President Obama announced today that he wants to raise taxes on America’s millionaires. As I explain on the homepage, this is hardly a novel concept. Obama’s so-called “Buffett Rule,” named for billionaire investor and tax enthusiast Warren Buffett, would establish some sort of minimum tax standard stipulating that “no household making over $1 million annually should pay a smaller share of its income in taxes than middle-class families pay.” Beyond that, the administration offered few details as to how the “rule” would be enforced, or how much they plan to raise in new tax revenue. Of course, the president insists “this isn’t class warfare, this is simple math.” A look at some of that “math”:
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Millionaires accounted for just 0.17 percent (236,883) of the more than 140 million tax returns filed in 2009, and reported income totaling $727 billion.
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The federal government will spend about $3.6 trillion this year (a rate of $300 billion per month), running an annual deficit of about $1.3 trillion. So, even if the IRS decided to confiscate every cent earned by millionaires in a given year, it would amount to less than half of the new debt we are taking on each year, and would barely be enough to fund the government for two months.
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According to Forbes, the 400 wealthiest individuals in the U.S. are worth a combined $1.37 trillion. Confiscating all their wealth (not just annual earnings) would buy us another 4.5 months.
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The top 1 percent of income earners (just a quarter of which are millionaires) earn just 20 percent of the country’s personal income, yet pay 38 percent of federal income taxes. For the top 10 percent of earners, those figures rise to 46 percent and 70 percent, respectively.
Obama says he wants a “fairer, more progressive tax system.” But given that “the rich” already pay a disproportionate share of income taxes, one wonders if it will ever be “fair” and “progressive” enough to satisfy the Left.
Facts and Logic ought to be like Kryptonite to Demagoguery. Unfortunately, Obama is out trying to motivate his base and Liberals are immune to Facts and Logic. If they weren't they would not be Liberals.
Reply to this commentLinkReport AbuseIt is true that the rich pay a disproportionate share of income taxes. I believe that's the way the system was designed.
It is also true that taxes on "the rich" are at the lowest level in decades.
Reply to this commentLinkReport AbuseTrust a liberal to believe something that isn't so.
Taxes on the rich were down to 28% in the 80's, and have been climbing since then.
Reply to this commentLinkReport Abuseback of envelope simple math:
$1.5T in tax increases on "millionaires" over the next 10 years works out to $150B per year.
Millionaires total income is $727B per year, so the "simple math" works out to an increase in revenue equivalent to another 21% of their income!
(Not a 21% increase in marginal rates, a 21% increase in REVENUE over and above any money-hiding or new-loopholes that will reduce revenues as rates increase. Marginal rates would have to go up by more than 21% on millionaires, in other words. Which would make the top fed rate at least 55-60%?)
Unless of course some of that tax cut hits the middle class too . . . ?
It seems to me the "simple math" problem here is that if you narrow the circle of "rich" enough to be politically palatable, then the population is too small to raise enough revenue to make a difference. If you widen the circle in order to capture enough revenue from tax increases to actually balance the budget, then you have to raise taxes on "the middle class" and that's not a popular move (doubly so in a recession).
So maybe the easiest thing to do would be to make speeches full of soaring non-specific rhetoric about "fairness" without presenting any "math" at all! ;-)
Reply to this commentLinkReport AbuseOh yeah, also -- $1.5T over ten years is only about 15% of the projected deficit anyway. So even if everything worked exactly as Obama plans, we're still running up massive debt every year. His proposal doesn't go nearly far enough to solve the problem . . .
. . . and "simple math" says it CAN'T EVER solve the problem! To balance the budget on the backs of "millionaires" without cutting spending would require fantasy top marginal rates of 150% or more. How does that work? It don't! That's math!
To realistically balance the budget, spending cuts have to be MASSIVE and/or there need to be broad-based revenue increases (you have to tax the middle too for it to make enough difference.) The idea that we can balance the budget by "taxing the rich" is mathematically impossible.
Reply to this commentLinkReport AbuseSometimes Dems claim they just want to go back to the Clinton tax rates and only on "the rich." But that would only cover about 5% of the deficit. If you're going to close the deficit with taxes you have to go after the middle class - that's where the money is.
Reply to this commentLinkReport Abuse(Of course even that isn't enough money, but I guess if you just want a scapegoat as a campaign issue the math really doesn't matter.)
