Today, Senate Democratic Leaders announced a proposal to replace the first year of sequestration with the American Family Economic Protection Act, a balanced approach that works for middle class families and the economy. The proposal includes the Buffett Rule, which reduces the deficit by $54 billion by making sure that taxpayers with a gross adjusted income above $1 million cannot pay tax at a lower effective tax rate than middle class families.
In 2012, U.S. Senator Tammy Baldwin served as the lead sponsor in the House of Representatives of 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.
"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 helps 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 struggled to get ahead."
The Buffett Rule provision would ensure that millionaires and billionaires pay a minimum effective tax rate of 30 percent. By doing so, it would raise an estimated $53.6 billion in new revenue over ten years to avoid the cuts under the sequester. Unless Congress acts by March 1st, a series of automatic cuts--called a sequester--will take effect. These large and arbitrary cuts will have severe impacts that threaten thousands of jobs and the economic security of the middle class.
"The Buffett Rule will help ensure a basic level of fairness in our tax system and generate billions in new revenue. It's a common-sense addition to any deficit-reduction plan, and I'm glad it has been adopted by Senate leadership," said U.S. Senator Sheldon Whitehouse (D-RI). Senator Whitehouse introduced the Paying a Fair Share Act in the Senate last year and reintroduced it as stand-alone bill yesterday with Baldwin as a co-sponsor.
Buffett Rule legislation has been endorsed by a coalition of more than 100 national, state, and local organizations, as well as by Warren Buffett himself. The proposal is named after Mr. Buffett, the legendary investor who has famously pointed out that he pays a lower tax rate than his secretary. The Paying a Fair Share Act would preserve the deduction for charitable giving and apply only to the 0.1% of taxpayers with income greater than $1 million (including capital gains and dividends).
"If we're going to create shared prosperity and strengthen middle class economy security, everyone has to do their fair share so that everyone has a fair shot," Baldwin said, "We need to move our economic recovery forward and reduce our deficit without shortchanging our future. The Buffett Rule will ensure that our path forward is guided by fairness and that our tax system reflects the need to make sure that everyone plays by the same rules."