Floor Updates

Mikulski, Kyl, Sanders, Whitehouse, Corker

Buffett Rule bill (S. 2230)

Apr 16 2012

04:35 PM

Senator Mikulski: (3:46 PM)
  • Spoke on the Buffett Rule.
    • SUMMARY "Let's talk about what the Buffett rule actually is and what the gentleman from Rhode Island is advocating, and I salute him for offering it. This would ensure that high-earning Americans who make more than $1 million a year pay at least 30% income tax on their effective rate on their second million. Let me repeat what this is. Your first million you keep at the same tax rate that it is right this afternoon. What we're talking about is changing the tax rate not on your first million but on your second million. Now, I don't think that stifles entrepreneurship. I don't think it breaks the neck of small business. What the small business needs is not more tax breaks; they need more customers, which is about more jobs. So, I think this bill really talks about this fairness. It would phase in additional tax liability for taxpayers earning between $1 million and $2 billion to avoid a tax cliff. And they're saying, oh, well, let us keep our money so we can give it to charity. This preserves the incentive for charitable giving and, quite frankly, from what we're told, the highest-earning 400 Americans make about $270 million each. They're the ones that paid an effective tax rate of 18%. Now, just think. You make $270 million. That's not exactly the entrepreneur in a garage. That's not exactly that small business person, a florist or, like my grandmother running this polish bakery or like my father with his little grocery store. $270 million each. They pay 18%. So here it is, April 16, they pay 18%. And that, by the way, is the rules. All we're saying is, you can pay that 18% on your first million, but on that second million, you got to get into the game and start to pay 30%."

Senator Kyl: (3:54 PM)
  • Spoke on the Buffett Rule.
    • SUMMARY "Today I want to talk about why this legislation is fundamentally misguided and why it would be harmful to businesses, workers, and the economy. The Buffett tax may make for good politics for President Obama on the campaign trail but it's bad policy. It is deeply flawed. First, let's start with its premise. There is a key misconception about Warren Buffett's tax rate. The notion that Mr. Buffett pays a lower tax rate than his secretary is based on a fundamental misunderstanding of the tax code. Mr. Buffett, and I would add many older Americans, attain most of his income from investments. That income is taxed at the capital gains rate. Mr. Buffett and President Obama would have us believe that capital gains income gets preferential treatment in the tax code. But that doesn't tell the real story. Capital income is actually taxed twice. First it's taxed at the 35% rate that corporations pay on their income. It's taxed, money is paid to the government. And then it's taxed again when the distribution of capital gains or dividends is made to the investors, when it's passed on to shareholders as dividends or capital gains. That means the tax rate is already far higher than 30%. It is actually not 30% plus 15%, but it is higher than 30%, and it's closer to 45%. President Obama ignores these facts when he says Mr. Buffett pays a lower tax rate than his secretary. You have to count it twice, not just the second time. And that leads me to my second point. The fairness of the current tax code: Does it really favor the wealthy at the expense of others, as President Obama argues? Perhaps one could cherry-pick some statistics to show that pun person or another pays more or less. But the actual tax numbers show the real progressivity of the American internal revenue code, and interestingly enough, among all the industrialized countries in the world, ours is the most progressive. In other words, the U.S. income tax code has the wealthier people paying a far higher percentage of income taxes than any other country in the industrialized world. Yes, even more than Sweden and even more than France and even more than the other countries in Europe. According to Congressional Budget Office data, the average tax rate paid by middle-income earns is 14.2%. In contrast, the average tax rate paid by a high-income American is 31.2%, more than twice as much. So the average tax that the secretary or somebody else like that might make, 14.2%. The average tax paid by high-income Americans, 31.2%."

