Written by Robert Thyer in November, 2011

In recent news from the United States, President Barack Obama has caused quite a stir with his proposed “Buffett Rule” to help alleviate some of the pressure of the Country’s growing debt crisis. President Obama’s proposed tax amendments will change the way individuals are taxed on incomes in excess of $1 million.

The amendment proposal comes after vocal criticism from billionaire investor and current Chief Executive of Berkshire Hathaway, Warren Buffett. Buffet has asserted that part of the reason for the debt crisis is due to the current taxation system favouring higher income earners by allowing a special tax rate on capital gains which is higher than that of ordinary wages. This, Buffet asserts, causes low and middle wage earners at an effectively higher tax bracket than those with significantly higher incomes (Brown 2011).

Although the proposed tax changes have come with high level criticism, a recent poll conducted by media outlet Bloomberg has shown the following statistics in approval for the proposed tax changes (Bloomberg 2011):-

• Respondents based in the United States  63% approval rating;
• Respondents based in Europe   78% approval rating; and
• Respondents based in Asia   69% approval rating.

Irrespective of whether the amendments are brought into legislation in the United States, the talks of adopting tax changes to favour lower income learners are already been seen in other countries such as France. French President Nicolas Sarkozy has recently unveiled plans to add an additional 3 per cent surcharge on incomes above 500,000 euros (Lynch 2011). It will be interesting to see if any additional countries follow this example and start overhauling their respective taxation legislation.

As it stands today, the current national debt for the United States is approximately $14.7 trillion and rising by an estimated $3 billion per day (Treasury Direct 2011).

Further reading & References:-

Brown, C 2011, “Obama’s ‘Buffett Rule’ to call for high tax rate for millionaires”, Politico, 17 September, viewed 24 September 2011, <www.politico.com/news/stories/0911/63756.html>

Lynch, D 2011, “Investors Back Obama’s Buffett Rule”, Bloomberg, 1 October, viewed 2 October 2011 < http://www.bloomberg.com/news/2011-09-30/obama-s-buffett-rule-backed-by-63-investors.html>

Treasury Direct 2011, “Debt to the Penny”, 29 September, viewed 2 October 2011, <http://www.treasurydirect.gov/NP/BPDLogin?application=np>

PLEASE NOTE:  All information contained in the articles below was correct at time of publishing.