Senate Republicans on Monday voted to block the advancement of “Buffett Rule” legislation, offering Democrats new political fodder as they continue to paint the Republican party as the protectors of America’s wealthiest earners at the expense of the middle-class, tells Yahoo!.
The vote, mostly on party lines, was 51 to 45, short of the 60 votes needed to advance the bill.
According to the Guardian, Barack Obama denounced the vote, saying: “It’s just plain wrong that millions of middle-class Americans pay a higher share of their income in taxes than some millionaires and billionaires.”
“The wealthiest one percent takes home the highest share of the nation’s income since the early ’20s, the roaring ’20s,” Senate Majority Leader Harry Reid (D-Nev.) said.
“Times are tough for many middle class American families. Millionaires and billionaires aren’t sharing the pain or the sacrifice, not one bit. Last year there were 7,000 millionaires who didn’t pay a single penny in federal income taxes,” he said.
Monday’s vote was the first time a so-called “Buffett rule” proposal has come to a Senate vote this election year.
Citing complaints from billionaire Warren Buffett that he pays a lower tax rate than his secretary, Obama has said everyone earning at least $1m (£630,000) a year or more should pay at least 30% of their income in taxes.
Democrats have tried to use the alleged unfairness of the tax code as a campaign weapon against GOP presidential candidate Mitt Romney, who paid federal income tax of $3.2 million on income of nearly $21 million in 2011, for an effective tax rate of 15 percent, reports MSN BC.
Much of Romney’s income came from capital gains on his investments. Capital gains are taxed at 15 percent, while the top marginal tax rate on earned income is 35 percent.
Romney ridiculed the Buffett rule on Monday, telling a campaign audience the revenue it would produce would fund the government for only about 11 hours.
According to The Huff Post, Sen. Jon Kyl (R-Ariz.) countered that statistics show the rich are paying plenty, and that it’s the bottom half of the income ladder that is doing too little.
“You’ve got the top 10 percent of taxpayers paying 70 percent of all the taxes, earning 45 percent of the income. Those are certainly the wealthy, and they’re certainly paying a big share,” Kyl argued. “How about less wealthy? The bottom 95 percent — in other words, everybody but the top 5 percent — pays 41.3 percent of income taxes, earns 65 percent of the money, of the income. Is this fair?”
The Buffett Rule does not lower rates for the poor, but Democrats have said the $47 billion raised by the measure over 10 years would either go to deficit reduction or to help for middle class families.
“There are lots of ways that I think the American people would prefer to spend $47 billion than tax breaks for millionaires and billionaires who aren’t paying what the average person pays,” Sen. Chuck Schumer (D-N.Y.) said on a conference call with reporters.
Republicans have consistently said that the “Buffett Rule” amounts to nothing more than a tax hike on America’s high-income earners. They say it could further stymie economic growth and it has not been shown to help decrease the deficit or create jobs in any way.
“By wasting so much time on this political gimmick that even Democrats admit won’t solve our larger problems, it’s shown the President is more interested in misleading people than he is in leading,” Senate Minority Leader Mitch McConnell (R-Ky.) said in a speech Monday.
The Senate vote on Monday is only a prelude to a contentious debate at year’s end over what to do about the current income tax provisions which expire on Dec. 31.
However, the Democrats’ measure is popular. According to a CNN/ORC poll released onMonday, 72 percent of Americans favor taxing the very wealthy at 30 percent. The Buffet Rule would start phasing in at earnings above $1 million, and reach the full 30 percent for annual incomes above $2 million.