GOP derails Senate ‘Buffett rule’ taxes on wealthy

ALAN FRAM

Asso­ci­ated Press

WASHINGTON — Sen­ate Repub­li­cans derailed a Demo­c­ra­tic “Buf­fett rule” bill Mon­day forc­ing the nation’s top earn­ers to pay at least 30 per­cent of their income in taxes, using the day before Amer­i­cans’ taxes are due to defy Pres­i­dent Barack Obama on one of his sig­na­ture election-year issues.

By a near party-line 51–45 tally, sen­a­tors voted to keep the bill alive but fell nine votes short of the 60 needed to con­tinue debat­ing the mea­sure. The anti-climactic out­come was no sur­prise to any­one in a vote that was designed more to win over vot­ers and embar­rass sen­a­tors in close races than to push leg­is­la­tion into law.

At the White House, Obama denounced the vote, say­ing Repub­li­cans chose “once again to pro­tect tax breaks for the wealth­i­est few Amer­i­cans at the expense of the mid­dle class.” In a state­ment issued after the vote, he said he would keep press­ing Con­gress to help the mid­dle class.

“It’s just plain wrong that mil­lions of middle-class Amer­i­cans pay a higher share of their income in taxes than some mil­lion­aires and bil­lion­aires,” he said.

Repub­li­cans called the mea­sure a divi­sive Demo­c­ra­tic dis­trac­tion from the nation’s real prob­lems that would not address the economy’s real woes.

“This leg­is­la­tion will do noth­ing with regard to job cre­ation, with regard to gas prices, with regard to eco­nomic recov­ery,” said Sen. Jon Kyl of Ari­zona, the No. 2 Sen­ate GOP leader.

Democ­rats’ goal, he said, was “to try to draw atten­tion away from the issues that the Amer­i­can peo­ple are most con­cerned about.”

Sen. Susan Collins of Maine was the only Repub­li­can to join Democ­rats in vot­ing to keep the mea­sure alive, argu­ing that it was a way to begin con­sid­er­ing a badly needed, broad revamp­ing of the entire tax code.

The lone defect­ing Demo­c­rat was Sen. Mark Pryor of Arkansas, who said mak­ing the rich pay a fair share of taxes should occur as part of an over­all tax over­haul, “not as a polit­i­cal ploy meant to score points.”

Monday’s vote was the first time a “Buf­fett rule” pro­posal has come to a Sen­ate vote this elec­tion year, though Democ­rats have tried unsuc­cess­fully in recent months to impose mod­est sur­charges on the income of the wealthy.

With pres­i­den­tial and con­gres­sional elec­tions approach­ing in Novem­ber, it was also a micro­cosm of the broader bat­tle the two par­ties are wag­ing over an econ­omy that is still hav­ing a tough time cre­at­ing enough new jobs. And the fight isn’t con­fined to the Sen­ate floor.

On Thurs­day, the House plans to vote on a plan by House Major­ity Leader Eric Can­tor, R-Va., to pro­vide 20 per­cent tax deduc­tions to all busi­nesses with fewer than 500 work­ers — a thresh­old that includes 99.9 per­cent of all U.S. companies.

Repub­li­cans say that plan would spur job cre­ation, while Democ­rats call it a give­away to busi­ness because firms would not have to hire employ­ees to receive the reduc­tion. That bill is expected to pass the GOP-run House but die in the Democratic-led Senate.

The Sen­ate vote was on a mea­sure by Sen. Shel­don White­house, D-R.I., that would impose a min­i­mum 30 per­cent income tax on peo­ple mak­ing over $2 mil­lion yearly and phase in higher taxes for those earn­ing at least $1 mil­lion. The mea­sure is nick­named for bil­lion­aire War­ren Buf­fett, who has called for higher taxes on the rich.

The fight has been polit­i­cally irre­sistible for both sides.

It allows Democ­rats to take shots at Mitt Rom­ney, the wealthy, all-but-certain GOP pres­i­den­tial nom­i­nee. He has released data show­ing he paid an effec­tive tax rate of only around 14 per­cent in 2010 and about 15 per­cent last year, both years earn­ing around $21 million.

For Repub­li­cans, it’s a chance to accuse its Demo­c­ra­tic back­ers of press­ing for tax increases that will divert money employ­ers could oth­er­wise use to expand and hire more workers.

The Sen­ate mea­sure would raise $47 bil­lion over the com­ing decade, barely enough to notice against the roughly $7 tril­lion in bud­get deficits expected over that period. Admin­is­tra­tion offi­cials have con­ceded that by itself it would do lit­tle to trim those short­falls, instead empha­siz­ing its fairness.

“The admin­is­tra­tion believes that con­tin­u­ing to allow some of the wealth­i­est Amer­i­cans to use spe­cial tax breaks to avoid pay­ing their fair share sim­ply can­not be jus­ti­fied,” the White House said in a writ­ten statement.

Obama’s tax return shows he earned nearly $790,000 last year and paid an effec­tive tax rate of almost 21 percent.

Repub­li­cans said the bill under­scored an effort by Obama and Democ­rats to scape­goat the wealthy with a gim­mick that would accom­plish nothing.

Cam­paign­ing in Philadel­phia, Repub­li­can pres­i­den­tial con­tender Mitt Rom­ney ridiculed the Buf­fett rule, telling a tea party audi­ence in Philadel­phia the rev­enue it would pro­duce would fund the gov­ern­ment for only about 11 hours. Obama gen­er­ally says the pro­posal is to make sure the very wealthy do to not pay an abnor­mally low tax bill, and doesn’t advo­cate it as a source of sig­nif­i­cant fed­eral revenue.

Sen. Rob Port­man, R-Ohio, called the mea­sure a pro­posal “that no one can cred­i­bly argue will cre­ate a sin­gle job.”

On aver­age, the wealthy already pay higher income tax rates than those who make less.

Peo­ple mak­ing $1 mil­lion or more annu­ally paid an aver­age effec­tive rate of 25 per­cent last year in fed­eral income and pay­roll taxes that finance Social Secu­rity and Medicare, accord­ing to the non­par­ti­san Tax Pol­icy Cen­ter, a Wash­ing­ton group that stud­ies taxes. Those earn­ing $50,000 to $75,000 paid an aver­age effec­tive rate of 12 per­cent, the group said.

The White House com­plaint was that even so, some mil­lion­aires end up pay­ing lower rates than many of those earn­ing less. That is largely because many wealthy peo­ple earn income from div­i­dends that are taxed at just 15 per­cent, instead of the top 35 per­cent rate on salaries.

A report in Octo­ber by the Con­gres­sional Research Ser­vice, an agency that con­ducts research for law­mak­ers, said about a quar­ter of those earn­ing $1 mil­lion or more per year — 94,500 tax­pay­ers — had a lower tax rate than 10.4 mil­lion moderate-income people.

Posted by AP News on Apr 16 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.