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Looming ahead of President Obama in the next 50 days is mandatory 11% across the board cuts for most federal government departments including devastating cuts to the Department of Defense. As part of a deal cut before the election, these cuts will automatically take place unless reversed by new legislation. The center of this partisan storm is controversy over whether to increase taxes on people making more than $250,000 per year. If you were to listen to the rhetoric without looking into the numbers you would think that this issue is “make or break” for controlling the budget and bringing the deficit under control. Is there any truth to this public perception? Absolutely not.
If Obama’s proposed taxes were imposed against families earning more than $250,000 per year were put into place, this measure would add approximately $65 billion to the national coffers. Just to put that into perspective, that is about .5% of the increase in the national debt estimated for 2013. (Tax Increase Budget Impact) This negligible impact on the national debt will come at a price that means that the average family making $250,000 will spend approximately $138,000 of that income on taxes and education – about 55% of their income. (Impact On Families) According to Obama during the campaign, that makes these folks just plain greedy.
Repeatedly during the campaign, Obama called for those wage earners “just to pay their fair share” which is ironic given that about 50% of America pays ZERO income taxes, these “greedy rich” pay about 38% of ALL federal income taxes and the top 20% pay more than 94% of federal income taxes. (Paying More Than Fair Share) Clearly this is a purely political argument with no merit trying to get the Occupy movement types reenergized and angry at this “enemy.”
What is even more ironic is that the Democrats are not even shooting at the right villain in their own story. Whenever President Obama talks about the dark forces of the rich skating by without paying their fair share, he always attacks folks like Governor Romney or Warren Buffet or Donald Trump arguing that these “rich folks” pay less taxes than their poor secretaries. While this makes for good political fodder it is a complete red herring. NOTHING in the President’s proposed tax increases would impact the truly rich. Mr. Trump, Mr. Romney and Mr. Buffet pay capital gains taxes on virtually all of their income (15% tax rate) and are able to take advantage of other loopholes that reduce the tax they pay even further. Again, there is nothing in the President’s plan that would change any of that.
So, let’s recap, 1) the proposed tax increase will raise less than .5% of the money necessary to balance the federal budget, 2) the truly rich will pay no more tax than they already pay, 3) those earners who work to earn more than $250,000 will pay 55% of their income in taxes and education, 4) the 1% suffering the additional taxes already pay 38% of federal income taxes and will now be asked to pay more than 41% of those taxes, and 5) 50% of Americans pay ZERO federal taxes. Remind me, how is that fair?
HotAir
Why pretend that this is ALL Obama is offering?
1) )” the proposed tax increase will raise less than .5% of the money necessary to balance the federal budget”
Ha ha ha, this from the crowd who cheered when Romney proposed firing Big Bird. This is an obvious and necessary starting point, Obama also wants to institute the Buffet Rule. Which means taxing income of over a million at at least 30%.
2)” the truly rich will pay no more tax than they already pay”
Not if the Buffet Rule is passed and there is a lot of potential revenue possible with tax reform.
3)” those earners who work to earn more than $250,000 will pay 55% of their income in taxes and education”
The tax increases are ONLY on income OVER 250k and those folks paid them before, under the Clinton boom years. Not sure where you are getting your numbers, I wouldn’t trust any right-wing sources seeing as how they couldn’t even figure out the polls .
4) “the 1% suffering the additional taxes already pay 38% of federal income taxes and will now be asked to pay more than 41% of those taxes”
“Suffering”? What a joke. Let’s put it into pizza slices, if we had 10 guys and 1 pizza (10 slices) 1 guy would get 5 slices and the other 9 would have to share the remaining 5 slices. The top 10% in this country have 50% of the income, the top 1% have 20% alone. The top 20% own 85% of the wealth of the entire country.
Sorry, if you want to raise taxes you have to go where the money is. It may seem unfair , but it is far less devastating asking someone making 350k to pay a few thousand more than it is to ask the working poor to pay more.
