation as US Senate Bill S. 2059, Paying a Fair Share Act of 2012.{{cite web|url=http://thomas.loc.gov/cgi-bin/bdquery/z?d112:s.2230:|title=Bill Summary & Status - 112th Congress (2011 - 2012) - S.2230 - THOMAS (Library of Congress)|work=loc.gov|access-date=April 17, 2012|archive-date=December 16, 2012|archive-url=https://web.archive.org/web/20121216103303/http://thomas.loc.gov/cgi-bin/bdquery/z?d112:S.2230:|url-status=dead}} On April 16, 2012, the bill received 51 affirmative votes, but was stopped by a Republican filibuster that required 60 votes to proceed to debate and a vote on final passage.{{cite web|url=http://consumerist.com/2012/04/senate-blocks-buffett-rule-with-51-45-vote.html|title=Senate Blocks Buffett Rule With 51-45 Vote|work=Consumerist}}{{cite news|url=https://www.usatoday.com/news/washington/story/2012-04-16/senate-fails-to-pass-buffett-rule/54324786/1 |title= Bill defeat | work=USA Today | date=April 16, 2012}}

If enacted, the rule change would result in $36.7 billion per year in additional tax revenue ($367 billion over the next decade), according to a January 2012 analysis by the Tax Foundation, a think tank.{{cite news|url=http://dyn.politico.com/printstory.cfm?uuid=3B1556AF-A13F-476F-AD68-42FA17D5C0CA|title=Buffett Rule's impact? W.H. won't say|first=Josh|last=Boak|publisher=Politico|access-date=January 30, 2012|date=January 26, 2012|url-status=dead|archive-url=https://web.archive.org/web/20120128034453/http://dyn.politico.com/printstory.cfm?uuid=3B1556AF-A13F-476F-AD68-42FA17D5C0CA|archive-date=January 28, 2012|df=mdy-all}} These figures assume that the 2001/2003/2010 tax cuts are not extended. If the 2001-2010 tax cuts do not expire as scheduled, estimated Buffett Rule revenues would total $162 billion over the decade.{{cite magazine|url=https://www.forbes.com/sites/beltway/2012/05/02/why-the-buffett-rule-would-raise-more-revenue-than-critics-say/|title=Why The Buffett Rule Would Raise More Revenue Than Critics Say|first=Roberton|last=Williams|magazine=Forbes|access-date=May 6, 2012|date=May 2, 2012}} An alternative study released that same month by the Citizens for Tax Justice, a liberal think tank which favors the change, stated that the change would add $50 billion per year in tax revenue ($500 billion over the decade).{{cite web|url=http://www.ctj.org/taxjusticedigest/archive/2012/01/ctj_calculates_buffett_rule_wo.php|title=CTJ Calculates Buffett Rule Would Raise $50 Billion in One Year and Affect Only the Richest 0.08 Percent of Taxpayers|publisher=Citizens for Tax Justice|date=January 27, 2012|access-date=January 30, 2012|archive-url=https://web.archive.org/web/20121008080915/http://www.ctj.org/taxjusticedigest/archive/2012/01/ctj_calculates_buffett_rule_wo.php|archive-date=October 8, 2012|url-status=dead}} The United States Congress Joint Committee on Taxation released a letter in March 2012 estimating that the Buffett Rule would raise $46.7 billion over the next decade.{{cite web|last=United States Congress Joint Committee on Taxation|title=Memo On 'Buffett Rule' Revenue Estimates|url=http://taxprof.typepad.com/files/joint-committee.pdf|access-date=April 11, 2012}} The divergent estimates come about because of different assumptions about the details of the Buffett Rule. For example, the Joint Committee on Taxation assumes that many high-income taxpayers would reduce the amount of capital gains realized in one year to fall beneath the Buffett Rule threshold.

The estimated $47 billion would offset by 0.7% the $6.4 trillion increase in spending over the next decade estimated by the Congressional Budget Office, based on President Obama's 2013 budget plan.{{cite news |title=Buffett Rule Tax Bill Would Raise $47 Billion Over 10 Years |author=Richard Rubin |url=http://www.businessweek.com/news/2012-03-20/buffett-rule-tax-bill-would-raise-31-billion-over-10-years |archive-url=https://web.archive.org/web/20120322224934/http://www.businessweek.com/news/2012-03-20/buffett-rule-tax-bill-would-raise-31-billion-over-10-years |url-status=dead |archive-date=March 22, 2012 |work=Bloomberg BusinessWeek |date=March 20, 2012 |access-date=April 16, 2012}} Using the higher estimate from the Tax Foundation, the estimated $367 billion would offset by 5.7% the $6.4 trillion spending over the next decade.

The 2013 budget proposed by the Obama administration stated that the Buffett Rule should replace the Alternative Minimum Tax.{{cite journal |title=Cutting Waste, Reducing the Deficit, and Asking All to Pay Their Fair Share |url=https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2013/assets/cutting.pdf |journal=Office of Management and Budget |date=n.d. |via=National Archives|access-date=May 6, 2012}} The Joint Committee on Taxation calculated that the Buffett Rule plus the repeal of the Alternative Minimum Tax would increase the deficit by $793.3 billion in the next decade.{{cite news |title=The Buffett Tax Loss |url=https://www.wsj.com/articles/SB10001424052702304444604577341832674519416?KEYWORDS=buffett+rule |work=The Wall Street Journal |date=April 13, 2012 |access-date=April 16, 2012}} The $793.3 billion loss projected did not take into account additional proposed measures, such as incremental increases in retirement age and payroll tax lifetime contributions raised to $190,000 by 2020, about $22,000 higher than it would be under current law.{{cite news |title=Debt commission: What Obama's panel said |url=https://money.cnn.com/2011/04/13/news/economy/debt_commission_obama/index.htm?iid=EL |work=Money CNN Online |date=April 13, 2012 |access-date=May 6, 2012 |first=Jeanne |last=Sahadi}}

