February 1, 2012

Whitehouse Introduces “Buffett Rule” Legislation

The Paying a Fair Share Act will Ensure Million-Dollar Earners Pay at Least 30% in Taxes

Washington, DC – Last week, in his State of the Union address, President Obama said: “Tax reform should follow the Buffett Rule.”  Today, U.S. Senator Sheldon Whitehouse (D-RI) introduced legislation to make that goal a reality and put an end to a tax policy that often asks middle class workers to pay higher tax rates than individuals earning more than $1 million per year.
The Paying a Fair Share Act, which is cosponsored by Senators Daniel Akaka (D-HI), Mark Begich (D-AK), Richard Blumenthal (D-CT), Tom Harkin (D-IA), Patrick Leahy (D-VT), Bernie Sanders (I-VT), and Chuck Schumer (D-NY) would ensure that multi-million-dollar earners pay at least a 30 percent effective tax rate, just as President Obama proposed.
“It’s time to give middle class families in Rhode Island and across the country the straight deal they deserve,” said Whitehouse, who began drafting the legislation several months ago.  “As we continue working to restore our economy, it’s more important than ever to make sure all Americans are paying their fair share toward our nation’s success – and right now that just isn’t happening.  It’s inexcusable that our tax system permits ultra-high income earners to pay a lower tax rate than a truck driver or a janitor, and this legislation would help fix that unfair system.”
Senator Daniel K. Akaka (D-Hawaii) said: “This bill is about fairness. It’s simply not right that some millionaires pay a lower tax rate than hardworking middle-class families, and like President Obama said in the State of the Union, we must fix it now. We cannot ignore the fact that tax breaks for the wealthiest Americans added nearly a trillion dollars to the debt over the last decade, and the Congressional Budget Office released a report yesterday showing that these tax breaks will continue to push deficits to unsafe levels. Passing this bill would mark a strong first step toward achieving a tax code that returns to the core America values of fairness and shared responsibility.”
“As one of the Senate’s strongest advocates for comprehensive tax reform, I’m a firm believer that our tax code is broken and our nation’s top earners need to pay their fair share,” said Sen. Begich. “There’s no reason why an Alaska fisherman or teacher should be paying a higher tax rate than a millionaire or billionaire. It makes no sense. Right now our top earners have a special status compared to middle class Alaska families who depend on earned incomes and it’s time to seek fairness.”
Blumenthal said, “The biggest earners should do their fair share – that basic American principle is our goal.  I will fight for fairness in our tax code, with this measure as our first step.  Hardworking families deserve this measure, and no less.”
“This legislation is a strong first step toward rebuilding the middle class by restoring a measure of fairness to our tax code. In our unbalanced economy, we must provide a tax code that represent the needs of our country, with respect to equality and fairness to our society as a whole,” said Harkin. “By ensuring that the wealthiest among us pay their fair share, we will be better able to afford critical investments in education, infrastructure, and innovation that can rebuild a strong, vibrant middle class.”
Senator Patrick Leahy said, “While hard-working Vermont families and small businesses are struggling to make ends meet in a difficult economy, tax fairness has continued to erode, benefitting the wealthiest one percent at the expense of the rest of the country.  By now a large proportion of millionaires pay a smaller percentage of their income than do a large share of moderate-income taxpayers.  As we grapple with large budget deficits worsened by the Bush tax cuts and two wars overseas, it is just common sense that those who have benefitted the most shoulder their fair share of the burden.”
Sen. Bernie Sanders said, “With a record-breaking $15 trillion national debt and a growing gap between the very rich and everyone else, it is absolutely absurd that the wealthiest people in the country are paying the lowest effective tax rate in decades.  There is no excuse for millionaires and billionaires to have an effective tax rate lower than middle-class families.  If we are serious about addressing this deficit crisis, it is imperative that we have a tax system which is fair and which asks the wealthiest people in our country to pay their fair share.”
Whitehouse has pointed out in Senate speeches that the top 400 earners in America paid an average effective tax rate of just 18.2 percent in 2008.  President Obama often cites the example of Warren Buffett, who has famously highlighted that he pays a lower tax rate than his secretary.
Whitehouse’s legislation would apply only to taxpayers with income over $1 million – including capital gains and dividends.  Taxpayers earning over $2 million would be subject to a 30% minimum federal tax rate.  The tax would be phased in for incomes between $1 million and $2 million, with those taxpayers paying a portion of the extra tax required to get them to a 30% effective tax rate.   The bill also includes language to preserve the incentive for charitable giving.
The legislation is expected to reduce the deficit by tens of billions of dollars, and is currently awaiting a score by the Joint Committee on Taxation.

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