5:11 AM, Apr. 15, 2012 |
WASHINGTON — Should millionaires be required to pay higher taxes? Montana’s U.S. lawmakers are split over the issue, which is expected to be front and center in Washington, D.C., this week.
At issue is a concept pushed by President Barack Obama and other Democrats, called the Buffett Rule. Named for billionaire Warren Buffett, who said his secretary pays a higher tax rate than he does, the rule would require people making more than $1 million a year to be taxed at a rate of at least 30 percent.
The Senate is poised to vote as early as Monday on a bill authored by Sen. Sheldon Whitehouse, D-R.I., that would put the Buffett Rule into law. Under the billm, the minimum 30 percent effective tax rate for those making more than $1 million would be phased in by levying a “Fair Share” tax for people who don’t meet the 30 percent threshold. Deductions for charitable giving would not be changed.
“Plain and simple, Montanans deserve an economy where everyone chips in their fair share and everyone plays by the same set of rules,” said Sen. Max Baucus, D-Mont. “It’s only fair to ask big-city millionaires and billionaires to pay the same amount of taxes on Wall Street investments that Montana teachers, firefighters and nurses do on their hard-earned paychecks.”
As chairman of the Senate Finance Committee, Baucus has jurisdiction over the proposed bill. Both he and Sen. Jon Tester, D-Mont., plan to vote in favor of the measure, but it isn’t likely to get the 60 votes it needs in the closely divided Senate.
Most Republicans oppose the bill, saying it smacks of politics and that raising taxes is never a good idea.
“Little to do with policy and everything to do with politics,” the Republican National Committee wrote in an email to reporters.
A spokesman for Rep. Denny Rehberg, R-Mont., said the congressman opposes the measure.
“Denny believes the tax code needs to be reformed with the goals of keeping more money in the pockets of hard-working taxpayers and incentivizing small businesses to create jobs so Montana families have a more secure future. The so-called Buffett Rule may be good politics, but it won’t help create a single job,” Rehberg spokesman Jed Link said.
Obama touted the Buffett Rule during a Tuesday speech in Florida, and at a Wednesday White House event that featured millionaires and their assistants.
“It’s time for us to choose which direction we want to go in as a country. Do we want to keep giving tax breaks to the wealthiest Americans like me, or Warren Buffett, or Bill Gates — people who don’t need them and never asked for them? Or do we want to keep investing in things that will grow our economy and keep us secure?
That’s the choice,” Obama said.
The White House attention on the Buffett Rule came the same week that Republican Mitt Romney wrapped up his nomination to oppose Obama. The rule has been described by some as a political ploy to shine a spotlight on Romney’s finances — he made $21.6 million in 2010, and paid an effective tax rate of about 14 percent — and his tax policy: He supports continuing the Bush-era tax cuts for the wealthy.
Obama and his wife, Michelle, reported Friday that they paid an effective tax rate of 20.6 percent on an adjusted gross income of about $790,000.
According to the IRS, the 400 highest-earning Americans in 2008, who made an average of $271 million, paid an average effective tax rate of about 18 percent.
That’s about the same rate that a truck driver pays on a $40,000 salary, according to Whitehouse.
In Montana, only about one tenth of 1 percent of taxpayers make more than $1 million, according to the Montana Department of Revenue.
The Buffett Rule, according to the congressional Joint Taxation Committee, would raise $47 billion over 10 years. That revenue increase would be much higher if it was approved and the Bush-era tax cuts were allowed to expire: combining for $171 billion in increased revenue over 10 years, according to the Institute on Taxation and Economic Policy.