Part of the reason for the inequality in taxation is that revenue from long-term capital gains is taxed at a maximum rate of 23.8%.{{cite news |title=How the Government Subsidizes Wealth Inequality |url=http://www.americanprogress.org/issues/tax-reform/report/2014/06/25/92656/how-the-government-subsidizes-wealth-inequality/|work=Center for American Progress |date=June 25, 2014 |access-date=Aug 1, 2014 |first=Harry |last=Stein}} It's not entirely clear how many individuals would be affected by the change. An October 2011 study by the Congressional Research Service found that a 30% minimum tax rate rule would mean up to 200,000 taxpayers, equivalent to 0.06% of all U.S. citizens, paying more.

Paul Krugman, The New York Times columnist and Nobel Prize–winning economist, wrote in January 2012 that "such low taxes on the very rich are indefensible".{{cite news|url=http://communities.washingtontimes.com/neighborhood/politics-policy-and-public-interest/2012/apr/30/case-buffett-rule/

|title=The Case for the Buffett Rule}} He stated that "the economic record certainly doesn’t support the notion that superlow taxes on the superrich are the key to prosperity" asserting that since the U.S. economy added 11.5 million jobs during President Bill Clinton's first term, when the capital gains tax rate was over 29 percent, he thinks there's no real reason to keep from raising the tax rate.{{cite news|author=Paul Krugman|author-link=Paul Krugman|url=https://www.nytimes.com/2012/01/20/opinion/krugman-taxes-at-the-top.html|title=Taxes at the Top|newspaper=The New York Times|date=January 19, 2012|access-date=January 30, 2012}}

A CBS News/The New York Times poll released in January 2012 found that 52 percent of Americans agreed that investments should be taxed at the same rate as income.{{cite news|url=https://www.cbsnews.com/news/obama-details-buffett-rule-says-millionaires-should-pay-at-least-30-percent-tax-rate/|title=Obama details "Buffett Rule," says millionaires should pay at least 30 percent tax rate|publisher=CBS News|first=Leigh Ann|last=Caldwell|date=January 25, 2012|access-date=January 30, 2012}} A Gallup poll released in April 2012 also found that 60 percent of Americans support the rule. A similar poll released later that month by CNN found that 72 percent of Americans support the idea.{{cite news|url=https://www.latimes.com/la-xpm-2012-apr-13-la-pn-gallup-poll-buffett-rule-20120413-story.html |title=Gallup poll: 60% back Obama's 'Buffett Rule' - Los Angeles Times |newspaper=Los Angeles Times|date=April 13, 2012 |access-date=2012-04-17 |first=Michael A. |last=Memoli}}{{cite news|last=Geiger |first=Kim |url=http://www.latimes.com/news/politics/la-pn-polls-americans-divided-over-taxes-but-support-buffett-rule-20120416,0,433493.story |title=Polls: Americans divided over taxes but support 'Buffett Rule' |newspaper=Los Angeles Times|date= April 16, 2012|access-date=2012-04-17}}

===Opposition===

Representative Paul Ryan (R–Wis.), who was the chairman of the House Budget Committee, criticized the new tax provisions. He labeled it as class warfare and also stated that it would negatively impact job creation and investment.{{cite news|title=Rep. Ryan Accuses Obama of Waging 'Class Warfare' With Millionaire Tax Plan|url=https://www.foxnews.com/politics/republicans-accuse-obama-of-waging-class-warfare-with-millionaire-tax-plan|access-date=September 18, 2011|publisher=Fox News Channel|date=September 18, 2011}} Senate Minority Leader Mitch McConnell (R–Ky.) said the conditions of the U.S. economy were ill-disposed to raising taxes.{{cite news|last=Eldridge|first=David|title=GOP slams Obama's millionaire's tax as 'class warfare'|url=http://www.washingtontimes.com/news/2011/sep/18/gop-slams-obamas-millionaires-tax-as-class-warfare/|access-date=September 19, 2011|newspaper=The Washington Times|date=September 18, 2011}} House Speaker John Boehner (R–Ohio) has spoken against the proposed rule and said that, "there's a reason we have low rates on capital gains ... because it spurs new investment in our economy and allows capital to move more quickly." Dana Milbank from The Washington Post criticized the proposed tax as a gimmick, stating that President Obama was prioritizing the Buffett Rule over the alternative minimum tax for political, not economic reasons.{{cite news |title=Rebuffing Obama's gimmicky 'Buffett Rule' |author=Dana Milbank |url=https://www.washingtonpost.com/opinions/rebuffing-obamas-buffett-rule/2012/04/11/gIQA7m4HBT_story.html |newspaper=The Washington Post |date=April 11, 2012 |access-date=April 16, 2012}}

• Economic policy of the Obama Administration
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{{Reflist|colwidth=30em}}

• [https://web.archive.org/web/20120414103546/http://www.businessweek.com/articles/2012-04-12/buffett-rule-or-not-most-rich-people-already-pay Buffett Rule or Not, Most Rich People Already Pay] April 12, 2012

Category:Buffett family

Category:Works by Barack Obama

Category:Tax reform in the United States

Category:Personal taxes in the United States

Category:Wealth in the United States