Obama Enlists Millionaires in Buffett Rule Campaign
President Barack Obama is intensifying his campaign for higher taxes on top U.S. earners by casting the issue against Republican opposition as one of fairness and support for the middle class.
Obama enlisted what the administration described as a group of four millionaires and their assistants, all of whom support the so-called Buffett rule to set a minimum tax on people who earn at least $1 million annually.
The president met with Abigail Disney, president of the Daphne Foundation, Whitney Tilson, managing director of T2 Partners LLC, Frank Jernigan, a retired software engineer from Google Inc. and Lawrence Benenson, partner at Benenson Capital Co., according to an administration official. They were accompanied by their assistants at the event.
Obama said the millionaires on the stage with him at the Eisenhower Executive Office Building are “rightly proud of their success.” They had agreed to take part in the event because “they haven’t been asked to do their fair share” and “they believe there is something deeply wrong and irresponsible about that.”
The proposal, which faces Republican opposition in a test vote in the Senate on April 16, is named after billionaire investor Warren Buffett, who says he pays a lower tax rate than his secretary, largely because of the preferential treatment given to capital gains and dividends.
Agreement on Taxes
“They agree with Warren,” Obama said of the group.
White House press secretary Jay Carney said at a briefing afterward that the administration didn’t ask for an assessment of the participants’ tax status before the event.
Tilson, 45, said in an interview at the White House that he and his assistant Kelli Alires, 47, were “a little shocked” after they calculated their comparable federal tax rates for 2010.
While his adjusted gross income was 39 times that of Alires, Tilson said, he paid a rate of 24.6 percent while Alires paid a rate of 33.4 percent. “It struck both of us as unfair and ridiculous,” he said.
“I would agree with that,” Alires said.
Tilson estimated the Buffett rule would increase his federal tax obligation by 40 percent. He declined to disclose dollar amounts. He said he supports it as what he sees as a necessary component to a long-term deal to reduce deficits and balance the federal budget, along with spending cuts.
Tilson is an Obama donor, according to the Center for Responsive Politics, a Washington-based group that tracks campaign finance. He and Disney, granddaughter of Roy O. Disney, co-founder of the Walt Disney Co., each have given Obama at least $5,000 over the past year, according to the center’s data.
Benenson, 44, said in a telephone interview that while he paid a lower tax rate than his assistant, Carmen Peterson, he wasn’t sure what the rate was. “I’m just standing up for what I believe in,” Benenson said.
All are affiliated with a group called Patriotic Millionaires for Fiscal Strength, which in 2010 began urging Obama and congressional leaders to allow Bush-era tax cuts to expire on those earning annual incomes of $1 million or more.
Tilson said he was tapped about a week ago by that group to participate in today’s event at the White House.
Tax fairness will be a central theme in the election, Obama campaign manager Jim Messina told reporters on April 9.
He said former Massachusetts Governor Mitt Romney, Obama’s likely opponent in November, has been a beneficiary of the current tax system and his proposals are based on protecting special tax rates for Wall Street investors and looking out for “people just like him.”
Romney, co-founder of Bain Capital LLC, earned $21.6 million in 2010 and paid 13.9 percent of that in income taxes, according to tax returns he released in January.
Romney’s campaign organization fired back during a conference call today for reporters with the candidate’s advisers and supporters.
Andrew Puzder, the chief executive officer of CKE Restaurants Inc. (CKR), said the economic recovery is “stagnant” and that the Buffett rule would do little to help the federal deficit.
“It doesn’t make sense,” said Puzder, a Romney supporter whose company operates the Carl’s Jr. and Hardee’s food chains. “It’s not a plan. It’s obviously politically motivated.”
Today was the second consecutive day Obama promoted the tax proposal and he said he would “keep on making this case across the country.” He spent yesterday in Florida, a swing state central to his re-election strategy, talking about the Buffett rule and portraying Republicans as poised to undo a health-care law and other measures he said have helped students, senior citizens and the middle class.
Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), has said that the preferential tax rates on investment income should be increased. The proposal would boost tax rates paid by households with incomes between $1 million and $2 million, phased up to a 30 percent minimum rate for those making more than $2 million a year. Taxpayers would be able to deduct charitable gifts.
The tax would do little to close the deficit, which the administration project will be $1.1 trillion this year. The new rate would increase U.S. tax revenue by $47 billion over the next decade, assuming that income tax cuts enacted in 2001 and 2003 are allowed to expire at the end of the year as scheduled.
According to a White House report released yesterday, 22,000 households made more than $1 million in 2009 and paid less than 15 percent in income taxes.
The report cited an Internal Revenue Service study on the 400 U.S. taxpayers with the highest incomes in 2008, at $110 million or higher. Those people paid an average tax rate of 18.1 percent, excluding payroll taxes, down from 29.9 percent in 1995. Families in the middle 20 percent of the income distribution paid 16 percent in federal taxes in 2010, according to the report.
Under current law, ordinary income, including profits from small businesses, is taxed at rates up to 35 percent. Capital gains and dividends are taxed at no more than 15 percent.
The proposal isn’t designed with the average high-earning household in mind, Jason Furman, deputy director of Obama’s National Economic Council, said. Instead, he said, the goal is to raise taxes for the relatively few taxpayers who can use multiple tax breaks to lower their rates.
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