Yes. Until there are no rich, except Obama and all his friends. But they will be rich like the old Lords of Olde. They will control all the money, and we should just shut up. Just don't go away. Or we'll hunt you down and kill you.
Reply to this commentLinkReport AbuseThe more things change.....
truck gives a great example of how to lie with statistics.
The poll question asks if the rich should pay their fair share, without defining what "fair share" is.
Obviously most people would agree with such a question.
However, when people are asked what they thing a "fair share" should be, the vast majority answer it should be 20% or less. Which happens to be a lot less than the rich are paying now.
Reply to this commentLinkReport AbuseSorry, it's not just "the left". Overwhelming majorities of Americans in all polls say they want higher taxes on the wealthy as part of deficit reduction:
External Link
Sorry to intrude with facts.
Reply to this commentLinkReport AbuseAnd it's an understandable response. Most people recognize the unsustainable nature of our current deficit spending, and they recognize the value of actually reducing our overall debt. Thus, when you ask the average person (who likely will not be targeted by the high income tax increases) whether some unnamed other people ought to pay higher taxes to fix the debt, the answer will almost invariably be "yes." If the question was posed more honestly, like "Should taxes be raised even higher for higher income earners so that government can continue expanding its growth and spending?" you'll get a markedly different answer.
Reply to this commentLinkReport AbuseNot comparing this to genocide, but don't all brutal regimes gain their populist momentum by claiming that some segment of the people has an unfair advantage that must be curtailed? Did the average Soviet apparatchik think he had the morally superior p=position in carrying out the policies against the kulaks?
After all, their self-interested acts were a threat to the people of the nation, right?
Just making the obvious point: once equal treatment under law is compromised it's all slippery slope territory. I want the U.S. not go there.
Reply to this commentLinkReport AbuseThank you Andrew for finally taking on the liberal red herring of known as "fair share".
1. The rich do not pay less in income taxes. They pay exactly the same because the tax rates are progressive based on income. The first 50K of the so called rich person's income is taxed at the exact same rate as the income of a couple with a taxable income of 50k...it is exactly the same taxation.
2. Liberalism relies on changing the precise meaning of words. They have changed the meaning of "fair" to mean unfair. It is absolutely unfair that there are contributors to this society and people who contribute nothing. It is only fair if everyone pays the same. But the class warfare liberals can't have that.
3. This is only a distraction to keep people from talking about spending. I would use the democrats words against them. The government has been spending more than their fair share as defined by the Constitution. Time for them to "pay" by cutting spending. Why hasn't Reid passed a budget in over 2 years? That's not fair to the taxpayer who has a right to know how the money will be spent.
Time to go on offense against the democrat and their media allies.
Reply to this commentLinkReport AbuseWhen did the definition of "millionaire" change from "a person with a net worth of at least $1 million" to "a person with a million dollars adjusted gross annual income?" Obama's proposal hits people with over $1M in income; this spares many millionaires as defined by pretty much everyone (and also will hit a few people who aren't actually millionaires).
If you sum federal income tax, payroll taxes, state income taxes, and state taxes and fees (sales tax, DMV, etc) and divide by yearly income, the number you wind up with is constant for most taxpayers in most states. I've never seen anyone do a study on this, but it'd be interesting to see the same calculation done, but dividing by net worth rather than annual income. Many functions of the government boil down to wealth preservation -- defense, enforcement of contract law, defense of physical and intellectual property rights, monetary policy preventing inflation, etc. Folks with more assets disproportionately benefit from these functions of government.
Reply to this commentLinkReport AbuseWell, since the "middle class" pays so little in taxes, the bar to pay more than them is a low one. Keeping in mind all the tax credits and deductions and give backs, i.e. welfare, embedded in the tax code. Best thing I did was quit my job. We dropped several tax brackets, we "get" all kinds of goodies now that we were not eligible for previously. As long as I keep my draw low, just about everything I do is a pre-tax business expense, the Corp rate my LLC pays is way less than the individual one.
Leeching off the system is fu-un!
Reply to this commentLinkReport AbuseThe article says taking every dollar from every millionare will take in 727 billion, covering less than half this year's new debt. But, don't millionaires probably already lose around a third of their pay?
If Washington is taking 250 billion already, taking every penny will NET around 500 billion, around a third of this year's debt. This leaves 1,000 billion to take, and we've tapped the millionaires for every penny.
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