The Buffett Rule and Obama’s 30% Threshold

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April 13, 2012

The Buffett Rule has become a major talking point for politicians and economic specialists over the past few weeks. However complex the rule may be, Jeanne Sahadi for CNN Money provides a few basics on what you might want to know in her April 10th article. So what is the Buffet Rule exactly? The Buffett Rule, named after investor Warren Buffett, would ensure that millionaires and billionaires pay a higher percentage in their federal taxes. President Obama believes that the threshold should be no lower than 30%. According to the article:

To measure whether a millionaire is paying at least 30% of his income in taxes, the bill would take into account what the individual paid in federal income and payroll taxes plus the new 3.8% Medicare surtax set to take effect in 2013.

A big question about the Buffett Rule is how much money it would bring the federal government. From figures developed by the Joint Committee of Taxation, the rule would generate $47 billion over ten years. That said, Sahadi notes that many believe that it would complicate the tax code and do little to lower the deficit.

Teachers can use this article to further analyze the Buffett Rule with their students. Some questions to consider are: Should the threshold proposed by President Obama be more or less than 30%? Does cutting the deficit in such a small manner (billions instead of trillions) even matter? Teachers can also work on developing a tax code with their class that is more “fair” and “equal.” They should think about this in terms of the different people being taxed and what their possible reactions might be to paying varying percentages.

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