Australia: 'confronting the growing divide between rich and poor in the US'

The Sydney Morning Herald

Rich must pay their fair share: Obama
By Simon Mann

Barack Obama has delivered a populist pitch to Americans before his re-election bid, calling for tax reform to eliminate inequality and to ensure the wealthy pay their fair share – at least 30 per cent, if they earn more than $US1 million a year.

Confronting the growing divide between rich and poor in the US, Mr Obama called for the removal of tax breaks that allowed the wealthiest Americans to pay a lower rate of tax than ordinary wage earners.

And in what was clearly a campaign speech ahead of November's election, he said he would resist any efforts by political opponents to return the US to the sort of policies that led to the 2008 financial crash.

"Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that does the same," Mr Obama said in his annual State of the Union address.

"It's time to apply the same rules from top to bottom: no bailouts, no handouts and no cop-outs."

Mr Obama, whose midyear push for a so-called "millionaires' tax" has been blocked by Republicans in Congress, has argued that government has a role in moderating the economy to uphold the promise that by working hard "you could do well enough to raise a family, own a home, send your kids to college and put a little away for retirement".

"The defining issue of our time is how to keep that promise alive," he told a packed House of Representatives. "No challenge is more urgent. No debate is more important.

"We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by.

"Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. What's at stake are not Democratic values or Republican values, but American values. We have to reclaim them."

The President's pitch came a day after a key contender for the Republican Party's presidential nomination, Mitt Romney, released his tax records, revealing that the former venture capitalist paid an effective tax rate of just 13.9 per cent in 2010 on income of $US21 million, mostly derived from low-taxed investments.

It also comes as Washington searches for a way to reduce its debt without extinguishing an already teetering recovery, a task that has made for an increasingly divisive political environment.

Republicans urge spending cuts as the means to confront the nation's $US1 trillion annual deficits, arguing that now is not the time to be increasing taxes on the rich who are best positioned to help create jobs.

But that argument has been rejected by billionaire investor Warren Buffett, who has famously declared that he should not be paying a lower rate of income tax than his secretary.

"Tax reform should follow the Buffett rule," said Mr Obama.

"If you make more than $US1 million a year, you should not pay less than 30 per cent in taxes ... [and] you shouldn't get special tax subsidies or deductions.

"On the other hand, if you make under $US250,000 a year, like 98 per cent of American families, your taxes shouldn't go up. You're the ones struggling with rising costs and stagnant wages. You're the ones who need relief.

"Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense."

Mr Obama added: "We don't begrudge financial success in this country. We admire it. 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. Americans know it's not right."

Seeking to drive the point home, Debbie Bosanek, who has worked as Mr Buffett's assistant for almost 20 years, was seated in the public gallery as a guest of the President and Michelle Obama.

Other guests, too, symbolised Mr Obama's legislative achievements during his first three years in the White House – a 23-year cancer survivor who had been able to remain on his parents' health insurance policy because of the "Obamacare" reforms; a lesbian air force colonel whose partner had attended her promotion ceremony after the repeal of the Pentagon's "Don't Ask, Don't Tell" policy, which discriminated against gays and lesbians in the armed services; and a host of small business operators and entrepreneurs.

Also present was Mark Kelly, the astronaut husband of shooting survivor Gabrielle Giffords, the congresswoman from Arizona, who attended the speech but has given notice that she will step down from Congress in a bid to aid her recovery. Mr Obama stopped and gave her a long embrace when entering the chamber.

It was the Democrat President's third State of the Union address, an event attended by all 535 representatives and senators, as well as cabinet members and Supreme Court justices, and watched typically by between 40 million and 50 million Americans.

During the hour-long speech, Mr Obama also trumpeted the end of the Iraq war, the death of Osama bin Laden and said the Taliban's momentum in Afghanistan had been "broken". He hailed the removal of Libyan dictator Muammar Gaddafi and America's deft involvement, and warned that time for Syria's Assad regime was also running out.

But his key themes revolved around the economy and creating the right environment for economic growth. He declared the bailout of the US car industry a success and promised not to backslide on tougher regulations on Wall Street.

He also pledged lower taxes for small businesses and manufacturers, while claiming that companies outsourcing jobs overseas should not qualify for tax breaks. And he said he would instruct his administration to open up to exploration 75 per cent of America's potential offshore oil and gas reserves.

Mr Obama warned that he would fight obstructionists in Congress in a bid to keep the economy moving.

"As long as I'm President, I will work with anyone in this chamber to build on this momentum," he continued amid enthusiastic applause. "But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.

"No, we will not go back to an economy weakened by outsourcing, bad debt, and phoney financial profits."

He said the future had to be built on "American manufacturing, American energy, skills for American workers and a renewal of American values".

http://www.smh.com.au/world/rich-must-pay-their-fair-share-obama-20120125-1qh17.html