While administration officials blamed “tax breaks,” the chief target of the Buffett Rule would be those who make money from investments. Under the 2003 Bush tax cuts, later extended by President Obama, both dividend and interest income are taxed at 15 percent — well below the top income tax rates.
Republicans said even at 15 percent it still amounts to double-taxation, since that income was already taxed at the corporate tax rate of 35 percent on the business side, and then is taxed again when disbursed to investors.
The Buffett tax would apply to about 223,000 taxpayers.
If imposed, the tax could bring in anywhere from $4.6 billion up to $16.2 billion in an average year over the next decade. Even at that high range, however, it’s still just 2.5 percent of the deficits Mr. Obama’s budget plans would produce during that same 10-year period.
Democrats said every little bit can help.
Mr. Schumer vowed to try to use the Buffett tax as a way to pay for expanded college access or a research and development tax credit. He predicted the GOP will have a hard time voting against the tax increase when the revenue raised is used for one of those purposes.