President Barack Obama announced on Monday that his deficit plan would include the so-called “Buffett Tax” on Americans that make over $1 million a year in order to make wealthy Americans pay their fair share.
The tax is named after U.S. investor Warren Buffett, who came out earlier this year and called for higher taxes on the wealthy because, as he claimed, he was paying a smaller percentage of taxes than his secretary as a result of tax loopholes for the wealthy.
“It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million,” President Obama pointed out.
“Anybody who says we can’t change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out,” continued Obama. “They should have to defend that unfairness.”
The President’s deficit plan, along with the “Buffett Tax,” is a way to help the new congressional super committee find the $1.2 trillion in cuts that are needed before the end of the year.
So far, the plan cuts $580 billion in entitlement programs such as Medicare and Medicaid along with other programs.
If savings from the defense budget and the new tax are included, the President projects that the whole plan will provide over $4 trillion in cuts over the next decade.
“The President put down a marker today, and he did it more forcefully than we have seen before,” Sen. Charles E. Schumer (D-NY) told The Los Angeles Times after Obama’s speech.
Sen. Bernie Sanders (I-VT) agreed with the President, saying, “With the wealthiest people in this country becoming wealthier and large corporations enjoying huge profits, it is time that we end tax breaks for the wealthy and large corporations and have them pay their fair share.”
While the Democrats have viewed this push for taxes on the wealthy and necessary spending cuts as a winning combination to combat the deficit, Republicans have outright rejected the proposal.
House Speaker John Boehner (R-OH) said that “Pitting one group of Americans against another is not leadership.”
Senate Minority Leader Mitch McConnell (R-KT) dismissed the proposal as a “massive tax hike, phantom savings.”
“We’re trying to create jobs, and if you increase taxes on people who hire folks, you’re not going to move the ball forward on reducing unemployment,” Sen. Lindsey Graham (R-SC) told Fox News. “This is a conflict created by the president to help his polling numbers.”
“Americans wants to see the president focused on stimulating jobs and innovation, not on raising taxes in a near recession,” said Mark Penn, a former strategist for Hillary Clinton during the 2008 election.
Penn also said that instead, Obama could be pushing tax reform that raises rates for capital income which would be better both economically and politically.
“You’re already hearing the moans and groans from the other side about how we are engaging in class warfare and we’re being too populist…all the usual scripts,” Obama said, defending his plan. “But the truth of the matter is that if we don’t succeed, then I think that this country is going to go down a very perilous path.”
