Obama fleshes out meaning of 'pay their fair share'

“We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” Obama said.  “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

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Republicans have long argued against higher taxes on the highest earners, with GOP lawmakers charged with hammering out a year-long extension of the payroll tax cut deriding the Democratic idea of a millionaire surtax on Tuesday.

The president’s proposal for a new minimum tax on multinationals is part of a larger push to ensure that companies aren’t rewarded for moving jobs offshore, and to slash tax rates for manufacturers who actively create jobs in the U.S.

Obama is also pressing for a new tax credit to help companies trying to build new factories or buy new equipment in the areas stung most by the economic slowdown.

“Right now, companies get tax breaks for moving jobs and profits overseas,” the president said. “Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it.”

“No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas,” Obama added. “From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.”

The president also fleshed out the Buffett Rule on the same day that Mitt Romney, one of the leading contenders for the GOP presidential nomination, announced that he had paid an effective tax rate of roughly 14 percent in 2010.

According to a White House fact sheet, the 30 percent rate would come, at least in part, by barring high earners from claiming tax credits for child care, housing, health care and retirement.

Like the billionaire investor Warren Buffett, Romney has taken advantage of laws that tax capital gains at a top rate of 15 percent – far lower than the maximum 35 percent rate for income.

Buffett has also famously said that his secretary, Debbie Bosanek, paid a higher tax rate than he did. Bosanek watched the State of the Union from the House chamber as a guest of Michelle Obama, the first lady.

In his speech, Obama also reiterates his call for the Bush tax cuts to expire for household income above $250,000 a year.

“If you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions,” Obama said. “On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up.”

“Now, you can call this class warfare all you want,” Obama said. “But asking a billionaire to pay at least as much as his secretary in taxes?  Most Americans would call that common sense.”