MICHELE NORRIS, host: Another idea the president introduced in his deficit plan is what he's calling the Buffett Rule.
President BARACK OBAMA: Middle-class families shouldn't pay higher taxes than millionaires and billionaires. That's pretty straightforward. It's hard to argue against that. Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett.
NORRIS: Warren Buffett is, of course, the billionaire investor and CEO of Berkshire Hathaway, who insists the rich should be taxed more.
Here's NPR's Tamara Keith with the economics of the president's Buffett Rule.
TAMARA KEITH: On August 14th, the New York Times ran an op-ed from Warren Buffett. The headline: Stop Coddling the Super-Rich. In it, he said he was taxed at a lower rate than his non-billionaire staff. It caught fire on the Internet. This argument wasn't a new one from the Oracle of Omaha. In 2007, he sat down with Tom Brokaw for a segment that aired on "The NBC Nightly News."
(SOUNDBITE OF ARCHIVED INTERVIEW)
WARREN BUFFETT: My total taxes paid - payroll taxes plus income tax - mine came to 17.7 percent. The average for the office was 32.9 percent. There wasn't anybody in the office, from the receptionist on up, that paid as low a tax rate. And I have no tax planning. I don't have an accountant. I don't have tax shelters. I just follow what the U.S. Congress tells me to do.
KEITH: The president didn't offer specifics about the Buffett Rule today, and neither did Treasury Secretary Timothy Geithner when he was asked about it at a White House press briefing.
Secretary TIMOTHY GEITHNER: Americans who are fortunate enough to make over a million dollars should, as a share of their income, pay a minimum level that is no lower than that paid by an average, middle-class family. Lots of different ways to do that.
KEITH: So how many of these million-dollar Americans are there? Roberton Williams is a senior fellow at the nonpartisan Tax Policy Center.
ROBERTON WILLIAMS: We estimate there are about 433,000 people who will earn a million dollars from all sources of income this year.
KEITH: His number is somewhat larger than what you'll get from the IRS. But either way, there aren't very many of them as a share of the U.S. population.
WILLIAMS: So they make a very appealing target. They've got a lot more money, they've done very well, and their tax rates have gone down in recent years.
KEITH: The Bush-era tax cuts lowered the top-level income tax rate, and they also lowered the tax on capital gains - sales of assets like stocks or businesses. That rate is now 15 percent. An analysis of IRS statistics shows households earning near the national average. So in the $40,000 to $50,000 range, they get the vast majority of their income from wages, while those bringing in more than a million dollars a year only get about a third of their income from wages. Williams says the rich tend to get more of their money from capital gains and dividends.
WILLIAMS: The average tax rate at the very top end is about 29 percent at the federal level. But there are a lot of people, like Warren Buffett, who pay a lot lower tax rate on their total income than do working Americans.
KEITH: But Williams points out that more heavily taxing CEOs, celebrities, sports stars and hedge fund managers isn't the answer to the nation's deficit woes - not even close. He put together an estimate based on a tax rate that's so high it's not likely happen. He says that if you taxed all income above $1 million at 50 percent, you'd only get 10 percent of what most experts say is needed to tackle the nation's deficit.
Alan Viard is a resident scholar at the American Enterprise Institute. He says the president is making a mistake by putting a focus on taxing millionaires.
ALAN VIARD: I think what we have to see, from both Republicans and Democrats, is a greater emphasis on the things that - the hard choices we'll ultimately have to make, instead of the easy choices we would like to think would be enough.
KEITH: Congressional Republicans have been quick to criticize the Buffett rule. They were all over the Sunday talk shows, referring to it as class warfare. The debate that Warren Buffett started will no doubt rage on through the 2012 elections.
Tamara Keith, NPR News, Washington.