Despite the recent push from President Barack Obama to extend all current tax rates, except income earners making over $250,000, Senate Democrats yesterday blocked two amendments offered by Sen. Mitch McConnell (R-KY); one of which is exactly what the White House wants:
Senate Minority Leader Mitch McConnell, R-Ky., proposed votes on two amendments to a small business tax cut bill the chamber is debating. One was on Obama’s plan, the other on a Republican alternative that would include top earners in the extended tax reductions.
Senate Majority Leader Harry Reid, D-Nev., blocked the votes on both for now, saying the Senate would return to them after it finishes the small business tax measure. Aides said Democrats want to focus now on the small business measure, which they view as a winning issue for them, and turn later this month to Obama’s plan to extend the broader tax cuts, which they see as a draw for voters.
“We’ll get to the tax issues,” Reid said. “That way we’ll be able to talk in more detail about Gov. Romney’s taxes,” a reference to Democratic demands that wealthy GOP presidential challenger Mitt Romney release more of his income tax returns.
Obama has taken this push to raise taxes on the campaign trail. During a recent stop in Iowa, he again used the same wornout rhetorical lines that we’ve come to know since 2008. Obama told his supporters, “[T]o give me another tax break and to give Warren Buffett another tax break or to give Mitt Romney another tax break that would cost — that would cost about $1 trillion and we can’t afford it.”
American Crossroads, a PAC that has already put millions into the upcoming election, put out a new ad just after President Barack Obama’s speech on Thursday in Cleveland with which he hoped to reboot his economic message after a disastrous White House press conference the week before.
The speech really was nothing new. It was the same familar class warfare, big government talk that we’ve all become used to with Obama. In fact, it was so typical that it bombed with the media. So with that, American Crossroads took some of the soundbites and translated them into what Obama really means, in true Peanuts fashion:
On Monday, the Washington Post reported that negotiations had begun in Congress to deal with what has become known as “Taxmageddon,” when the 2001 and 2003 tax cuts expire. Even though it seems that the larger focus is tax reform, Conn Carroll notes that no one should bank on President Barack Obama going along with extending current tax rates, even temporarily:
If American voters reelect President Obama, they have no right to complain when their taxes go up by $494 billion on January 1st. That is the total amount taxes are set to increase, automatically if Congress does not pass, and Obama does not sign, tax relief before December 31st of this year.
In the current edition of The New Yorker, Ryan Lizza reports that unlike 2010 and 2011, Obama is prepared to follow through on his threat to let taxes go up after he no longer has to face voters ever again: “Several White House officials I talked to made it clear that if a deal, or at least the framework of a deal, is not reached before December 31st Obama would allow all the Bush tax cuts to expire – a tactic that would achieve huge deficit reduction, but in a particularly painful and ill-conceived fashion.”
Over the last several months, President Barack Obama, Democrats, and Occupy Wall Street have told us that higher-income earners must pay more in taxes. They say that this is about “fairness” and “income inequality.” They may soon get their wish if Obama and Senate Democrats don’t take action to extend the 2001 and 2003 tax cuts. Failure to act would, as the Congressional Budget Office recently noted, cause another recession.
But do the rich get a pass on taxes? Not according to Mark J. Perry, who has crunched the numbers and produced this chart (below) showing that the top 400 taxpayers paid nearly as much in federal income taxes than the bottom 50% of income earners.
Here’s Perry’s conclusion:
A small group of 400 of America’s most successful earners in 2009, about the number of residents living in a typical apartment building in Washington, D.C., paid almost as much in federal income taxes as the entire bottom half of America’s 138 million tax filers, which is a population equivalent to the combined number of residents living in America’s 29 least populated states, plus the District of Columbia. What makes this disparity possible is the fact that an estimated 47% of individual income tax returns filed in 2009 had a zero or negative tax liability.
And the chart:
While President Barack Obama’s re-election strategy is focused on class warfare and attacking private capital, the Congressional Budget Office is warning that the coming “Taxmageddon” at the beginning of the year would send the economy reeling back into a recession:
Tax hikes and spending cuts set to take effect in January would suck $607 billion out of the economy next year, plunging the nation at least briefly back into recession, the nonpartisan Congressional Budget Office said Tuesday.
Unless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year.
Canceling those tax and spending policies would protect the recovery in the short run and encourage more vibrant growth, around 4.4 percent, in 2013, the CBO said. However, unless lawmakers adopt policies that would reduce budget deficits by a comparable amount down the road, the CBO said, the national debt would continue to climb, imperiling future economic growth.
The report, “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013,” comes as policymakers are bracing for the most consequential battle over government tax and spending policies in years. The George W. Bush-era tax cuts are set to expire on Dec. 31, along with a payroll tax cut proposed by President Obama. Meanwhile, sharp cuts are scheduled to hit the Pentagon and other federal agencies to meet a deal cut during last summer’s showdown over the nation’s debt limit.
Despite the push from President Barack Obama, his campaign team, and Democrats, the 30% tax on millionaires — dubbed the “Buffett Rule” — unsurprisingly went down yesterday evening in the Senate:
The Senate rejected consideration Monday of the “Buffett rule ,” a key election-year Democratic initiative that would impose a minimum tax rate on those making more than $1 million per year, as a philosophical debate over taxes that will define this year’s elections occurred on Capitol Hill.
