‘Buffett rule’ is producing Capitol gains
The Senate careens toward a vote Monday on the “Buffett rule” tax in a showdown that will do a lot more to arm both political parties for November’s elections than it will for making a dent in the federal deficit.
President Obama has made passage of the tax his chief priority and has tried to tap into concerns over a growing income gap.
His own party isn’t united on the proposed tax, which stands little chance of gaining the 60 votes needed to advance in the Senate.
“Just because Republicans oppose this does not mean it’s not the right thing to do and not the right thing to push for,” Treasury Secretary Timothy F. Geithner said on NBC’s “Meet the Press” program Sunday as he made the rounds of the political talk shows to try to drum up last-minute support.
The GOP has rebutted by arguing that the tax is a distraction that will punish small businesses and won’t create jobs, though they fear an even more bruising fight later this year when the George W. Bush-era tax cuts are due to expire.
“Instead of delivering political speeches promoting the destructive Buffett tax increase, President Obama should be encouraging his Democrat colleagues in the Senate to work with congressional Republicans on legislation that would actually create jobs, lower gas prices and rein in federal government spending,” said Sen. John Thune, South Dakota Republican, as Mr. Obama delivered several speeches last week promoting the proposal.
The Buffett tax is designed to impose a higher rate on wealthier Americans whose income is from investments rather than salaries or wages. Because capital gains and dividend income are taxed at 15 percent, many investors end up paying a lower rate than they would if their income were all from salaries or wages.
Named after billionaire investor Warren Buffett, who famously said he shouldn’t pay a lower tax rate than his secretary, the tax would phase in a minimum tax for those with incomes of $1 million or more, until those making at least $2 million would face a mandatory minimum 30 percent tax.
Mr. Obama called for a Buffett tax in his State of the Union address in January, and Sen. Sheldon Whitehouse, Rhode Island Democrat, wrote a bill to implement it. It faces its first 60-vote hurdle in the Senate on Monday evening.
A similar proposal in the Republican-controlled House has failed multiple times. In the House Budget Committee, a stand-alone Buffett tax was defeated by a 22-15 vote, with one Democrat siding with all Republicans. Several 2013 federal budget plans written by Democrats included the tax, but they were also defeated on the House floor last month.
The Buffett rule is just one of the issues facing Congress as it returns from a two-week recess.
Also to come will be debate on the federal government’s highway-building fund. Currently operating on a stopgap extension, the program needs a more permanent fix.
Senators overwhelmingly passed a bipartisan two-year extension, but House Republicans have struggled to find a consensus. On Friday, they announced that they would tack approval of the Keystone XL oil pipeline from Canada onto the highway bill.
Overshadowing all of that, however, will be the presidential and congressional elections - and Mr. Obama’s push for tax increases on the wealthy.
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