The Buffett Rule is the controversial proposal which would set a minimum of a 30% tax on anyone making over a million dollars. It was first forwarded by billionaire Warren Buffet (for whom the tax is named) who argued that the rich ought to pay more taxes than the middle class. President Obama has pushed for the measure to be addressed in Congress. However, on April 16, the Senate voted down bringing the proposal to a debate, though the Democrats will keep pushing the idea.
Much of the attention surrounding the Buffett Rule has been on the possible effects it would have on small businesses. Proponents claim that only about 1% of small business would be effected by the tax increase. Data from the U.S. Treasury Department’s Office of Tax Analysis supports that claim. They pulled tax data from 2007 and found that, of the 20 million tax returns studied, only 273,000 would have meet the threshold of the tax. In addition, a survey conducted by three small business advocacy groups –the American Sustainable Business Council, Main Street Alliance, and Small Business Majority — found that 57% of the 250 small businesses surveyed supported a higher tax percentage for millionaires.
A similar study was conducted by the International Franchise Association; however, their findings found that 73% of franchise owners and 43% of franchise operators believe they would be hurt by the tax. Moreover, critics, such as Tax Foundation economist Will McBride, say that focus should not be on how many small businesses are affected, rather on the proportion of income brought in by millionaire small businesses: about 19%. McBride argues that the tax would hamper some businesses’ ability to invest and hire employees. This would mean small business would not grow, and would be harmful to the overall economy.
Read more at CNN Money.
