During speech in Florida on Tuesday, President Barack Obama said that “trickle down” economics never worked and called for Congress to pass the so-called “Buffett Rule.”
“This is not about a few people doing well, we want people to do well, that’s great,” Obama said. “But it is about giving everybody the chance to do well. That’s the essence of America. That’s what the American dream is about… In this country, prosperity has never trickled down from the wealthy few. Prosperity has always come from the bottom up, from a strong and growing middle-class.”
Trickle-down economics is closely associated with former President Ronald Reagan and the Republican Party. According to the theory, if the wealthy are taxed less, then they will invest more into businesses, creating jobs for middle-class Americans.
Obama said giving more tax breaks to millionaires and billionaires would not help the economy grow. Instead, he called for government investments in healthcare, research, veteran services, and education.
The Buffet Rule would require those earning more than $1 million per year to pay at least a 30 percent effective tax rate on their income. The rule is named after billionaire investor Warren Buffett, who lamented the fact that he paid a lower tax rate than his secretary. Although the wealthy are taxed at a higher rate than most Americans, they can drastically reduce their effective tax rate through tax loopholes.
The Paying a Fair Share Act would establish the Buffett Rule, and has been introduced to both chambers of Congress. Senate Majority Leader Harry Reid has announced that the Senate will vote on the legislation on April 16, tax day.