Representative Paul Ryan was among the Republicans to call President Obama’s proposed tax plan “class warfare”. The plan is set to be announced on Monday according to White House officials. The controversy arose when it was revealed that the plan would include something called the Buffet Rule. This rule would replace the Alternative Minimum Tax that was created decades ago to ensure that people paid the minimum percentage of their income in taxes. As a result, individuals earning more than $1 million a year will receive a new tax rate. According to CNN.com, the new tax rate would guarantee that the wealthiest individuals in the country would “pay at least the same percentage of their earnings in taxes as middle-income Americans”.
President Obama rightfully named his proposal after investor Warren E. Buffett. This billionaire has openly complained that the richest Americans pay a smaller share of their income in taxes than middle-income workers. The New York Times explained that this is a result of a lower tax rate for investment gains than wages. The Buffett rule is set to replace the Alternative Minimum Tax and begin a process to reform the tax code.
Representative Ryan, chairman of the House Budget Committee, has openly opposed the tax plan that has not yet been formally announced. Ryan claims that the new minimum tax rate for millionaires would punish job creation and that “it looks like the president wants to move down the class-warfare path”. However, Ryan was not the only Republican to speak out against the proposal. Senate Minority Leader Mitch McConnell of Kentucky has said that raising the taxes of the wealthy will hurt both the economy and small business owners that may file individual tax returns instead of corporate tax returns. Republican Senator Lindsey Graham of South Carolina said on CNN that the tax would not bring in as much revenue as the administration has implied. As of today, the Obama administration has not specified the rate or the amount of revenue that would result in this proposal. In contrast, former President Bill Clinton stated that tax reform would be a good idea and that ending the Bush-era tax cuts is what is best for the country.
The early opposition is a clear indication that the Obama Plan has little chance becoming law unless Republicans can compromise. Many believe, however, that Obama would agree to changes in programs like Medicare only if Republicans budge on taxes. It is certain that politically, Obama is attempting to make Republicans seem indifferent to the struggles many Americans are facing today. With the new tax rate only effecting 0.3% taxpayers or fewer than 450,000 individuals, middle-income Americans may see the proposal as a good thing. This would greatly affect the Republican Party and their campaign. The hasty reaction by Republicans is not a surprise given the current relationship of both parties and it seems that the plan will divide them further. Obama’s tax proposal will be announced on Monday.
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