In the most unmistakable sign yet that he has thrown down the gauntlet to his Republican challengers in the November presidential election, United States President Barack Obama announced a dramatic increase in the tax rate for the wealthiest Americans, to about 30 per cent.
Though even with the increase the tax rate for Americans earning over $1 million annually will only fall in line with the standard income tax rate, Mr. Obama struck a defensive note about the increase in a budget speech in Virginia, doubtless anticipating obstructionism in the Republican-controlled House of Representatives.
Mr. Obama said the U.S. had already spent nearly $1 trillion more on “what was intended to be a temporary tax cut” for the wealthiest two per cent of Americans — a reference to the Bush-era tax compromise — and that this was set to cost the economy another trillion dollars.
“Keep in mind, a quarter of all millionaires pay lower tax rates than millions of middle-class households... Warren Buffett pays a lower tax rate than his secretary. That's not fair. It doesn't make sense at a time when we've got to pull together to get the country moving,” said Mr. Obama.
Under his new budget proposals, taxes on dividend income for the wealthiest taxpayers could jump from 20 per cent to 36.9 per cent. Millionaire Republican presidential hopeful and former Massachusetts Governor, Mitt Romney, was said to have paid a tax rate closer to 15 per cent, holding much of his wealth in overseas tax havens.
Mr. Romney and Republicans in Congress were quick to attack Mr. Obama's 2013 budget proposals. Even before the budget document was unveiled on Monday Mr. Romney said it would not take “any meaningful steps toward solving our entitlement crisis”. Similarly Mr. Romney's rival and former U.S. Senator from Pennsylvania, Rick Santorum, said Mr. Obama had “failed to lead on budget deficit”.
In Congress, Paul Ryan, Republican Chair of the House Budget Committee, said Mr. Obama had put politics ahead of country, adding in a comment to the Associated Press “It seems like the President has decided again to campaign instead of govern... He's just going to duck the responsibility to tackle this country's fiscal problems.”
Mr. Obama appeared to anticipate some of these criticisms saying in his speech, “Some people go around, they say, well, the President is engaging in class warfare. That's not class warfare. That's common sense.”
Using himself as an example, Mr. Obama said, “I'm doing fine. We don't need the tax breaks. You need them. You're the ones who see your wages stall. You're the one whose costs of everything from college to groceries has gone up. You're the ones who deserve a break.”