Senator Sanders: (4:16 PM)
  • Spoke on the Buffett Rule.
    • SUMMARY "The wealthiest people in this country have an effective tax rate that is lower than many middle-class workers. It makes no sense that the richest 400 people in our country who earned an average of more than $270 million each in 2008 pay an effective tax rate of just 18%, which is less than many small business men, nurses, teachers, police officers, et cetera. That is wrong from a moral perspective. It is also very bad economic policy. But, the issue we are debating today really speaks to a much larger crisis that is taking place in America, and that is that in many important ways, the united states is departing from its democratic tradition which has always included a strong and growing middle class and is moving rapidly into an oligarchic form of government in which almost all wealth and power reside in the hands of the very richest people in our society, the top 1%. That, is not what America is supposed to be about. Let me mention to you a recent study which shows not only why we should pass this Buffett Rule, but why we should go, in fact, much further. An economist at the University of California, professor Emmanuel Sayez, studying tax returns, found that in 2010, 93% of all new income generated during that year went to the top 1%. Let me repeat that. Between 2009 and 2010, the last year we have statistics on this issue, 93% of all new income went to the top 1%. While the rest of the people, the bottom 99% were able to receive 7%. Even more incredible is the fact that 37% of that new income went to the top .01%. In other words, of the $309 billion in new income gained in 2010, $288 billion went to the top 1%. Only $21 billion in new income went to the bottom 99%. Today the top 1% earns over 20% of all income in this country, which is more than the bottom 50%. In terms of distribution of wealth, accumulated income, as hard as it may be for us to believe as a country which believes in mobility, in a country which believes in equality, today we have a situation where the 400 wealthiest people in America now own more wealth than the bottom half of America, 150 million people. 400 people here own more wealth than the bottom 150 million Americans, and that gap between the very rich and everybody else is now wider than it has been in this country since the late 1920's, and we have by far the most unequal distribution of income and wealth of any major country on earth. So that is where we are today as a nation, and it is not a good place to be."

Senator Whitehouse: (4:23 PM)
  • Spoke on the Buffett Rule.
    • SUMMARY "One of the speakers has said that we do have a progressive tax code, that the income tax generates 31.2% of the total income tax revenue from high-income folks versus 14.2% from the middle as their rate. But it's worth focusing on the fact that when my Republican colleagues talk about taxes and they focus on income taxes, they leave out the payroll taxes that virtually every American pays, that a great number of Americans pay. More pay payroll taxes than pay an income tax, I believe. And if you look at all of those taxes and you put them together, you find that the top 1% of Americans do indeed pay 28.3% of the taxes. 1% pays 28.3% of the taxes, and that sounds pretty progressive until you realize that the top 1% in America controls more than a third of the nation's wealth. The top 1% holds more than a third of the nation's wealth but pays only 28% of the taxes. That's not progressive if you're measuring in what you're usually taxing, which is income and wealth, not just the existence of a human being on the planet. If you go to 5%, then the top 5% pay 44.7% of all of our taxes, which, again, is a lot and is progressive, but not when you consider that that 5% owns or controls more than 60% of the nation's wealth. We are a country in which more than half of the wealth of the country, more than 60% of the wealth of the country is concentrated in the hands of 1/20 of the population, the top 5%. And so for them to pay a higher rate makes a lot of logical sense, and what you find is that they actually pay a lower rate all too often The other point that I'd like to address is the argument that this will take money from the pockets of small businesses. If you look at the office of taxation and the treasury's definition of what a small business is and look at how many would be affected by this bill, it would be 3.3%. Nearly 97% of small businesses would have zero effect from this bill. And of the 3.3% that would be affected, it's hard to know how many of those are simply high-income individuals who have incorporated themselves for tax purposes but don't fit the ordinary definition of a small business."

Senator Corker: (4:29 PM)
  • Spoke on the Buffett Rule.
    • SUMMARY "This last March, 64 Senators, 32 on each side, wrote a letter to the President asking for real reform and real entitlement reform. I think most of us know that today's exercise is a political exercise. It's not intended to deal with deficits. It's intended to divide. I heard the President speaking to a college in Florida last week about the Buffett tax. And in that speech he was talking about spending all of that money on things that they were interested in. In other words, this money is not being used per the President's speech in any way to reduce deficits. I would just encourage all of those on both sides of the aisle, 32 Senators on each side, that have spoken earnestly and sincerely about pro-growth tax reform and entitlement reform to not follow this folly of division but to hold together as we need to do something that is great for our country, and it's my hope that by later this year, possibly lame duck, although I hope that something happens sooner than that, all of us who really care about solving problems, not about scoring political points, which this bill is about, will come together and do something great for our country."