President Obama's so-called Buffett Rule is supposed to make certain that top-earning Americans don't pay taxes at lower rates than their assistants.
But there are still ways for the country's wealthiest to escape their tax share under the measure, according to Bloomberg. Yes, the new rule would tax millionaires at higher minimum rates of up to 30 percent while eliminating many loopholes. But savvy taxpayers could focus a larger percentage of their portfolios on tax-free investments, such as municipal bonds and employer-based health insurance, neither of which require taxes on subsequent interest. They could also reportedly time the sale of their assets to get bigger tax breaks.
The rule has lately been the focus of lawmakers in Washington. Estimated to generate $47 billion in federal revenue over the course of a decade, it has also become one of the centerpieces of Obama's re-election campaign, cited by the President as a necessary measure to pay off the country's mounting deficits.
The new policy bears the name of the man who inspired its creation, Berkshire Hathaway CEO Warren Buffet, who has spoken out against an American tax code that allows him to pay taxes at a lower rate than his secretary.
Obama has also recently been joined by other super-rich Americans and their assistants in support of the mandate. One of those supporters, hedge fund manager Whitney Tilson, recently wrote in a Washington Post op-ed that he agreed with the policy because of "basic fairness." Tilson reiterated Buffett's basic point to Bloomberg: that even though his income is 39 times greater than that of his assistant, he still pays taxes at a considerably lower rate.
Democrats have pushed for the measure, which is expected to hit the Senate by next week, while many Republicans have railed against what they describe as an act of “class warfare.’’ GOP nominee Mitt Romney's campaign said on Monday that increased taxes on job creators will harm the national economy, according to The Boston Globe. Romney and his wife have also recently come under scrutiny for their own tax return. The couple paid 13.9 percent on their $22 million earnings in 2010.
On Friday, the Obamas disclosed that they paid an effective tax rate of just more than 20 percent.