Does wanting to tax millionaires more help re-elect Obama?

Apr. 13, 2012
Does wanting to tax millionaires more help re-elect Obama?
David Lightman | McClatchy Newspapers

WASHINGTON — The White House and congressional Democrats think they have the ideal issue to use against Republicans all year — that the GOP is eager to give tax breaks to the rich.

"It's an excellent strategy for Democrats," said Floyd Ciruli, Denver-based political consultant, as the Senate plans a vote Monday on a Democratic-authored measure to impose higher taxes on millionaires.

The Democratic strategy, though, may not be a winning one.

While taxing the rich is popular, "it just isn't the first priority" of the swing voters who likely will decide the 2012 presidential and congressional elections, said Lanae Erickson, deputy director of social policy and politics at Third Way, a centrist Democratic group that recently studied independent voters.

It found that key swing voters were more interested in a candidate, and a government, that creates opportunity. Fairness trailed as a priority.

"They just didn't think that taxing the rich will improve their own lives," said Erickson.

In addition, data suggest people are not necessarily being taxed at unusually high rates. The average taxpayer had a rate of 11 percent, according to the Tax Foundation, a nonpartisan research group. The rate was higher as incomes went up, and for millionaires was 25 percent.

Still, Democrats insist they have found a magic political bullet.

President Barack Obama on Wednesday hosted a Rose Garden event to promote the tax hike on millionaires, and the White House website features a "Buffett Rule Calculator."

On Monday, the eve of the day most Americans must file their federal income tax forms, the Senate plans to take what's essentially a test vote on the "Buffett Rule," which would require millionaires to pay taxes at higher rates. The White House has been pushing hard for the measure.

"How many millionaires paid a lower effective tax rate than you? Find your Buffett Number using the calculator on the right," the White House website says, urging people to plug in their income and find out.

The millionaire tax would produce an estimated $47 billion over 10 years. The Obama administration found that in 2009, some 22,000 households earning more than $1 million paid less than 15 percent of their income in taxes.

The Buffett Rule is named for billionaire investor Warren Buffett, who said last year that his tax rate is lower than his secretary's.

The Senate effort is likely to fail Monday, since 60 votes are needed to cut off debate, and Republicans control 47 of the Senate's 100 seats. Most are expected to be opposed.

But Democrats figure they'll make a loud point. Sen. Sheldon Whitehouse, D-R.I., calls the vote "a great opportunity to reverse an unfairness in the tax code every American knows about," and also to "send a signal to the public" that Democrats care about fairness.

Democrats love this issue for a lot of reasons. They can paint themselves as champions of fairness in the tax code. And, as Ciruli put it, "it emphasizes what they need to emphasize," that Mitt Romney, the expected Republican nominee, is an out-of-touch rich guy.

Romney is worth $190 million to $250 million, and most of his taxable income comes from investments that are taxed at the capital gains rate, which in most cases is 15 percent. In 2010, he and his wife, Ann, had an effective tax rate of 13.9 percent of their income after deductions.

Obama's tax rate in 2010 was about 26 percent. Most of his family's income is from wages and book sale earnings. In 2011, the president and first lady Michelle Obama reported a joint adjusted gross income of $789,674. The couple paid $162,074 in federal taxes, or just over 20.5 percent.

Obama and Democrats have tried hard to paint Romney as a rich, cloistered executive who has little understanding of the less wealthy.

Romney, the son of a former Michigan governor and auto executive, has helped reinforce that impression, talking on the campaign trail about his wife's two Cadillacs and his friendship with NACAR owners.

"We're going to keep pushing this issue all year long," promises Sen. Charles Schumer of New York, the Senate's third-ranking Democrat.

Go ahead, say Republicans, who eagerly counter the Democrats' arguments.

"These new taxes don't lift anybody up, but they do tear some people down," said Senate Minority Whip Jon Kyl, R-Ariz.

Sen. Marco Rubio, R-Fla., said: "This has nothing to do with putting millions of unemployed Americans back to work and everything to do with the president keeping his job. It has nothing to do with sound economic policy and everything to do with class-warfare politics."

Republicans feel they "own" the tax issue politically, ever since Ronald Reagan won the presidency in 1980 with a pledge to dramatically reduce taxes. Within months of his 1981 inauguration, income tax rates were lowered 25 percent over three years.

"They firmly believe in lower taxes. That's their ideology," Steven Greene, an associate professor of political science at North Carolina State University, said of Republicans. Romney has proposed a 20 percent across-the-board cut in marginal income tax rates.

Trying to judge how this issue will play in the election campaign six months from now is tough. But Erickson offers this clue from a survey, conducted for Third Way, of 1,000 independents in 12 battleground states from March 8-18.

It found that 38 percent still making up their minds.

"The standard Democratic message of fairness just won't work with them," Erickson said the poll found, because these voters prefer "an optimistic, opportunity framework on the economy over one based on fairness and income inequality." Fifty-one percent preferred the "opportunity" message, compared with 43 percent who wanted fairness.

"Taxing the wealthy," said Erickson, "is just not their first priority."