This is an excerpt from Executive Insight Briefing, produced every Thursday by the National Journal’s Daily Briefings Team.
The so-called Buffett Rule – establishing a minimum effective tax rate of 30 percent on those who earn more than $1 million annually – is set for a procedural Senate vote next week.
The bill has no chance of getting the 60 votes it needs for passage, but it has become a rallying point for both parties: Democrats are using the legislation to paint Republicans as supporters of tax loopholes and low rates for the wealthy, while Republicans argue that the rule is a fluff proposal that won’t incubate jobs or make a significant dent in the deficit.
The White House and key Hill Democrats waged a weeklong offensive. President Obama touted it in Florida on Tuesday and at the White House on Wednesday, while Vice President Joe Biden hit New Hampshire on Thursday to lecture on tax fairness. With an invigorated focus on presumptive Republican nominee Mitt Romney, the Obama team is pushing the Buffett Rule to highlight Romney’s wealth and purported disconnect: The former Bain Capital executive paid an effective rate of just 13.9 percent on $21.6 million in 2010, because most of his income is drawn from investments.
But Republicans counter that a “millionaire’s tax” would do nothing to put Americans to work, and would in fact hurt small businesses. House Budget Committee Chairman Paul Ryan took to the airwaves on Tuesday to call the Buffett Rule “budget pixie dust” that would pay for only a tiny percentage of Obama’s proposed spending. Senate Minority Leader Mitch McConnell also attacked the proposal, saying, “This is yet another proposal from Democrats that won’t create a single job or lower the price at the pump by a penny, but may have the opposite effect.”
According to Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center, both sides are spinning. There are 438,000 people with $1 million or more; if the Bush tax cuts expire, 116,000 of them would pay about $173,000 more in taxes each under the Buffett Rule. If the tax cuts are extended, 217,000 of them would pay on average $190,000 more. That revenue would amount to $47 billion over 10 years – a tiny percentage of the estimated $6 trillion 10-year budget. But Williams added that a millionaire’s tax would not disproportionately hurt job-creators: Fewer than a third of people with very high incomes are small-business owners.