Yesterday, President Obama made it clear that his plan for cutting the deficit includes tax hikes for the wealthy.
Think of this speech as Obama’s opening bid going into Super Committee negotiations. The committee has until Nov. 23 to figure out how to address the deficit. If they don’t make a deal, the government faces across-the-board cuts.
Speaker John Boehner has said that he won’t accept any tax increases as part of the deficit deal. For his part, Obama has sworn to veto any proposal that cuts the deficit entirely through spending cuts and without raising taxes on the wealthy.
Lois Beckett and Marian Wang of ProPublica have a valuable primer on Obama’s proposed millionaire’s tax. Few details have been put forward so far.
In a nutshell, the President wants families making more than $1 million a year to be taxed at the same rate as middle class families – but that’s more of a guiding principle than a plan of action.
Lately the White House has been name-dropping the “Buffett Rule,” the radical notion that millionaires and billionaires should pay their fair share of taxes. The label is an allusion to the outrageous fact that billionaire financier Warren Buffett gets taxed at a lower rate than his secretary. That’s because his secretary earns wages and Buffett makes his money through capital gains, which are taxed at a lower rate.
This spring, Obama’s bipartisan fiscal commission recommended taxing capital gains at the same rate as ordinary income. Capital gains rates are at historic lows. The state of our economy refutes the idea that making it easier for the rich to get richer through rampant speculation is a recipe for shared prosperity. Bank bailout, anyone?
Capital gains tax reform is a great idea. Taxing capital gains at a lower rate than wages is tantamount to giving the rich a tax break just for being rich.
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