WASHINGTON – Democratic senators announced Monday that they would introduce legislation this week codifying President Barack Obama’s principle that the super-rich should pay at least the tax rate of middle-class workers.
But the effort to press the populist tax agenda Obama outlined in his State of the Union address could divide Democrats since many of them are more anxious to talk about “tax fairness” and Medicare in an election year than to try to raise taxes.
Sen. Sheldon Whitehouse, D-R.I., the author of the so-called Buffett Rule bill, told reporters Monday that he was serious about a legislative push this year. He said he might press his legislation as a stand-alone bill or seek to attach it to other legislation.
“In theory, we have a progressive tax code in which the more successful you are, the more money you make, the greater rate you pay in taxation,” Whitehouse said. “Unfortunately what turns out to be the fact in practice is that you have these huge exceptions.”
He cited the billionaire investor Warren Buffett’s oft-repeated assertion that he pays a lower percentage of his income in taxes than his secretary does. Whitehouse also cited a review that showed that the residents of the posh Helmsley Building in Manhattan paid a collective tax rate of 14.7 percent on their considerable incomes.
Whitehouse said he had the support of at least two other Democrats on the bill. He planned to announce other names later, and more names will come after the nonpartisan congressional Joint Committee on Taxation releases an official number for the amount of revenue the bill would raise. That “score” was requested by Sens. John Kerry, D-Mass., and Benjamin L. Cardin, D-Md.
The bill, following the rough contours laid out by Obama last week, creates what would be an alternative minimum tax for the super-rich. Households with adjusted annual gross incomes exceeding $1 million would do their taxes as they do now, with all the deductions, credits and loopholes intact. They would also calculate what 30 percent of their adjusted gross incomes amounts to. They would then pay whichever amount is larger.
By approaching the issue of “tax equity” that way, Congress would not have to tackle the difficult political task of closing each loophole, nor could they be accused of inadvertently hitting other taxpayers, since only those with annual incomes over $1 million would be required to calculate the flat, 30 percent rate.
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