The US senate rejected the so called "Buffett Rule" plan on Monday, a law that would have raised taxes for millionaires.
The vote, mostly along party lines, needed 60 votes to pass a filibuster but lost 51-45 in the upper house.
According to the Associated Press, Democratic leaders and President Obama supported the tax plan, which would have seen millionaires taxed at over 30 percent of their income - an amount that backers said was more balanced and fair.
Senate Majority leader, Harry Reid, D-Nev., said on the Senate floor that the wealth gap was growing between the richest and poorest Americans.
Other democratic leaders said the failure to pass the Senate spoke to larger economic issues facing the United States.
"The issue we are debating today really speaks to a much larger crisis," said Sen. Bernie Sanders, D-Vt., according to the Wall Street Journal.
"In many important ways, the United States is departing from its democratic tradition and is moving rapidly into an oligarchic government in which almost all wealth and power reside in the hands of the very richest people in our society."
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Republicans argued that raising taxes on capital gains and dividends would be harmful to investment.
They also said it would be harmful for the economy during a slow recovery.
"This entire debate has been very illuminating for a lot of folks," said Senate Minority Leader Mitch McConnell, according to CBS News.
"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."