BOULDER, Colo. (CBS4) – President Obama outlined his plan to cut the debt on Monday and Republicans are already attacking parts of the plan.
The president is calling for $1.5 trillion in new taxes as part of a 10-year deficit reduction package. It would also reduce spending for benefit programs, including Medicare and Medicaid by $580 billion. The president’s plan also counts savings of $1 trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan.
The proposal getting the most attention would hit wealthy taxpayers. The president is calling for a tax hike for people earning more than $1 million. It’s being called the Buffet Rule in homage to billionaire Warren Buffet who says his secretary has a higher tax rate than him.
“It’s only right that we ask everyone to pay their fair share,” Obama said.
There are residents in Boulder who would be especially impacted. Boulder has about 7,000 millionaires, or 6 percent of its population, according to Phoenix Marketing Research, which has compiled millionaire household data for nearly 30 years.
Right now millionaires fall into a 35 percent income tax bracket, compared to middle income earners’ 25 percent. But most wealthy Americans make most of their income off investments, and those are taxed at 15 percent, making their effective tax rate lower than those who make far less.
Colorado ranks 15th in the country for the number of millionaire households and some are angry over Obama’s proposal.
“Clients realize there needs to be some sort of give and take,” Robert Alexandrovic with Brown & Tedstrom Wealth Management said.
Alexandrovic represents dozens of millionaires. He says they’ve anticipated the Bush tax cuts expiring, but the Buffet Rule is new. It would raise taxes on capital gains, which may impact investors’ willingness to risk money in stocks.
“If we see people start to pull money out of riskier assets, out of the stock market and if we see some downturns in the market, it could be a bit of a negative feedback loop,” Alexandrovic said.
It’s a risk the president is willing to take.
“I will not support any plan that puts all the burden for closing our deficit on ordinary Americans,” Obama said.
Obama says he will veto any bill that changes Medicare but doesn’t increase taxes on the wealthy.
Republicans have called Obama’s plan class warfare