Business News : Q+A: The 'Buffett Rule,' a minimum tax on the rich

WASHINGTON (Business News) - President Barack Obama and congressional Democrats are laying a political trap for Republicans to be sprung on Monday when the U.S. Senate is slated to vote on the proposed "Buffett Rule," which would slap a minimum tax on the highest-income Americans.

With polls showing strong public support for the rule, Democrats plan to bring it up for a procedural vote in the Senate. Republicans are solidly against it and the proposal is not expected to garner enough votes to move forward.

Even if it does advance in the Senate, it is not expected to be taken up in the House of Representatives, which is controlled by Republicans. Democrats control the Senate, but just barely.

Despite the proposal's poor outlook, Democrats hope that the Senate vote and the debate around it will help them politically ahead of the November 6 elections by casting the Republicans and their presumptive presidential candidate Mitt Romney, himself a multi-millionaire, as the party of the wealthy.

Republicans have attacked the Buffett Rule as a diversion from the weak economy. They also argue that raising taxes on the r ich would hit small businesses and discourage their growth.

Here is a Q+A on the legislation and the issues behind it.

WHAT IS THE BUFFETT RULE?

Named after billionaire Warren Buffett, who backs it, the rule would require individuals with adjusted gross income of more than $ 1 million, or $ 500,000 for married individuals filing separately, to pay at least 30 percent in taxes.

Democrats have been careful to stress that the tax would not apply to people with $ 1 million or more in assets, who comprise a much larger slice of the U.S. population than those with annual incomes of $ 1 million or more.

About 433,000 U.S. households earn more than $ 1 million a year. That is only about 0.3 percent of all taxpayers, according to the Tax Policy Center, a research group.

The bill being voted on in the Senate, sponsored by Democratic Senator Sheldon Whitehouse, would impose the 30-percent tax on adjusted gross income after a modified deduction for charitable giving and certain other tax credits.