Congresswoman Tammy Baldwin (D-WI) announced today that she will introduce in the House on Monday the Paying a Fair Share Act, also known as "the Buffett Rule," to help level the playing field between middle class taxpayers and millionaires and billionaires. Baldwin's legislation is a companion to one introduced in the Senate by Senator Sheldon Whitehouse (D-RI).
The Paying a Fair Share Act responds to President Obama's proposal in his State of the Union Address to ensure that middle class workers do not pay a higher tax rate than those earning more than $1 million a year.
It is simply unfair to ask middle class Americans to pay a higher tax rate than millionaires and billionaires," said Baldwin. "The Paying a Fair Share Act will help restore people's faith that if you work hard and play by the rules, you'll have a chance to get ahead. For far too long, our tax code has unfairly benefited the wealthiest Americans, while middle class families have taken it on the chin. It's up to Congress to fix this obvious injustice. I call on all of my colleagues to join me in taking this first step to strengthen our middle class and rebuild our economy with a commitment to shared responsibility and shared sacrifice," Baldwin said.
The "Buffet Rule" is so-named because billionaire Warren Buffett has decried the fact that his secretary pays a higher tax rate than he. In 2008, the top-earning 400 Americans, making an average $270 million each, paid an average effective federal tax rate of 18.2 percent. In Wisconsin, using the standard deduction and exemption, the typical construction worker pays the same 18.2 percent in taxes.
The Paying a Fair Share Act would:
Apply only to the 0.1% of taxpayers with income greater than $1 million (including capital gains and dividends);
Ensure that the highest-earning Americans pay at least a 30% effective tax rate;
Phase-in additional tax liability (the amount necessary to bring the rate to 30%) for taxpayers earning between $1 million and $2 million -- to avoid a "tax cliff" at the $1 million level; and
Preserve the deduction for charitable giving.
The additional revenue generated by asking millionaires and billionaires to pay their fair share is expected to reduce the deficit by tens of billions of dollars.