Republicans in the Senate blocked debate on the so called "Buffett Bill" on Monday, effectively killing the bill.
The Senate voted 51-45, mostly along party lines. Democrats needed 60 votes to allow debate and eventually a vote.
The bill, named after billionaire Warren Buffett who complained about paying taxes at a lower rate than his secretary, would have increased taxes for millionaires.
President Obama has been pushing the legislation for the past week, but Republicans stood firm, calling it a "gimmick."
“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,” Senate Minority Leader Mitch McConnell said on the Senate floor.
The bill called for a minimum 30% tax rate on incomes greater than $1 million. The top income tax rate is now 35%, but many wealthy people pay far less because of deductions and loopholes on investment income.