#1Jan 25th, 2012
President Barack Obama appealed Tuesday for an overhaul of the U.S. tax code to force America's millionaires to pay a bigger share of their income to Uncle Sam, setting the stage for a heated election-year debate about economic inequality that could pit the nation's middle class against its rich.
In a State of the Union address infused with politics and populist rhetoric, Mr. Obama said it was time the nation's wealthiest citizens pay their "fair share" to help lower the U.S.'s mounting debt.
"Now, you can call this class warfare all you want," Mr. Obama told lawmakers gathered for a joint session of the U.S. Senate and House of Representatives.
"But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense."
Mr. Obama's third State of the Union address marked an effort by the President to road-test policy themes expected to be at the heart of his bid for a second term.
While domestic policy dominated, Mr. Obama included a stern warning in his speech for Iran.
"America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal," he said.
With Americans still battling high unemployment amid a fragile economic recovery, he drew battle lines in a fight over taxes. He renewed his call for an end to Bush-era tax cuts for high-income earners and paired that with an appeal for the renewal of payroll tax cuts set to expire next month.
But he took sharpest aim at the nation's uber-wealthy, who he said benefit from tax loopholes and shelters that allow them to pay lower rates than most middle-class Americans.
"Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else - like education and medical research; a strong military and care for our veterans?" he said. "Because if we're serious about paying down our debt, we can't do both."
The President sought to underscore his push for tax reform by inviting the secretary of billionaire investor Warren Buffett to watch the address with First Lady Michelle Obama.
Mr. Buffett, the chairman of Berkshire Hathaway, ignited debate over tax rates for "the super rich" by complaining in a New York Times op-ed article last summer that he pays a lower rate - about 17% - than his assistant, Debbie Bosanek.
Mr. Obama called for implementation of his so-called "Buffett rule" in the tax code.
"If you make more than $1-million a year, you should not pay less than 30% in taxes," Mr. Obama said.
The focus on raising taxes on the rich carries strong political overtones in the 2012 presidential election - and, in the hours before the speech, the debate also took centre stage in the Republican presidential race.
Former Massachusetts governor Mitt Romney, whose personal wealth is estimated at $250-million, released financial information showing he earned more than $42-million over the past two years.
Mr. Romney paid a 13.9% tax rate in 2010, according to tax filings posted on his campaign website Tuesday morning. He estimated a 15.4% rate for 2011.
Wealthier Americans like Mr. Romney and Mr. Buffett often make most of their income from investments, which are taxed at lower rates than earned income from a salary.
"We don't begrudge financial success in this country. We admire it," Mr. Obama said.
"When Americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich. It's because they understand that when I get tax breaks I don't need and the country can't afford, it either adds to the deficit, or somebody else has to make up the difference ... That's not right."
Republicans shot down Mr. Obama's appeal for a tax code overhaul even before he arrived in the House of Representatives chamber to deliver his speech.
"This is a President who said I'm not going to be a divider, I'm going to be a uniter, and running on the politics of division and envy is - to me it's almost un-American," said Rep. John Boehner, the U.S. House Speaker.
As he seeks restore voter confidence in his ability to right America's listing economic ship, Mr. Obama told lawmakers he would focus his efforts on creating jobs through a revitalized manufacturing sec-tor and by exploiting domestic sources of energy.
He called on Congress to support doubling the tax deduction for U.S. manufacturers who build their products in the U.S., adding that tax breaks should be ended for companies that outsource jobs overseas.
On energy, Mr. Obama said he was directing his administration to open "more than 75%" of our potential offshore oil and gas resources to development.
Even before Obama spoke, Republican leaders in Congress denounced the President as being hypocritical for advocating greater domestic energy production in his speech.
Just last week, his administration rejected the Keystone XL oilsands pipeline - a $7-billion project that would have carried crude from both Alberta and the Bakken fields of North Dakota to the Gulf Coast of Texas for refining.
"The Keystone pipeline decision made no sense to anyone in the middle of the country that I talk to, and we need to move forward with more American energy," said Senator Roy Blunt, a Missouri Republican.
Mr. Boehner, meantime, expressed his anger over the Keystone XL decision by inviting four pipeline supporters to be his personal guests at Mr. Obama's speech.
The U.S. unemployment rate fell to 8.5% in January with the creation of 200,000 net new jobs. But nearly 24 million Americans are still out of work or underemployed - a statistic Mr. Obama's Republican opponents are set to use as evidence his efforts to jumpstart the nation's recovery have failed.
Meet the face of class warfare in the U.S.A. - National Post