The poor in this country are already strapped to the wall, juggling bills and pay day loans just to make it to the end of each month. You can’t get blood out of a turnip and for the last 30 years the rich have sucked all the blood out of the poor and most of the middle class. Time to go after the blood suckers.
5) “50% of Americans pay ZERO federal taxes”
Because they DON’T MAKE ENOUGH MONEY, they’re barely scraping by, in other words, THEY ARE POOR!
Washington Post;
” The vast majority of households that don’t pay federal income taxes are either elderly or paying payroll taxes. As you can see below, 60 percent of those who don’t pay income tax are still working and paying taxes for Social Security and Medicare. Their tax liability is just too low to qualify for the income tax. Another 22 percent of non-payers are retirees.
Only about 7.9 percent of households are not paying any federal taxes at all. That’s usually because they’re either unemployed or on disability or students or are very poor.”
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/18/who-doesnt-pay-taxes-in-charts/
1) Not sure the relevance of Big Bird, part of a corporation that makes hundreds of millions of dollars a year, but I guess you like corporate welfare when you like the recipient like Solyndra? Also, the tax raised under the ironically named Buffet rule are a tiny, tiny fraction of the national debt, “The facts of the Buffett Rule are simple. The President wants millionaires (and small businesses taxed as individuals) to pay a minimum tax of 30 percent. For all of his rhetoric that the measure would “stabilize our debt and deficits for the next decade,” the Buffett Rule would bring in only $47 billion in revenue in ten years. To put those numbers in context, President Obama’s budget calls for adding $6.7 trillion to the national debt. So the Buffett Rule would cover just 0.7% of all of Obama’s debt and .1% of Obama’s spending.”
Worse yet, the Buffet rule would do NOTHING to raise its namesake Warren Buffets taxes. “What’s more, the whole idea of the Buffett Rule is based on a fallacy. The President says his tax is necessary because people like billionaire Warren Buffett’s secretary pay a higher tax rate than the wealthiest Americans. In reality, Warren Buffett pays over 50 percent tax on his income. He earns much of his income as capital gains and dividends from stock he owns in businesses — he pays a 15 percent tax on this income, but first, the businesses that generate this income pay a 35 percent corporate income tax. Corporate income is subject to at least two layers of tax. To create an artificial political fight, Obama and Buffett conveniently ignore the first.
Even some of the President’s friends on the left are seeing the Buffett Rule for the ploy that it is. Last week, liberal Washington Post columnist Dana Milbank devoted an entire column to “Rebuffing Obama’s gimmicky ‘Buffett Rule,’” picking it apart as flawed policy and political rhetoric, noting that even White House reporters are “tiring of the theme.” Milbank concludes that, “Obama’s prioritization is no mystery: The populist Buffett Rule polls well. This explains its inclusion in countless presidential speeches and statements.” http://blog.heritage.org/2012/04/16/morning-bell-tax-gimmicks-tax-doom/
Here’s the White Houses numbers;
The Wall Street Journal
November 14, 2012,
President’s Deficit Plan Casts a Wide Net for Revenue
By DAMIAN PALETTA
“WASHINGTON—President Barack Obama’s proposal to reduce the deficit by $1.561 trillion over the next decade includes more than 70 changes in the tax code that would affect everyone from high-income Americans to options traders, as well as oil and gas companies, and even some golf courses.
During a press conference Wednesday, President Obama spoke about the approaching fiscal cliff and reiterated the need for bipartisan cooperation.
President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept.
The White House says the changes are necessary to eliminate special preferences in the tax code and raise funds to reduce the deficit. Republicans contend the tax increases are poorly targeted and would hurt the jobs market.
The tax proposal the White House plans to offer at the deficit-reduction talks with lawmakers on Friday is identical to the budget proposal it released earlier this year. “We’re going to start out where we’ve been, which is a pretty well-designed set of reforms we laid out,” Treasury Secretary Timothy Geithner said Tuesday.
That plan was largely ignored by Congress as both parties awaited the outcome of the election. Its re-emergence will earn it a closer look from lawmakers on both sides, particularly as negotiators swap offers in the next several weeks in a bid to avert the year-end “fiscal cliff” of automatic spending cuts and tax increases.
