Buffett Rule

The Issue
The Buffett Rule was first discussed in a “blueprint” released by the White House following President Obama's 2012 State of the Union address. The Buffett Rule was initially part of proposed overhaul of the tax code that would ensure that households making more than $1 million pay an effective tax rate of at least 30 percent. The minimum tax rate is phased in linearly beginning at $1 million and would be fully phased in at $2 million.

Under the Buffett Rule, the charitable deduction would be the only tax deduction that affected taxpayers would be allowed to take.

President Obama's FY 2016 budget request included the Buffett Rule as source of revenue for further deficit reduction. The provision will raise an estimated $53 billion over 10 years.

The White House National Economic Council (NEC) released a report April 10, 2012 that argues that the “Buffett Rule,” which imposes a minimum 30 percent tax on households earning more than $1 million per year, is needed as part of efforts to reduce income inequality. According to the report, 8 percent of the 400 highest-income Americans have an effective federal income tax rate of less than 10 percent and one-third pay less than 15 percent.

In response to the NEC report, Senate Finance Committee Republicans April 12, 2012 released a "Dos and Don'ts of the Buffett Tax" fact sheet to make the case that the Buffett Rule would not have a net positive economic impact.


Legislation from the 112th Congress
Senator Sheldon Whitehouse (D-RI) introduced legislation (S.2059) in 2012 that would have applied the so-called “Buffett rule” that President Obama announced in his annual State of the Union address that year. The Paying a Fair Share Act would have applied a minimum 30 percent income tax rate for taxpayers with adjusted gross incomes above $1 million. The bill would have maintained current incentives for charitable giving, and would have permitted wealthy taxpayers to continue to receive a credit equal to the value of the charitable contributions deduction under the regular income tax. The legislation was reintroduced March 22, 2012 as S. 2203.

The Joint Committee on Taxation (JCT) estimated that S. 2059 would raise $46.7 billion over 10 years.

Representative Tammy Baldwin (D-WI) introduced a companion bill in the House in 2012 (H.R.3903).

IS Position
IS Letter on the Buffett Rule's Treatment of Charitable Giving
Independent Sector sent a letter to Sen. Sheldon Whitehouse (D-RI) and Rep. Tammy Baldwin (D-WI), as well as all of the original co-sponsors of the Senate and House versions of the Paying a Fair Share Act, to show our appreciation for the specific provision that carves out the charitable deduction for preservation under the Buffett Rule. The letter did not take a position on the broader legislation and included the names of almost 50 nonprofit organizations from around the country.

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