House Dems offer ‘Obama Rule’ on tax rates

The resolution is not binding, but is more evidence that policymakers are becoming more aware of the need to ensure that the tax policies of the rich and influential are not more favorable than those faced by the middle class. The Buffett Rule, which President Obama formally proposed in his 2013 budget plan, is a reaction to comments from billionaire investor Warren Buffett, who has said that he pays a lower effective tax rate than his secretary — a fact that Obama has used to promote a minimum tax on high earners.

{mosads}GOP presidential candidate Mitt Romney has reported that he pays an effective federal tax rate of about 15 percent, since most of his earnings come from capital gains, which are taxed at a lower rate than regular income. Buffett has reported an effective tax rate of between 15 percent and 20 percent, while his secretary reported an effective rate that’s roughly twice as high.

But the effect rates of federal policymakers might already be in line with — and might already exceed — those of middle-class Americans. Last year, Obama paid an effective rate of 26 percent on his family’s income of $1.7 million, and Vice President Biden paid an effective rate of 22 percent.

In contrast, households have paid a 25 percent marginal rate on income between about $34,000 and $82,000, although various deductions can lower that much closer to the 15 percent that Romney pays. Those same deductions can also lower higher-income earners’ rates to the high teens, even if they fall in the 28 percent or 33 percent tax brackets.