Analysis: Obama, Republicans shifting tax, budget fight into 2012
Sep 19, 2011, 5:11 a.m.
The U.S. budget deficit in 2011 is expected to be about $1.3 trillion. The national debt stands at $14.7 trillion.
Most fiscal experts agree that restructuring of social programs, such as the Medicare and Medicaid healthcare programs for the elderly and poor, is needed to reduce the deficit, along with basic tax reforms that bring in more revenues.
Democrats see unfairness in the present tax system that allows many of the well-to-do and large corporations to dodge taxes. Multibillionaire Buffett, for instance, has said that he pays a lower effective tax rate than many of his employees.
LEVIN: OBAMA "ON TARGET"
"The president's proposed 'Buffett rule' is right on target," said Representative Sander Levin, the top Democrat on the tax-writing House Ways and Means Committee.
Two years ago, only 287,000 out of about 172 million U.S. taxpayers made 9.5 percent of all reported U.S. income, or nearly $727 billion. Of those highest earners, Internal Revenue Service data also showed that 1,470 owed no federal income taxes in 2009.
Today's top tax rate, 35 percent, is half what it was 30 years ago. The last time the tax code was thoroughly overhauled was in 1986, when President Ronald Reagan, a Republican, raised corporate taxes and cut the top tax rate.
"The very wealthy in our country have seen their incomes skyrocket while middle class income has stalled and poverty has risen. We need an approach to deficit reduction that is balanced and a tax system that fairly represents today's reality," Levin said in a statement.
(Additional reporting by Richard Cowan, Alister Bull, Caren Bohan, John Whitesides and David Cay Johnston; Editing by Eric Beech)