Sapa-AFP Washington
US PRESIDENT Barack Obama would call today for a higher minimum tax rate on millionaires to ensure they were paying the same rate on their earnings as middle-income taxpayers, a White House official said yesterday.
The plan comes as Obama engages in a months-long, countrywide trek to back his $447 billion (R3.3 trillion) jobs bill to reduce 9.1 percent unemployment and restore trust in his economic leadership.
The tax raise is unlikely to pass the US Congress as Republicans have already rejected Obama’s plans to raise taxes and limit deductions for the highest earners, and would see the move as a political gambit.
Adding to the tax burden will hit small business owners and therefore harm job creation, Republicans say.
Speaking on condition of anonymity, an administration official said that Obama would call his millionaires plan the “Buffett Rule”, a reference to an objection by billionaire investor Warren Buffett that the richest Americans generally pay a smaller share of their income in federal taxes than middle-income workers.
Some millionaires enjoy the lower rate because investment gains – such as capital gains, dividends and “carried interest” compensation paid to investment managers and hedge fund partners – are taxed at a lower rate than wages. They only pay the Social Security payroll tax on the first $106 800 of their income.
But Obama would not indicate a specific rate or provide other details such as how much revenue the plan would raise, the New York Times reported. He would unveil the tax hike as part of a broader announcement at the White House on a long-term deficit reduction proposal, it said.
A special joint congressional committee is working on a bipartisan budget deal due in late November amid a new row between Obama and Republican legislators over the jobs bill, after Obama said he would finance the plan by ending tax breaks for oil and petrol firms and individuals earning more than $200 000.
Republicans rejected the blueprint last week.