It could almost make your head spin. With an economy on the front end of another recession, President Obama’s tax attack on the folks who are most likely to succeed, invest, start new businesses, and create jobs is nothing short of staggering. Only liberal-left class-warfare ideology can explain this.
In his speech on Monday, Obama laid out $1.5 trillion in tax hikes over ten years, aimed almost entirely at America’s well-to-do. This includes $800 billion from rolling back the top rates in the Bush tax-cut plan, $470 some-odd billion to reduce itemized deductions for upper-bracket payers, and — oh yes — a millionaire’s tax called the “Buffett Rule.”
Pause a moment on the Buffett Rule. Almost all of Warren Buffett’s income comes from capital gains taxed at 15 percent. He only pays himself $100,000 a year, which would be taxed at the top rate. Most of his wealth is untaxed as unrealized capital gains. So his effective income-tax rate is lower than his secretary’s.
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So what?
The vast majority of millionaires pay a 35 percent current tax rate on personal income from salaries, bonuses, and small-business income. Their effective tax rate is around 30 percent, much higher than the roughly 20 percent effective rate for the so-called middle class (depending, of course, on how you define the middle class).
Remember that the top 1 percent of income-tax payers shoulders 40 percent of all income taxes. They are paying their fair share. Then remember that 50 percent of income-tax filers don’t pay any income tax at all.
Obama refuses to tell us what the new millionaire tax rate would be, or what the formula might be in relation to middle-class taxpayers. But one thing’s for sure: This new Buffet tax is a penalty on investment, risk-taking, and job-creation.
No one even knows what the targeted group is going to be. A New York Times story suggests that the Buffet tax will hit three-tenths of 1 percent of taxpayers, which could be 450,000 people out of 144 million tax returns.
A Wall Street Journal story suggests the Buffet tax would have hit just 22,000 people in 2009, those households making more than $1 million annually and paying less than 15 percent of income in federal income taxes. According to the Tax Policy Center, doubling the tax burden of those 22,000 would raise just $19 billion a year. How silly is this?
And let’s also not forget that over the past four decades the evidence is absolutely clear that a lower capital-gains tax produces huge gains in revenues. Raising the cap-gains tax lowers revenues. It’s a pure Laffer-curve effect.
Clearly, the logic here is political, not economic. And it’s equally clear that Mr. Obama is now catering to his liberal-left base. I guess his logic is that even though so many people don’t have jobs, they’ll feel much better knowing that 22,000 rich people will have a higher tax rate.
Make sense?
Adding to this bizarre scenario, Obama knows full well that the debt-ceiling deal now moving to the phase-two super committee rules out tax increases. He also knows full well that none of these tax hikes will ever get through the GOP House. Perhaps, as Congressman Paul Ryan notes, class warfare makes for good politics. Perhaps.
But Ronald Reagan was branded a class warrior for the Kemp-Roth tax cuts, and he was overwhelmingly reelected. Why? Because low tax rates reignited economic growth and job-creation. Today, the president’s militant tax-hike threats, along with Obamacare and unmanageable regulatory costs, are holding back job-creators.
And Paul Ryan makes another key point: Tax investment more, and you’ll get less of it. If these kinds of tax hikes are ever passed, the economy will be doomed to stagnation over the long-run. Penalizing incentives will do that. And lower growth means higher deficits.
Why in the world doesn’t President Obama follow the overwhelming consensus for fundamental tax reform to lower marginal rates and broaden the income base? Economists of all stripes agree on this.
At the end of the day, it sure looks like our president wants to raise taxes on wealthy Americans and large corporations in order to spend more and enlarge the size and scope of government. From the standpoint of jobs, growth, and prosperity, it just won’t work.
In Europe, high consumption taxes inhibit private spending and allow high public spending. Here in the US the "dwindling" middle class want to spend privately like Americans but have publicly provided social benefits like Europeans, paid for by the "rich", not by them. That sounds to me like the very definition of class warfare.
What benefits paid for by the rich? Medicare and Social Security are paid for by the tax dollars of those who worked all their loves for it. So, what? Food stamps, medicaid, and unemployment insurance? We have a basic social safety net in this country, and it is far less of a safety net than anything in Europe. The President's plan cuts an additional 2.5 Trillion dollars, and that is on top of the $1+ trillion in cuts he has already signed into law. All of a suddent closing a massive deficit mostly brought on by reckless borrow, spend, and tax cuts policy, by a 3:1 plan of spending cuts to revenue instead of all in cuts is clas warfare? Why isn't it class warfare when Paul Ryan introduces a plan that gives even bigger tax cuts to the wealthy, while increasing the cost of Medicare by $6,500 through privatization? Why isn't THAT class warfare. Finally, this President is standing up and putting the GOP on the spot. They would rather cut programs that Americans want - health, education, social security, etc. - instead of raising a dime of revenue, and this is when revenue is the smallest it has been as a percentage of GDP in over 60 years; when this President isn't even raising taxes anywhere near the level of Bill Clinton. I'm sick of this b.s. The GOP taking the side of the minority, claiming it is the will of the people, and denying the reality that poll after poll after poll shows that people want the President's approach of revenue and cuts. The class warfare is coming from those who demand cuts that hurt the middle class, working class, elderly, and disabled, while giving more and more tax cuts and corporate welfare to those "jkb creators" who have only seen their wealth sky rocket, while not creating jobs at all. ENOUGH.
