Democrats peg Buffett rule to expiration of Bush tax cuts
Democrats are hoping to peg their White House-proposed thirty percent tax on millionaires to major end-of-the- year fiscal deadlines — including the expiration of tax cuts for all Americans. They hope that will box Republicans into a corner.
Known as the Buffett rule, named for the billionaire investor who famously complained that his tax rate is lower than that of his secretary, the proposal has virtually no chance of moving on its own with Republicans in control of the U.S. House of Representatives and Democrats with only a razor-thin majority in the Senate.
Democrats hope that the looming expiration of tax cuts for all individuals enacted by former Republican president George W. Bush will motivate them. Plus polls show many Americans back raising taxes on the rich.
Automatic spending cuts to programs Republicans hold dear, such as defense, also kick in at year-end, unless a deal to cut the deficit is struck. Those cuts are known as “sequestration.”
“I think chairman (Senate Finance Committee Chairman Max) Baucus is looking forward to the January 1 date when the sequestration and the tax cuts all occur and that will create a very significant negotiating opportunity,” said Senator Sheldon Whitehouse, a co-sponsor of a bill that would enshrine the minimum 30 percent tax on millionaires. Whitehouse made the remarks at a panel sponsored by the liberal think tank Center for American Progress.
Although Baucus, a powerful tax-writing Democrat, had not endorsed the Buffett legislation, he has given “positive signals,” Whitehouse said.
Jason Furman, an economic advisor to Obama, said tough choices needed to be made when preparing Obama’s 2012 budget proposal light of big budget deficits, but that raising taxes on high earners is was not one of them.
“It is a lot closer to a no brainer than it is to a tough choice,” Furman said, agreeing that the year-end deadlines provide the best chance to push Obama’s tax changes through Congress.
The expiry of the Bush-era tax cuts also gives hopes to those wanting to put triggers in place to move broader reform of the overall tax code.
“The tax code is going to hit the fan at the end of this year and that is the best possible triggering mechanism for addressing real reform that we have had in a while,” said Center for American Progress vice president Michael Ettlinger.