Obama to Propose a 'Buffett Tax' on People Earning Over $1 Million

CNBC.com with Reuters

President Obama will propose a "Buffett Tax" on people earning more than $1 million a year as part of his deficit-cutting recommendations to a congressional supercommittee Monday.

Berkshire Hathaway CEO Warren Buffett
Getty Images

White House Communications Director Dan Pfeiffer said in a tweet Saturday the tax would act as "a kind of AMT" (Alternative Minimum Tax) for people in that earning bracket, aimed at ensuring they pay at least as much tax as middle-class families. The "Buffett Tax" refers to billionaire U.S. investor Warren Buffett.

Buffett, the founder of Berkshire Hathaway and one of the richest men in America, famously said he thinks that he, and other uber-wealthy Americans, don't pay enough in taxes. He said his tax rate is 17.4 percent — many Americans pay 30 percent or more in income tax.

"My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice," Buffett wrote in an opinion piece in the New York Times this summer.

In his weekly radio address Saturday, President Barack Obama said Americans need to be ready to "pay their fair share" to narrow the U.S. deficit, previewing his proposals to Congress.

Obama said his $447 billion jobs plan that features tax breaks for workers and small businesses, plus funds for public works projects and schools, "will not add to the deficit. It will be paid for."

"On Monday, I'll lay out my plan for how we'll do that — how we'll pay for this plan and pay down our debt by following some basic principles: making sure we live within our means and asking everyone to pay their fair share."

Obama has repeatedly argued for the wealthiest Americans to face higher taxes with fewer loopholes and exceptions as part of the effort to ensure the U.S. debtload remains in control.

In addition to floating the idea of more taxes on the rich, he is also expected to propose companies getting some tax breaks in his Monday suggestions to a congressional "super committee" tasked with finding at least $1.2 trillion in budget savings over 10 years.

Republicans, who have raised the volume on Washington's fiscal problems as the November 2012 presidential election nears, see higher taxes on the wealthy as a problem for jobs, given that entrepreneurs and companies would be strongly affected.

President Barack Obama walks to Air Force One prior to departing for Toronto to attend the G8 and G20 summits.
Saul Loeb | AFP | Getty Images

In his party's weekly address, Republican Congressman Peter Roskam said Obama's barnstorming about the jobs bill had masked other constraints on the economy that are keeping people from getting back to work.

"Washington has become a red tape factory, with more than 4,000 rules in the pipeline — hundreds of which would cost our economy more than $100 million each annually," Roskam said.

The White House has conducted a regulatory overhaul to eliminate old and overlapping rules across U.S. government agencies. It was broadly welcomed by the private sector including major groups like the U.S. Chamber of Commerce.

Roskam said more regulations should be pared back as part of the effort to tackle unemployment. "I hope the president will consider our ideas as we take a look at his," he said.