NICKinNOVA - I'm crying on the inside. I don't have a moral claim on your money anymore than you do on mine. Involving the federal government doesn't change that, especially when the purpose is non-enumerated.
How about we remove minorities and majorities in the tax code and go flat rate? There is no argument you can make that doesn't involve theft.
Beginning to believe Liberalism truly is a mental illness...the manifestation of the angry and envious ne'er do wells... earn a little something liberals. Maybe you'll start to feel better about yourself.
Learn the TRUTH
Here is what Reagan did that brought us prosperity
1.) Reduced growth of government spending
2.) Reduced income tax AND capital gains tax
3.) Reduced government regulation
4.) Controlled the money supply to reduce inflation
Obama is doing the opposite. Why?
Carter's (Obama 1) individual tax rate of 70% was brought down by Reagan to 28%
Those Reagan rates encouraged entrepreneur's to create the economy we have enjoyed since. Republicans created the economy with a Republican led House that Clinton tries to take credit for...Learn the truth and thank God for the likes of Reagan and the prosperity that followed ...
and look at Obama and the destruction he has caused and continues to reek havoc on the USA and her people.
Obama's economy.... call it crony- capitalism but really it's just plain corruption..and on a level never seen before. People involved in the theft of our treasure belong in prison.
Not true- I love Reagan, and think that his plans generally would be a boon in our exact economy, but gov't spending increased dramatically under Reagan. And he knew it and regretted it.
Look it up- an uninformed conservative is better than a liberal, but that leaves you open to attacks on your whole argument.
Exactly! What is the appropriate tax that should be paid by the 47% of Americans that pay NO tax, yet still enjoy the benefits of living in the greatest nation on the planet?
"At the end of the day, it sure looks like our president wants to raise taxes on wealthy Americans and large corporations in order to spend more and enlarge the size and scope of government. From the standpoint of jobs, growth, and prosperity, it just won’t work."
Larry, is it not obvious then, that Obama's goal is something other than jobs, growth and prosperity?
Or do you believe that Obama is mentally impaired?
"Then remember that 50 percent of income-tax filers don’t pay any income tax at all."
Does that 50% include "rich" people who pay no tax because they are able offset their tax liability with deductions/investment losses, whatever?
"And let’s also not forget that over the past four decades the evidence is absolutely clear that a lower capital-gains tax produces huge gains in revenues."
Does the evidence also clear demonstrate that it produces an increase in investment leading to jobs? No one will be interested in doing something just to increase corporate revenues.
"Rich" people don't offset their tax liability with deductions or investment losses. Losses that can be claimed against profits are capped. AMT closes the loop on deductions.
I think your comment may have proven the first sentence you quoted. Or if you do file, maybe you ought to furlough your accountant & do them yourself. Just so you can see how your pockets are being picked.
As for increasing corporate revenues, what do you think those are used for? How about capital investments (companies buy stuff to build the business), dividends (they give money to their investors who then go and buy stuff), they hire people (who go and buy stuff). Anybody who seriously works for a living in the private sector, or who has a retirement plan, wants corporate revenues to rise.
Quit worrying about who gets paid what & start worrying about who has money to spend. That's what creates jobs. Folks and firms willing to spend money.
Generally, you can't use "deductions" to completely offset your tax liability. If you're upper-middle-class or above, the Alternative Minimum Tax prevents it.
Regarding "investment losses," post-1986, IIRC, you can only offset them against investment gains. In other words, if you made $1,000 on one investment, but took a loss of $1,000 on your other one, your net investment income is zero -- and you're taxed accordingly.
In any case, if zeroing out one's tax liability is so easy for an Evil Rich Person to do, why do so few of them seem able to pull it off? All the evidence shows that the rich, as a group, pay boatloads of taxes.
I hold out hope that once left-liberals educate themselves about how the things they scream about actually work, they will turn conservatives. But that would require the kind of good honest character that abandons a mistaken opinion upon learning the true facts.
They'll start being educated on the same day that the first unmanned spacepig flies to the moon on his own flatulence. Ignorance is an incurable disease.
I am glad, though, that after a century leftist still trot out the same class warfare claptrap and still fail miserably. Keep trying, you'll get the same results as usual. Try as they might, leftist refuse to grasp that in a merit based competitive society, the majority want to strive for excellence, instead of bewail "inequality".
When President Obama talks about not wanting to hurt the middle class - it cannot be serious.
The Democrats in Congress fought any form of new oil drilling, new refineries or nuclear power while George Bush was president.
The Democrats have been in power since 2006 - controlling both houses of Congress. What energy policy, that would have grown supply, did they propose under Bush - only to have Bush veto it? None.
The Obama energy policies, driven by a Democrat-controlled congress, have effectively been a MASSIVE tax increase on all Americans - which of course hurts the Middle and Lower income segments of our country and transfers billions to countries that are not friendly to US interests.
If so called "job creators" actually created jobs, perhaps President Obama would not need to apply a FAIR tax law such as the Buffet Rule. Stop being so greedy.
Most small business owners work long hours and many on Sundays for the money they make--so greedy they are. They cannot afford new employees right now because of lack of demand for their product and the high costs that government regulations add to doing business.
Before you cast stones on these job creators, maybe you should understand what it means to be an employer, the financial and physical toll on them.
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