Obama demands millionaires pay at least 30% tax

2012-01-25 07:35

Washington – President Barack Obama demanded millionaires pay at least 30% tax, in an election-tinged State of the Union address that nodded to anger over the low tax rate of his Republican rival Mitt Romney.

“We need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes,” Obama said yesterday in remarks to a joint session of Congress that were met with sporadic, partisan applause.

“If you make more than $1 million (about R8 million) a year, you should not pay less than 30% in taxes.”

Pledging no tax increases for those earning less than $250 000 a year, Obama doubled-down on an election year gambit which casts him as a champion of America’s middle class.

“If you make under $250 000 a year, like 98% of American families, your taxes shouldn’t go up.

“You are the ones struggling with rising costs and stagnant wages. You’re the ones who need relief,” he said.

Obama also proposed eliminating housing, healthcare, retirement and childcare tax breaks for millionaires.

“If you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions,” he said.

The changes could spell a vastly different tax bill for up to four million Americans.

According to the Tax Policy Centre, about 90% of those earning more than $200 000 pay an effective tax rate of 15 to 30%.

As well as staking his position in sharp contrast to Congressional Republican demands for lower tax rates, Obama’s comments also presented his possible Republican opponent Romney with a stark political challenge.

Romney revealed yesterday that he makes a staggering $20 million a year and pays a lower tax rate than many Americans, in the latest twist in the roiling 2012 White House race.

The ultra-rich businessman reported income of $21.7 million in 2010 from investments and an estimated $20.9 million last year – and paid in 2010 just more than $3 million in taxes, or 13.9%, a much lower rate than many Americans.

The figures will likely shock a polarised American public fixated on themes of “class warfare” and the growing income disparity between the rich and poor – which has led in recent months to the Occupy protests in major US cities.

With elections just 10 months away and the Republicans in control of the House of Representatives, Obama’s plan will face not just hurdles, but a full steeplechase to becoming law.

Previously, Obama’s rhetoric has brought howls of protest from the right, which accuses the US president of prosecuting class warfare and creating divisions in US society.

Obama shot back at that accusation. “You can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes, most Americans would call that common sense.”

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