Democrats were unable to get the 60 votes necessary to break a filibuster and proceed to a full consideration of the measure, with the Senate voting 51 to 45 to move ahead. The vote was largely along party lines, although Republican Sen. Susan Collins (Maine) voted with Democrats to allow the measure to proceed and Democratic Sen. Mark Pryor (Ark.) voted to block it.
As noted above, it was mostly a party line vote, but if you want to see how your Senators voted you can view the roll call here.
Unfortunately, the vote doesn’t mean the end of this charade over tax hikes. We’ve noted before that the Buffett Rule wouldn’t have brought in much in terms of revenue, approximately $47 billion over 10 years — or just under $5 billion annually; less than half a day of spending. And that small amount of revenue would literally be nothing compared to the trillion dollar budget deficits we’ve seen coming out of Washington in recent years.
Last month, the Joint Committee on Taxation released a report showing that the so-called “Buffett Rule,” a new tax supported by President Barack Obama and congressional Democrats on the wealthiest Americans, will not work as intended as those targeted would likely find a way around it. But despite this, Senate Democrats are expected to bring the tax to floor next week, hoping to use it as a tool to hammer their Republican counterparts:
White House press secretary Jay Carney said a Senate vote next week on the so-called Buffett Rule will not be an empty gesture even if it is defeated in the upper chamber.
Carney insisted the White House goal was to win passage of the measure, but also acknowledged the vote could accomplish the political goal of hurting Republicans, something that could also lead to its eventual passage.
“I would simply note two things,” Carney said at Monday’s daily White House press briefing.
“One, the piece of legislation we’re talking about here on its face has broad support across the country,” he said. “Two, there is an opportunity here, because of the 60-vote threshold, to demonstrate Republicans listen to their constituents.
“That’s what votes do — they put senators on record,” Carney said. “We will certainly see how senators handle that, the opportunity to vote on the so-called Buffett Rule. The goal is the passage of the resolution.”
President Barack Obama insists, in the name “fairness,” that a new tax on the wealthy is needed. When discussing this, he frequently points to Warren Buffett, whose secretary pays more as a percentage of her income than her billionaire boss. The argument is misleading, however, since Buffett doesn’t pay taxes on wages like his secretary, rather capital gains taxes, which are already taxed once at the corporate level.
However, a new report from the Joint Committee on Taxation shows that the so-called “Buffett Tax” wouldn’t likely work as intended:
A lot of millionaires likely would find legal ways to avoid President Barack Obama’s so-called Buffett Rule, according to a new congressional estimate. That means the proposed new tax on the wealthy would raise only a relatively small amount for the deficit-plagued government, and could diminish its heft as a political weapon in 2012.
The Buffett Rule–spelled out in Mr. Obama’s State of the Union address–is named for the billionaire investor Warren Buffett, who advocates higher taxes on the very wealthy. It would impose a 30% minimum tax rate on people making more than $1 million a year. As currently envisioned, it would be an additional tax on households that didn’t pay at least the 30% minimum rate through their individual income taxes and employment taxes.
As you know, President Barack Obama has made Warren Buffett’s tax bill a frequent talking point, often mentioning that his secretary pays a tax higher rate. Of course, Obama and his apologists don’t mention that they are taxed different — Buffett being taxed via capital gains.
The debate is interesting in that an official in the Obama Administration has said that the president will propose a reduction in the United States’ corporate income tax. That’s certainly welcome news given that our corporate tax rate is among the highest in the industrialized world, but it’s also at odds with Obama’s frequent class warfare rhetoric because it would put more money into Warren Buffett’s pockets:
Reuters reported late Friday, citing two anonymous sources, that President Obama will call for reducing the U.S. corporate income tax rate to “the high 20 percent range” from 35%.
During his State of the Union address, President Barack Obama telegraphed his intent to wage class warfare against the rich, hoping to revive the populism that helped put him in office at the height of the financial crisis.
Obama once again pushed for the so-called “Buffett Rule” — after Warren Buffett, who pays a higher tax rate than his secretary. The rule would tax individuals making over $1 million at a higher rate, out of “fairness.”
Writing at the Wall Street Journal, economist Stephen Moore asks President Obama about “fairness,” taxes, and his economic policies that discourage success:
President Obama has frequently justified his policies—and judged their outcomes—in terms of equity, justice and fairness. That raises an obvious question: How does our existing system—and his own policy record—stack up according to those criteria?
Is it fair that the richest 1% of Americans pay nearly 40% of all federal income taxes, and the richest 10% pay two-thirds of the tax?
Is it fair that the richest 10% of Americans shoulder a higher share of their country’s income-tax burden than do the richest 10% in every other industrialized nation, including socialist Sweden?
Is it fair that American corporations pay the highest statutory corporate tax rate of all other industrialized nations but Japan, which cuts its rate on April 1?
Is it fair that President Obama sends his two daughters to elite private schools that are safer, better-run, and produce higher test scores than public schools in Washington, D.C.—but millions of other families across America are denied that free choice and forced to send their kids to rotten schools?