This afternoon U.S. Senate Republicans blocked a bill to impose a minimum tax rate of 30 percent on taxpayers who collect at least $1 million in income. The motion received 51 votes in favor and only 45 against, but in the convoluted world of Senate procedure, Democrats needed 60 votes to approve a “motion to invoke cloture on the motion to proceed to consider” the bill. All but one Democrat voted for cloture, while all but one Republican voted against. Iowa’s Tom Harkin and Chuck Grassley split on party lines. Neither has issued a statement on today’s vote, but after the jump I’ve posted an excerpt from the “Q&A on taxes” in Grassley’s latest e-mail newsletter to constituents.

President Barack Obama and Senate Democrats plan to flog the “Buffett rule” repeatedly throughout the election year. A few samples of the preferred talking points on both sides are below, just after the Grassley commentary.

Left unsaid: we wouldn’t be having this debate if Congressional Democrats and/or the president had refused to extend the Bush tax cuts for the top income brackets in late 2010 (as most of them had promised to do during the Bush presidency).

From Senator Chuck Grassley’s “The Scoop” newsletter, April 16:

April 11, 2012

Q&A on Taxes

Q:    What is Tax Freedom Day?

A:    Since 1990, the Tax Foundation has calculated how many days a taxpayer must work from January 1 each year to pay taxes that year, including federal, state and local levies.  Tax Freedom Day is the symbolic day that a taxpayer’s income no longer goes to paying taxes.  This year, Tax Freedom Day arrives nationally on April 17, after 108 days of work.  In Iowa, Tax Freedom Day came on April 9.  According to the Tax Foundation, if the federal government raises taxes to close the budget deficit, Tax Freedom Day would come on May 14, instead of April 17.

Q:    Would raising taxes reduce the deficit?

A:    President Obama is pushing a tax increase that he calls the Buffett Rule, after billionaire investor Warren Buffett.  According to the Joint Committee on Taxation, the nonpartisan scorekeeper for all tax legislation in Congress, the Buffett Rule, as introduced by Senator Sheldon Whitehouse of Rhode Island, would generate $47 billion of revenue over ten years, or less than $5 billion a year.  That’s a minuscule fraction of the federal deficit, which is currently more than $1 trillion for the fourth year in a row.  And, $47 billion is less than 0.3 percent of America’s $15.6 trillion national debt.  In fact, the Buffett Rule would cover one day of deficit spending by the government in fiscal year 2012.

Raising taxes won’t help reduce the deficit unless spending is under control.  This spring, the head of the General Services Administration was forced to resign after the Inspector General found that $823,000 was squandered last year on an over-the-top Las Vegas conference for agency employees with outlandish spending on penthouse suites, entertainment including a clown and a mentalist, and gifts of electronics including iPods, along with other indefensible spending.  Last fall, a Navy audit of a contract awarded for energy efficiency projects under the 2009 stimulus program found that $90 million was wasted, yet the Navy official responsible for the contract award has done nothing to stop the projects.  Since 2008, federal spending has increased by 21 percent and would continue to increase under the President’s budget, where it would be more than 23 percent of the total economy through 2014 and never drop below 22 percent in future years.  Given that government spending as a percent of the economy has averaged about 21 percent since 1970, the President’s budget proposes a massive increase in the size of government.

What’s more, there’s evidence that tax increases fuel more spending rather than reduce deficits.  Professor Richard Vedder of Ohio University has studied tax increases and government spending for decades.  According to his analysis, over the entire post-World War II era and through 2009, every dollar in new taxes has resulted in $1.17 in government spending.  In fact, in the budget proposed in February by President Obama, only 16 percent of the $2 trillion in tax increases would go to deficit reduction.

In addition, whatever the details of proposed tax increase, there’s evidence that raising taxes in a struggling economy makes things worse.  Federal Reserve Chairman Ben Bernanke said this in response to a question I asked him during Senate Budget Committee hearing earlier this year.

Q:    Aren’t taxes on working families going up anyway in January 2013?

