February 27, 2024

Republicans Call Obama’s Tax on Millionaires ‘Class Warfare’

The tax proposal, which would be introduced in 2013 and limit the deductions and credits that high earners could take once they hit the million-dollar threshold, is part of a broad plan for $2 trillion in deficit reductions that Mr. Obama is expected to unveil on Monday at the White House.

Representative Paul D. Ryan, chairman of the House Budget Committee and a leading proponent of cutting spending on benefit programs like Medicare, said the proposal would weigh heavily on a stagnating economy.

On “Fox News Sunday,” Mr. Ryan said it would add “further instability to our system, more uncertainty, and it punishes job creation.”

“Class warfare,” he said, “may make for really good politics, but it makes for rotten economics.”

With a special joint Congressional committee starting work on a bipartisan budget deal to cut at least $1.5 trillion in spending over 10 years, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts to Medicare and Medicaid.

Mr. Obama is calling his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers because investment gains are taxed at a lower rate than wages.

Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise.

Senator Lindsey Graham, Republican of South Carolina, suggested on CNN that raising taxes on billionaires and millionaires would add a minimal amount of money to the Treasury to pay off the debt.

The Senate minority leader, Mitch McConnell of Kentucky, said Sunday that there was “bipartisan opposition to what the president is recommending,” which he said would slow growth in difficult times.

Still, “if Warren Buffett would like to give up some of his benefits, we’d be happy to talk about it,” Mr. McConnell said on the NBC program “Meet the Press.” He then added, more seriously, that Republicans were ready to consider means testing as part of a broader overhaul to the big entitlement programs, meaning that the well-to-do would receive less from programs like Social Security.

Two former government economists said on CNN on Sunday that they would like to see a more sweeping approach to tax reform.

The economists, Alice Rivlin, who was director of the White House Office of Management and Budget under President Bill Clinton, and Douglas J. Holtz-Eakin, who led the Congressional Budget Office during George W. Bush’s presidency, said Mr. Obama’s proposal would simply add a complication to a tax code that needs more fundamental reform.

The special deficit reduction committee, Ms. Rivlin said, has a rare opportunity to “reform entitlements and reform the tax code and put us on a sustainable deficit track.”

Behind the arguments of Mr. Obama, Mr. Buffett and others about the inequity of the tax system is the difference between taxpayers’ marginal rate, popularly known as their tax brackets, and the effective rate they end up paying after subtracting for deductions, credits and other breaks.

Under Mr. Obama’s proposal, Mr. Buffett and others with taxable income of more than $1 million would pay a minimum tax rate closer to that of the people they employ. But Mr. Obama will leave the details of how such a rate would be calculated to the debate over rewriting the tax code.

The millionaires’ rate would apply to fewer than 450,000 taxpayers, administration officials said; 144 million returns were filed for 2010.

Jackie Calmes contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=369f3656bdebe18c22971bffb0b82bd3

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