Obama targets wealthy with 'Buffett Tax'

Populist measure, possibly designed to appeal to voters in 2012, will tax Americans making more than $1m per year.

    The tax rate will see investors like Warren Buffett paying the same percentage as middle-income Americans   [EPA]

    Barack Obama, the US president, is expected to seek a new minimum tax rate for the wealthy to ensure they pay at least the same percentage as middle-income taxpayers.

    The populist measure, which some say is designed to appeal to voters, will propose a "Buffett Tax" on people making more than $1m a year as part of his deficit recommendations to Congress on Monday.

    Such a proposal, among suggestions to a congressional supercommittee expected to seek up to $3tn in deficit savings over 10 years, would appeal to his Democratic base ahead of the 2012 election but may not raise much in revenues.

    A White House official, who declined to be named because the plan has not been officially announced, said the new rate is part of Obama's proposal for long-term deficit reduction that he will announce on Monday.

    Obama is going to call it the "Buffett Tax" for Warren Buffett, the billionaire investor who has complained that rich people like him pay a smaller share of their income in federal taxes than middle-class taxpayers.

    Buffett wrote in a New York Times opinion article last month that he and his rich friends "have been coddled long enough by a billionaire-friendly Congress".

    The measure would be in addition to $447bn in new tax revenue that Obama is seeking to pay for his short-term spending and tax cuts to jump start the economy.

    Partisan squabble

    John Boehner, the Republican speaker of the House of Representatives, said on Thursday he would oppose tax increases to reduce the deficit.

    Boehner has urged Congress' deficit "supercommittee" to lay the groundwork for a broad overhaul of the US tax code.

    The panel has almost unlimited authority to recommend changes in federal spending and taxes and is working against a deadline of November 23.

    Boehner said the panel has "only one option, spending cuts and entitlement reforms", a reference to massive federal benefit programs such as Social Security, Medicare and Medicaid.

    Any broad compromise that clears the bipartisan committee is almost certain to require Democratic agreement to savings from programmes such as the social security pension programme.

    That goes with Republican acquiescence to additional revenues, although any such trade-offs are rarely discussed openly until the last possible moment in negotiations.

    Obama's new tax proposal was first reported by the New York Times

    SOURCE: Agencies


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