With the need to reduce the national deficit by $4 trillion, President Obama proposed the “Buffett Rule,” a tax measure which would require the wealthiest Americans to pay as much income tax as average Americans. 

The proposal defines “wealthiest” as those who earn a yearly income greater than $1 million.

Rather than an increase in tax rates, President Obama is proposing to eliminate the loopholes and tax breaks.

“It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million,” Obama said Monday.

Warren Buffett, a man whose name is synonymous with economic success, was a driving force in the construction of the plan.

Buffett’s op-ed in the New York Times in August raised the issue of the unfair tax laws, pointing out that his federal tax bill was lower than the other 20 people working in his office.

With Buffett’s reputable name attached to the proposal, the new tax rule is hoping to attract a broad support group. 

Buffett is known as a humble, down-to-earth individual whose financial guidance is highly sought after by several politicians, including President Obama who asked Buffett to join Obama’s Transition Economic Advisory Board in 2008.

However, Republicans and even some Democrats are strongly opposed to the idea, comparing the “Buffett Rule” to “class warfare.” 

 "Class warfare will simply divide this country more," Republican Paul Ryan told Fox News Sunday. "It will attack job creators, divide people and it doesn't grow the economy," Ryan said. 

Obama is steadfast in his views to raise taxes on the wealthy, stating that the only other option to reduce the deficit is to increase the costs of Medicare for seniors.

Many doubt the proposal will pass due to strong opposition in Congress. Christopher Thornberg, founding partner of Beacon Economics, LLC, believes “Buffet’s Rule” will not pass, but that President Obama proposed the idea to firm up his base. 

 

Reach Andrea Alonso here.