Bloomberg News

Obama Campaigns for Buffett Rule

April 10, 2012

Warren Buffett, chief executive officer of Berkshire Hathaway Inc., with a portrait of himself painted by Michael Israel in Omaha, Nebraska. Photographer: Chris Machian/Bloomberg

Warren Buffett, chief executive officer of Berkshire Hathaway Inc., with a portrait of himself painted by Michael Israel in Omaha, Nebraska. Photographer: Chris Machian/Bloomberg

President Barack Obama promoted his proposal to set a minimum tax rate for top earners as a matter of fairness as he sought to emphasize differences with his Republican opponents.

Obama framed the election-year debate over the tax, named for billionaire investor Warren Buffett, as a part of a choice for voters between “two very different visions for our future” during a stop in the swing state of Florida a week before the deadline for Americans to file their federal returns.

Without naming Republican presidential candidate Mitt Romney or critics in Congress, Obama said the contrast is demonstrated in approaches to the budget and taxes.

“Right now, the share of our national income flowing to the top 1 percent has climbed to levels we haven’t seen since the 1920s,” Obama said in a speech to students and faculty at Florida Atlantic University in Boca Raton. “And yet those same people are also paying taxes at one of the lowest rates in 50 years.”

“That’s not fair,” he said.

As the president turns more attention to his re-election bid, the so-called Buffett rule is getting a push from White House policy officials and his campaign advisers. Obama’s speech today is bracketed by fundraisers. Florida, with 29 of the 270 electoral votes needed to win the presidency, has gone to the winning candidate in 12 of the last 14 elections, including Obama in 2008.

Tax fairness will be a central theme in the election, Obama campaign manager Jim Messina told reporters yesterday.

Targeting Romney

He said Romney, Obama’s likely opponent in November, has been a beneficiary of the current tax system and his proposals are based on protecting special tax rates for Wall Street investors and looking out for “people just like him.”

Romney, the co-founder of Bain Capital LLC, earned $21.6 million in 2010 and paid 13.9 percent of that amount in income taxes, according to tax returns he released in January.

Gail Gitcho, Romney’s communications director, called Obama “the first president in history to openly campaign for re- election on a platform of higher taxes.”

“He has already raised taxes on millions of Americans, but he won’t stop there,” Gitcho said in a statement.

Romney’s main opponent in the Republican race, former Pennsylvania Senator Rick Santorum, announced today he’s suspending his campaign, clearing the path to the nomination.

Tax Rates

The tax measure was inspired by Buffett, who has said that the preferential tax rates on investment income should be increased. It would boost tax rates paid by households with incomes between $1 million and $2 million, phased up to a 30 percent minimum tax rate for those making more than $2 million a year. Taxpayers would be able to deduct charitable contributions.

The new rate would increase U.S. tax revenue by $47 billion over the next decade, assuming that income tax cuts enacted in 2001 and 2003 are allowed to expire at the end of the year as scheduled.

The Senate is scheduled to hold a procedural vote on the proposal April 16.

White House press secretary Jay Carney told reporters traveling with Obama that winning the vote in the Senate will be a “challenge.” While Democrats have a majority in the chamber, Republicans have enough votes to block legislation. Republicans, who control the House of Representatives, have vowed to oppose any tax increases.

‘Uphill Battle’

“It may be an uphill battle but it’s not an impossible battle,” he said. The administration wants lawmakers to go on record with a vote.

According to a White House report released today, 22,000 households made more than $1 million in 2009 and paid less than 15 percent in income taxes.

The report cited an Internal Revenue Service study on the 400 U.S. taxpayers with the highest incomes in 2008, at $110 million or higher. Those people paid an average tax rate of 18.1 percent, excluding payroll taxes, down from 29.9 percent in 1995. Families in the middle 20 percent of the income distribution paid 16 percent in federal taxes in 2010, according to the report.

Under current law ordinary income, including profits from small businesses, is taxed at rates up to 35 percent. Capital gains and dividends are taxed at no more than 15 percent.

Multiple Breaks

The proposal isn’t designed with the average high-earning household in mind, Jason Furman, deputy director of Obama’s National Economic Council, said. Instead, he said, the goal is to raise taxes for the relatively few taxpayers who can use multiple tax breaks to lower their rates.

Obama’s three fundraising events in Florida today will raise money for the Obama Victory Fund, a joint committee to benefit his re-election campaign, the Democratic National Committee and state Democratic parties.

The first fundraiser was a 60-guest luncheon in Palm Beach Gardens at the home of Hansel E. Tookes II, former president of Raytheon International Inc. Ticket prices started at $10,000. An 850-donor event at the Westin Diplomat Hotel in Hollywood is to include a musical performance by John Legend, with a limited number of tickets at $250 for youth voters. A 60-donor nighttime event at a private home in Golden Beach is $15,000 per person.

To contact the reporters on this story: Margaret Talev in Boca Raton, Florida at mtalev@bloomberg.net; Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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