The Buffett Rule is a tax plan named after American investor Warren Buffett that would establish a minimum tax rate for higher-income earners.  Though there have been different ideas on how to specifically implement the Buffett Rule, the general premise of this tax reform, as stated by the Obama Administration, is that “no household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay.”

The President and his party continue to insist that raising taxes will somehow boost economic growth.  The problem is that this tax increase, known as the “Buffett Rule,” would not just raise taxes on “wealthy Americans,” but would raise taxes on small business owners during the worst unemployment crisis since the Great Depression.  It is also important to remember that 9 out of 10 businesses in Wisconsin file their taxes as individuals, not as corporations.  These small businesses, known as "sub-chapter S corporations," limited liability corporations (LLCs) and partnerships employ more than half of all private sector workers. The President has proposed that the top tax rate for these businesses be raised to almost 45% in January of 2013. With two thirds of the net new jobs in America being created by small businesses, the President's tax proposal is a plan to kill job creation. Some of our foreign competitors are lowering their tax rates on businesses to as low as 15%.

There is a failure by the Minority to acknowledge that we are facing a debt crisis because we spend too much, not because we tax too little.  And while some continue to champion the Buffett Rule as a serious solution to reducing the deficit, the truth is that this tax increase, over a ten year period, would only reduce our nation’s projected deficit by less than one-half of one percent (0.4%). 

To put this into perspective, over a ten year period, the Buffett Rule would generate an average of $5 billion in revenue per year, and the FY2013 federal budget is projected to spend $3.803 trillion. That means that, in FY2013, these tax increases would pay for only 0.131 of federal spending.  Of the 8,760 hours contained in one year, the Buffett Rule could only pay for just over 11 hours of federal spending.  Instead of policies aimed at growing government and raising taxes on families and businesses, we must advance policies that boost private-sector job growth.  Policymakers must put aside these gimmicks and work together to meet our generation's defining challenge of restoring America's promise and ensuring greater opportunities for generations to come.

The budget advanced by the House of Representatives on March 29, 2012, helps spur job creation, stops spending money the government does not have, and lifts the crushing burden of debt. The Path to Prosperity cuts more than $5 trillion in spending from the President's budget over the next 10 years, putting the budget on the path to balance and the economy on the path to prosperity. This budget also advances a framework that calls for an American tax system that is simple, fair and efficient to promote innovation and sustained job creation in the private sector.

The current tax code for individuals is too complicated, with high marginal rates that discourage hard work and entrepreneurship. This budget embraces the widely acknowledged principles of pro-growth tax reform by proposing to consolidate tax brackets and lower tax rates, to just two rates of 10 and 25 percent, while clearing out the burdensome tangle of loopholes that distort economic activity and primarily benefit the wealthiest Americans.

American businesses are also overburdened by the highest corporate income tax rates in the developed world. The perverse incentives created by the corporate income tax do a lot of damage to both workers and investors, yet the tax itself raises relatively little revenue. This budget improves incentives for job creators to work, invest, and innovate in the United States by lowering the corporate rate from 35 percent (the highest in the industrialized world) to a much more competitive 25 percent (the international average) and by shifting to a territorial system that will ensure a level playing field for American businesses.