Obama is pushing for a minimum tax on millionaires*, the so-called Buffet Tax.
He has two goals: 1) raise more revenue, and 2) reduce the perception that the rich don’t pay enough taxes.
But, the tax isn’t predicted to raise much revenue. Here’s Robert Samuelson writing in The Washington Post:
… In September, the Congressional Budget Office estimated the 10-year deficit at $8.5 trillion. The nonpartisan Tax Foundation estimates that a Buffett Tax might now raise $40 billion annually. Citizens for Tax Justice, a liberal group, estimates $50 billion. With economic growth, the 10-year total might optimistically be $600 billion to $700 billion. It would be a tiny help; that’s all. …
Via Greg Mankiw.
* We’ve been down this road before. We’ve had a tax in place, the Alternative Minimum Tax (aka AMT) for about 40 years. It was put in place during the Nixon administration after it became public knowledge that in 1969 over 155 households with real incomes over $1.2M had completely avoided paying any income tax through the legal use of deductions. The AMT is now payed by about 4% of households, and a quarter of AMT payers report less than $200K in income.