One of the cornerstones of President Obama’s plan to lower the federal deficit is a new tax on the richest Americans, based on the so-called Buffett Rule. It is named for billionaire investor Warren Buffett, and would raise income tax on people earning at least $1 million a year.
Wealthy investor compares current tax rate
Investor Whitney Tilson wants to share more of his wealth with the rest of America. "It is hard to make the argument that the top one percent in this country are suffering somehow," he said.
He is part of a a group called Patriotic Millionaires who back the Buffett Rule, with support from his office manager, Kelli Alires.
“My adjusted gross income is 39 times higher than hers. Not 39 percent higher, 39 times higher. Her federal tax rate, including payroll taxes, 33.4 percent, and mine, using the same calculation, is 24.6 percent. So her tax rate was 36 percent higher than mine," said Tilson. "Despite the fact that I made 39 times as much money as she did."
“Should millionaires get a tax break because, you know, everyone else pays more? That doesn’t make that, no, I don’t think that’s fair,” added Alires.
The Buffett Rule gained traction after billionaire investor Warren Buffett compared his income tax rate of 17 percent with his secretary's rate of 29 percent. "I think people at the high end, people like myself, should be paying a lot more in taxes," he stated.
President Obama agrees and proposes that anyone making more than $1 million dollars a year pay at least 30 percent to the federal government.
Buffett and many other rich Americans often pay a lower tax rate because they make their millions and billions from investments, and pay a capital gains tax of just 15 percent.
Republican critics say the measure would discourage business owners from hiring. Arizona Senator Jon Kyl this week led his party in voting down a Senate bill on the Buffett Rule, which he calls an attack by President Obama on the wealthy.
"He thinks the government should take more from some people just because they're rich," Kyl said. "Even if the tax increases hurt the economy."
Rule, more about fairness
Tilson disagrees, "I don’t think this is about class warfare, I think this is about common sense, basic fareness. Who in their right minds thinks it makes sense for me, making 39 times more than my secretary and her paying a 36 percent higher federal tax rate. Right. It’s not class warfare to point that out," he said.
Tilson says the Buffett Rule is not a negotiating tool that Democrats are going to give up on. He calls it a must have.