18 Sep 2011

Obama to propose ''Buffett tax'' on millionaires

4:31 pm on 18 September 2011

United States President Barack Obama is to propose a minimum tax on people making more than $US1 million per year as part of his recommendations for cutting the deficit.

It's being called the "Buffett Tax" in reference to billionaire investor Warren Buffett who has called for wealthy people to pay more tax.

The White House says this will act as a kind of alternative minimum tax for people in the upper bracket, aimed at ensuring they pay at least as much tax as middle-class families.

The recommendations will be submitted to a Congressional committee on Monday.

In an article in the New York Times on 14 August, Mr Buffett wrote that his federal tax bill was only 17.4% of his taxable income, which he said was a lower percentage than any one else in his office. Their average tax payment was 36%.

''My friends and I have been coddled long enough,'' he wrote. ''It's time for our government to get serious about shared sacrifice.''

Mr Buffett, the chairman and chief executive of Berkshire Hathaway, also suggested an additional increase in the tax rate on those who make $US10 million or more.

The Congressional committee of six Democratic and six Republicans must find at least $US1.2 trillion in deficit savings before the end of the year. It has a mandate to seek savings of up to $US1.5 trillion.

These savings are on top of $US917 billion in deficit cuts agreed in August.

Mr Obama has been hammered in recent opinion polls over his handling of the faltering US economy.

Observers say the idea would appeal to the president's Democratic base ahead of the 2012 election but may not raise much in revenues.