The biggest item in the White House proposal would allow the Bush-era tax cuts to expire for households with net taxable income of more than $250,000 and individuals above $200,000.
This would trigger several tax-policy changes that would boost collections by $849 billion over 10 years. Among them would be $442 billion from the reinstatement of the 36% and 39.6% tax brackets, $206 billion in higher taxes on dividends paid by those taxpayers, $123 billion from limits on their itemized deductions and $36 billion more in capital-gains taxes paid by them.
The Obama plan also would reduce higher-income Americans’ tax benefits for their charitable contributions and mortgage payments. This and other changes would raise $584 billion over 10 years, the White House estimates. Restoring estate and gift taxes to 2009 levels would bring in $119 billion.
From there, the White House’s plan resembles a line-item tour through the tax code, with a focus on limiting tax breaks for wealthier Americans or certain businesses and industries….”
http://online.wsj.com/article/SB10001424127887324595904578119142466887844.html
When the Bush tax cuts were originally being debated, Republicans wanted to make them permanent. They backed down when economists almost universally said that making them permanent would bankrupt our country. They ended up limiting them to 10 years, so we would not go bankrupt because of them. Cynically, many Republicans also saw this as an issue to use against the Democrats at the time they were due to expire. They would fight to extend the cuts, and accuse Democrats of raising taxes if Democrats did not go along. This would get them the permanent tax cuts they wanted, without the blame for bankrupting our nation.
The Democratic position is a reasonable compromise, to extend the tax cuts on the first $250,000 of taxable income for everyone. For taxable income above that, go back to the rates in place during the Clinton administration, when we had tremendous growth in the economy and in employment. Those rates worked then. They will work now.
Roger, do you have a supporting cite for the fact that the Republicans wanted the tax cuts to be permanent? I don’t have it at my fingertips, but I thought that during my research I found that there was some legal conept that required a time limit on those cuts. I honestly could be wrong, so I would love it if you have a site.
The republicans passed the the Bush tax cuts through reconciliation which triggered the Byrd Rule which forced the sunset of the legislation.
Highbrow Magazine
by Matthew Rudow
“America’s long-term budget problems are largely due to forces beyond U.S. lawmakers’ immediate control, such as an aging population, the European debt crisis, and the 2008 economic collapse. The expiration of the tax cuts, however, is due to a specific budget provision known as the Byrd Rule. A minority party may use a parliamentary procedure known as reconciliation to circumvent a filibuster in the U.S. Senate. Ten years before the Democrats used the maneuver to overhaul health care, Republicans used reconciliation to give Bush his 2001 round of tax cuts without the 60 Senate votes needed to invoke cloture and avoid a filibuster. Because of the Byrd rule, however, the Republicans could not pass the tax cuts, which would have added significantly to the deficit, without covering their long-term costs with an expiration provision.”
“According to Paul O’Neill, the Treasury secretary under Bush who helped sell the tax cuts, the sunset provisions were “baloney.” He claims Republicans had no intention of actually allowing the cuts to expire after 10 years: “It was put in there so they could make a fiscal claim that it wouldn’t damage us. It had nothing to do with reality.”
http://highbrowmagazine.com/1493-bush-tax-cuts-bad-yesterday-bad-today-and-bad-tomorrow
So, Joe and Roger, the Byrd Rule simply avoids the use of filibuster and the 60 vote rule. This was not some evil plan to later blame Democrats but simply a move to avoid Democratic block through filibuster.
Way to avoid addressing my first post.
The Bush tax cuts were and are a disaster. Thank god we have a president with the moral compass (and mandate) to take on the corrupt and rotten republicans.
The taxes are not a disaster, the spending is a disaster.
Obama has a “moral compass?” Really? A man with a moral compass grant’s his wife’s employer a million dollar grant that instantly leads to a $250,000 salary raise for her? That is just the tip of the ice berg for one of the most immoral Presidents in history.
Please source that story.
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