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Obama lays out case for 'Buffett rule' tax on the wealthy

The US president says the nation cannot afford to keep giving tax cuts to the wealthiest – “who don’t need them and didn’t even ask for them.”

Image: Carolyn Kaster/AP/Press Association Images

US PRESIDENT BARACK Obama has laid out a case for imposing a minimum tax on America’s wealthiest people, which would see those earning $1 million or more annually pay at least 30 per cent of their income in taxes.

Obama has called on US citizens to pressure their member of Congress to support the so-called “Buffett Rule”, named after billionaire and philanthropist Warren Buffett who has called for a tax on the country’s wealthiest.

Buffett has pointed out that he pays a lower tax rate than his secretary, due to preferential tax treatment for capital gains and dividend income.

Speaking at Boca Raton, Florida, Obama said:

The share of our national income going to the top 1 per cent has climbed to levels we haven’t seen since the 1920s… The folks who are benefiting from this are paying taxes at one of the lowest rates in 50 years.

Chairman of the White House council of economic advisers Alan Krueger also argued in favour of the Buffett Rule recently, the Washington Post reports, saying:

At a time when the market is driving more income into the hands of the highest-income earners, that’s a time when it’s easier for the top income group to bear higher income taxes.

The proposed tax would increase US tax revenue by up to $47 billion (€36 billion) over the next decade, according to estimates by proponents. Taxpayers would be permitted to deduct charitable contributions under the new system.

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The proposal has been criticised by Republican presidential-hopeful Mitt Romney, who is instead advocating the lowering of the tax rate for those with the smallest incomes in order to allow small businesses to grow, reports the Financial Times (free subscription required).

The Senate is scheduled to consider the proposal today.

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