A:    Personal income taxes for individuals and families will go up dramatically if Congress and the President don’t act this year to extend the tax relief enacted in 2001 and 2003.  I authored these tax relief measures as Chairman and Ranking Member of the Senate Finance Committee.  The legislation reduced marginal tax rates and even created the 10-percent bracket for low-income taxpayers.  It also reduced the marriage penalty, increased the child tax credit, increased the adoption credit, and increased tax relief for both education and dependent care costs.  Most small business income is taxed at the top marginal rate for individual taxpayers.  So, small businesses, where 70 percent of new jobs are created, will see tax increases if this tax relief is not extended, and job creation will be made more difficult.  Without action by Congress and support from the President, low-income taxpayers will see their rate jump from 10 to 15 percent.  Because of the procedure under which the legislation was passed, the tax relief expired after ten years.  Congress and the President extended it with a bipartisan agreement in 2010.  These tax policies should be permanent law, but at the very least, they should be extended.

The problem isn’t that people are taxed too little, but that Washington spends too much.  Consider that from 1946 to 2008, budget deficits averaged 1.7 percent of the gross domestic product and exceeded five percent only three times.  From 2009 to 2011, budget deficits averaged 9.4 percent of the gross domestic product.  And, the federal debt held by the public grew from 40 percent of the gross domestic product in 2008 to an estimated 69 percent of the gross domestic product in 2011.

From Jonathan Weisman’s report for the New York Times:

Senate Democrats intend to return repeatedly to the legislation, named after the billionaire investor Warren Buffett, who has complained that he pays a lower effective tax rate than his secretary. On Thursday, House Republicans will counter with a proposed tax cut for businesses that they say would spur job creation but would cost the Treasury almost exactly what the Democrats’ tax increase would raise.

Republicans say they like that contrast, and their language ahead of the procedural vote on a motion just to take up the Buffett rule was harsh and aimed squarely at Mr. Obama, who first proposed a 30-percent tax rate floor for anyone earning at least $1 million a year last September. Senator Mitch McConnell of Kentucky, the Republican minority leader, went to the Senate floor and all but called Mr. Obama a liar.

“By wasting so much time on this political gimmick that even Democrats admit won’t solve our larger problems, it’s shown the president is more interested in misleading people than he is in leading,” Mr. McConnell said of the Buffett Rule push.

Democrats said they saw that as a sign of weakness. Pointing to a Gallup poll from last week that indicated 60 percent of Americans supported the proposal, including 63 percent of political independents, Senator Charles E. Schumer, Democrat of New York, called the Republican response “proof positive” that “for first time in decades, maybe generations, they’re on the defensive on their signature issue,” taxes.

After he made that comment, a CNN poll was released putting support at 72 percent, including 53 percent of Republicans.

From Bernie Becker’s report for The Hill:

Democrats believe they have a winner in the Buffett Rule’s proposition that those making north of $1 million a year should pay a higher effective tax rate than middle-class families.

The Obama White House and party lawmakers have been determined to amplify the issue, with the president using the bully pulpit last week to pressure Republicans on the message of tax fairness and economic equality.

But Republicans say Democrats are overplaying their hand by pushing for a tax increase, and believe a proposed small-business tax cut scheduled for a House vote this week sets up a nice contrast.

Top GOP lawmakers have repeatedly called the Buffett Rule a political gimmick, and derided the president for campaigning heavily on the issue.

Republicans have also said that the Senate proposal, which the Joint Committee on Taxation says would raise roughly $47 billion over a decade if current income tax rates expire, would put only a little dent in the federal debt.

“President Obama looked at the options in front of him, sat down with his political advisers, and he said, ‘you know what, let’s go with the poll-tested tax increase on investment and job creation that won’t fix anything and won’t pass anyway, instead of actually doing something about the debt and the deficit,’ ” Senate Minority Leader Mitch McConnell (R-Ky.) said Monday.

Democratic lawmakers said before the vote that they were willing to force repeated votes on the Buffett Rule to press their case.

“Republicans in Congress would rather end Medicare as we know it and slash education funding than ask the richest of the rich to contribute even a penny more,” Senate Majority Leader Harry Reid (D-Nev.) said on the chamber floor on Monday.