A new report from the White House's National Economic Council makes a clear and convincing case for why the "Buffett Rule" should become the centerpiece of fair tax reform. The rule, named for legendary investor Warren Buffett, is simple. It says no household with an income of more than $1 million per year should pay a smaller share of their income in taxes than middle-class families pay.
Buffett has noted that he pays a lower tax rate than his secretary, and has supported the fix that bears his name. Buffett is far from alone in enjoying substantial tax breaks that Americans with lower incomes can't take advantage of. As the report notes, the average tax rate paid by the highest-income Americans has fallen to its lowest in more than 50 years. Tax rates for middle-income families, meanwhile, have remained roughly the same over that same period.
The Buffett Rule has been introduced in the U.S. Senate by Sen. Sheldon Whitehouse (D-R.I.) as the Paying a Fair Share Act of 2012. The Senate is scheduled to vote on the legislation on April 16, the day before this year's federal tax deadline. As the name implies, it would be a step toward restoring fairness to the tax system—taxes would not go up for the 98 percent of American families that make less than $250,000 a year—and it would mean more revenues for vital programs such as education, healthcare and Pell Grants as well as for efforts to stimulate job growth.
As President Obama said, "We can either settle for an economy where a few people do really well and everyone else struggles to get by, or we can build an economy where hard work pays off again—where everyone gets a fair shot, everyone does their fair share and everyone plays by the same rules."
The White House website has a summary of the Buffett Rule, including a short video explaining how it would restore fairness to our tax system. The National Economic Council's report, "The Buffett Rule: A Basic Principle of Tax Fairness," is available online.
With the Senate vote coming soon on the Paying a Fair Share Act, the AFT is urging members to contact their senators and ask them to support the legislation. [Dan Gursky, the White House]
April 12, 2012