Obama to propose “Buffett Tax” on millionaires

Posted on 19 September 2011

This is a 60 second summary of the article here and here.

Courtesy Reuters

No its not a tax on people who don’t finish their leftovers at the buffet table.

In a nod to investor extraordinaire Warren Buffett (rhymes with Muppet and spelt with two “T”s), beleaguered U.S. President Barack Obama will propose a tax on millionaires named after the third richest man in the world.

Buffett wrote earlier this year that loopholes in the U.S. tax code resulted in rich people like him paying less taxes than poorer people, such as his secretary. He repeated his assertion in various television interviews such as this one:

Currently, the U.S. tax code allows the super rich to be taxed 15% because much of their income comes from investments. Less wealthy Americans pay between 10% and 35%.

The Buffett Tax, according to reuters, may not raise much in revenues but would appeal to Obama’s democratic base ahead of the 2012 elections. Obama is expected to seek up to $3 trillion in deficit savings over the next 10 years.

White House Communications Director Dan Pfeiffer said in a tweet on Saturday the tax would act as “a kind of AMT” (Alternative Minimum Tax) aimed at ensuring millionaires pay a minimum rate of tax that at least matches that of middle-class families.

More than just appealing to his home base, Obama’s reference to Buffett brings a shadow of doubt to those leaning towards the Republican side of the fence. The opposition has been steadfast on their stance against tax increases.

“It’s a very simple equation,” Mr. Boehner said in a speech to the Economic Club of Washington on Friday. “Tax increases destroy jobs. And the joint committee is a jobs committee. Its mission is to reduce the deficit that is threatening job creation in our country.”

Buffett’s company, Berkshire Hathaway, is estimated to employ 260,000 employees and there has been no mention of retrenchment within the company in response to potential tax increases.

On the other hand, the Bank of America announced last week that it was retrenching 30,000 employees while Citigroup has announced it will only hire for ‘critical’ jobs. There have been no tax increases last week.

Obama has been hammered in opinion polls over his handling of the faltering economy and could use his plan to counter Republican claims he is a ‘tax-and-spend’ liberal (or, a naughty boy that doesn’t know how to control his spending) as he campaigns for re-election next year.

Pushing for politically unrealistic tax increases may help his cause as he could blame lawmakers for thwarting his economic recovery plans at a time when the public is looking for a scapegoat for the politicking within Washington.

Obama will lay out his recommendations in White House Rose Garden remarks at 10.30 a.m. EDT on Monday and is expected to urge steps to raise tax revenue as well as cuts in government spending.

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