Late yesterday afternoon, the U.S. Senate rejected the Democrat-backed Paying a Fair Share Bill of 2012 (Sen 2230) by 51-to-45 margin, largely along party lines. The measure needed 60 votes to continue in the Senate. One Democrat and one Republican each crossed party lines in the vote. The so-called "Buffett Rule," named after the billionaire investor Warren Buffett, would levy a minimum 30% tax rate on the adjusted gross incomes of households earning more than $1 million annually. As you may recall, Buffett has commented that he pays a lower tax rate than his secretary. President Obama has made the “Buffett Rule” his cornerstone argument in attempting to seek support to raise taxes on wealthy Americans in the interest of “fairness.”
Prior to the vote, Senate Majority Leader Harry Reid, D-Nev., cited a recent poll that showed that nearly three-quarters of Americans believe millionaires and billionaires should contribute more. Reid also said, "And, it would be a small but important step toward restoring fiscal responsibility as our nation makes difficult choices about where to spend and what to cut." Reid’s statement was interesting particularly in light of the fact he has refused to take the “small but important step” of fiscal responsibility by introducing a budget on the Senate floor. The Senate has not had a budget for 1084 days, nearly three years!
Senate Republicans have rejected President Obama’s argument that the “Buffet Rule” is necessary in order to create a fair and equitable tax system, claiming that the president’s notion of fairness is simply a campaign ploy that would do little to fix the economic and budget crisis facing the country. Estimates provided by the Congressional Budget Office and Joint Committee on Taxation indicate that the top 1% of taxpayers already pay 37% of all federal individual income taxes, and the "Buffett Rule" would generate revenues of less than 1% of the new debt (budget deficit) projected under the president’s 10 year budget. The Joint Committee on Taxation said in its estimate that the measure would raise close to $47 billion between 2012 and 2022. For comparison’s sake, the Congressional Budget Office has said that the president’s budget would tack $6.4 trillion onto deficits over that same time span.
After consideration of the “Buffett Rule,” the Senate now appears to be starting the legislative process for another small business tax bill (the Small Business Jobs and Tax Relief Bill), which would provide a temporary income tax credit for increased business payroll and extend the 100% bonus depreciation for an additional year, through 2012. On the House side, it looks like Republicans will call for a vote on Thursday on a plan by House Majority Leader Eric Cantor, R-Va., to provide a 20% tax deduction to all businesses with fewer than 500 workers.
The “Buffett Rule” for Tax Accountants
Today marks the last day of tax season so most tax accountants are more concerned about the “Jimmy Buffett Rule” and not so much about the “Warren Buffett Rule.” Tomorrow, all those tired tax preparers will be wasting away again in Margaritaville and having a cheeseburger in paradise!
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