Factbox: Obama to refocus on 'Buffett rule' in speech

WASHINGTON (Reuters) - President Barack Obama is expected to renew support for the "Buffett rule" - to ensure the wealthy pay their "fair share" in taxes - in his State of the Union speech on Tuesday.

Here are the basics of the Buffett rule as it was originally proposed and some of the arguments for and against it.

* Billionaire investor Warren Buffett published an editorial in August stating that his 17.4 percent effective tax rate was lower than the effective rate paid by wage-earners in his office. Buffett makes a living off capital gains and dividend income, which are taxed at 15 percent. Taxpayers taking home wage income face tax rates as high as 35 percent.

* Obama seized on Buffett's revelation and called for greater tax fairness. In October, Senate Democratic leader Harry Reid proposed a 5.6 percent surtax on millionaires to pay for new stimulus provisions.

* The Buffett rule is designed to prevent millionaires from paying a smaller share of income taxes than middle-class taxpayers. The tax would hit taxpayers with modified adjusted gross incomes of more than $1 million.

* Speaking in defense of the Buffett rule, Treasury Secretary Timothy Geithner said in September: "Why should you say to the American people that ... the most fortunate Americans pay a smaller share of their income than does an average, middle-class family? I don't think it makes sense and what we're proposing is something basically fair."

* One argument in favor of lower taxes on long-term capital gains and qualified dividends is to reduce double taxation. When a corporation pays a dividend, for example, that dollar is already taxed at the corporate level. Taxing it again at the individual level is known as double taxation.

* The Obama administration has also called for Bush-era tax cuts to expire. This would return the capital gains tax rate to 20 percent and the qualified dividend tax to 39.6 percent.

* Speaking about the proposed millionaires' surtax in September, Senate Republican leader Mitch McConnell told NBC's Meet the Press: "With regard to (Buffett's) tax rate, if he's feeling guilty about it, I think he should send in a check."

(Reporting By Patrick Temple West; editing by Kevin Drawbaugh and Mohammad Zargham)