Now that Republicans have all but settled on multi-millionaire Mitt Romney as their presidential nominee, Democrats are renewing a push for the so-called “Buffett Rule,” which seeks to ensure the very wealthy pay as high a portion of their incomes in taxes as the middle class.
U.S. Sen. Patty Murray did her part with a news conference at a Seattle coffee shop Wednesday morning to spotlight a planned vote next week in the Senate on the proposal Democrats have named the “Paying a Fair Share Act of 2012.”
Standing with small business owners, a firefighter and construction worker, Murray said the wealthy are using tax loopholes and accounting tricks to dodge paying their fair share of federal taxes.
“So when they get to the bottom line on their tax forms, many of the people making the most money end up paying substantially lower rates than most working Americans,” Murray said.
The 400 highest earning Americans in 2008, who each made an average of $271 million, paid an average effective tax rate of about 18 percent, Murray said, citing IRS figures. The legislation before the Senate would ensure millionaires pay at least 30 percent.
It’s true that some of the very wealthy enjoy relatively low tax rates, thanks in large part to the reduction the tax rates on investment income as part of the 2003 Bush tax cuts.
But as a whole, the wealthiest 1 percent of Americans pay 30.4 percent of their income in federal taxes — substantially higher than the 12.6 percent paid by the middle 20 percent of taxpayers, according to the nonpartisan Tax Policy Center.
“What you have are two things that are true at the same time,” said Joseph Rosenberg, a research associate with the center. “On average these very high income people do pay a higher rate than the vast majority of taxpayers. But at the same time, there is a number of taxpayers – it’s not a secret – it’s because they derive income from dividends and investments, who pay less.”
With Republicans opposed to the tax change, the Senate vote next week is seen as largely a political gesture to highlight GOP opposition to raising taxes on millionaires.
It’s a move that Democrats hope will be particularly effective given news that Romney himself paid an effective tax rate of 13.9 percent in 2010, because most of his income came through investments.
President Obama’s re-election campaign has put a tax calculator online, urging voters to see how their own tax rate stacks up against Romney’s.
At Murray’s news conference, Malia Keene, who owns a children’s toy and clothing store next door to the coffee shop, said the tax-fairness message makes sense to her.
“When millionaires game the system to avoid paying their fair share it means that small business owners and middle class taxpayers are left picking up their tab,” she said.
Republicans are dismissing the Buffett Rule as divisive election-year theater.
“Little to do with policy and everything to do with politics,” the Republican National Committee said in an email blast to reporters Wednesday, pointing to estimates the new law may only raise about $50 billion over the next decade.
Asked whether the timing of the vote was merely political, Murray replied “there is no doubt it is a political issue,” but said it went deeper than that.
Murray pointed to the sacrifices the middle class would have had to make under proposals before the deficit-reduction “supercommittee” she co-chaired last year. She said the wealthy must also shoulder a burden if the U.S. is to regain its long-term financial health.
“And as long as we are protecting those people who make millions and billions of dollars every year we are not going to have a system that is fair and we are going to continue to burden those people at the bottom,” Murray said.
– The Seattle Times
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