Teh One Who Knocks
11-15-2012, 02:15 PM
Mike Rosen - The Denver Post
The nation is rapidly approaching a fiscal cliff and "Taxmageddon." Unless President Obama agrees to a reasonable compromise with Speaker of the House John Boehner to head off massive automatic tax increases, the Congressional Budget Office predicts the economy will plunge into another recession and push the unemployment rate back over 9 percent.
There are some reasonable options on the table, some of which were proposed by the Bowles-Simpson commission, whose recommendations were roundly ignored by Obama in an election year even though he impaneled that very commission. They include simplification of the income tax system and broadening of the tax base by eliminating deductions, coupled with reductions in tax rates to produce more revenue. To cut a reasonable deal, the president will have to give up his inflammatory rhetoric and come back down to economic reality.
Obama's campaign strategy of class warfare may have helped him win election, but if his rhetoric is enacted as fiscal policy it won't matter a whit in balancing the budget and it will certainly make a weak economy weaker. During the campaign, he repeatedly uttered the slogan, "I'm just asking millionaires and billionaires to pay a little more in taxes." Really? Let's look at the numbers.
According to the just-released IRS Statistics of Income Publication 1304 for 2010 (the most recent year for which detailed tax data is available), out of 143 million tax returns filed, only 280,000 showed income above $1 million. So, millionaires and billionaires accounted for a mere two-tenths of 1 percent of all tax filers. (You probably imagined there were more.)
Their combined adjusted gross income was $925 billion, and they paid $215 billion of that in federal income taxes. That left them with $710 billion. (Actually, less than that if you consider other federal, state and local taxes, but we'll keep it simple.) If Obama had taken every penny they made, that additional $710 billion would have covered only about half the 2010 deficit of $1.3 trillion and just a fifth of the $3.5 trillion the federal government spent that year.
Now, obviously, a confiscatory tax rate of 100 percent would have had to have been imposed retroactively, at the end of 2010, on income already earned that year. Announcing a 100 percent tax rate in advance just might have discouraged more than a few Americans from risking their capital and putting in the effort to produce income knowing they wouldn't be allowed to keep any of it.
But wait. In his campaign stump speeches, in media interviews and in the presidential debates, Obama said he just wanted those millionaires and billionaires to pay "a little more." So how much is a little more? Suppose your boss asked you to take a little pay cut. What would you call a little? Ten percent? Five percent? I bet you'd think more like 2 percent.
But let's give Obama the benefit of the doubt. We'll go with 10 percent. In 2010, another 10 percent — "a little more" — from millionaires and billionaires would have yielded an additional $21 billion for the Treasury and still left the deficit at $1.27 trillion.
That isn't serious deficit reduction. It's demagoguery, and little more than punitive taxation imposed on millionaires and billionaires who make up the top two-tenths of 1 percent of all income tax filers, earn 11 percent of total income but already pay twice that share (22 percent) of all federal income tax collections. (The bottom 48 percent of tax filers collectively pays less than 2 percent of the nation's total federal income tax bill.)
Mr. President, the campaigning — what you're really good at — is over. You won. Now act like a true president, not the Democrat in chief.
The nation is rapidly approaching a fiscal cliff and "Taxmageddon." Unless President Obama agrees to a reasonable compromise with Speaker of the House John Boehner to head off massive automatic tax increases, the Congressional Budget Office predicts the economy will plunge into another recession and push the unemployment rate back over 9 percent.
There are some reasonable options on the table, some of which were proposed by the Bowles-Simpson commission, whose recommendations were roundly ignored by Obama in an election year even though he impaneled that very commission. They include simplification of the income tax system and broadening of the tax base by eliminating deductions, coupled with reductions in tax rates to produce more revenue. To cut a reasonable deal, the president will have to give up his inflammatory rhetoric and come back down to economic reality.
Obama's campaign strategy of class warfare may have helped him win election, but if his rhetoric is enacted as fiscal policy it won't matter a whit in balancing the budget and it will certainly make a weak economy weaker. During the campaign, he repeatedly uttered the slogan, "I'm just asking millionaires and billionaires to pay a little more in taxes." Really? Let's look at the numbers.
According to the just-released IRS Statistics of Income Publication 1304 for 2010 (the most recent year for which detailed tax data is available), out of 143 million tax returns filed, only 280,000 showed income above $1 million. So, millionaires and billionaires accounted for a mere two-tenths of 1 percent of all tax filers. (You probably imagined there were more.)
Their combined adjusted gross income was $925 billion, and they paid $215 billion of that in federal income taxes. That left them with $710 billion. (Actually, less than that if you consider other federal, state and local taxes, but we'll keep it simple.) If Obama had taken every penny they made, that additional $710 billion would have covered only about half the 2010 deficit of $1.3 trillion and just a fifth of the $3.5 trillion the federal government spent that year.
Now, obviously, a confiscatory tax rate of 100 percent would have had to have been imposed retroactively, at the end of 2010, on income already earned that year. Announcing a 100 percent tax rate in advance just might have discouraged more than a few Americans from risking their capital and putting in the effort to produce income knowing they wouldn't be allowed to keep any of it.
But wait. In his campaign stump speeches, in media interviews and in the presidential debates, Obama said he just wanted those millionaires and billionaires to pay "a little more." So how much is a little more? Suppose your boss asked you to take a little pay cut. What would you call a little? Ten percent? Five percent? I bet you'd think more like 2 percent.
But let's give Obama the benefit of the doubt. We'll go with 10 percent. In 2010, another 10 percent — "a little more" — from millionaires and billionaires would have yielded an additional $21 billion for the Treasury and still left the deficit at $1.27 trillion.
That isn't serious deficit reduction. It's demagoguery, and little more than punitive taxation imposed on millionaires and billionaires who make up the top two-tenths of 1 percent of all income tax filers, earn 11 percent of total income but already pay twice that share (22 percent) of all federal income tax collections. (The bottom 48 percent of tax filers collectively pays less than 2 percent of the nation's total federal income tax bill.)
Mr. President, the campaigning — what you're really good at — is over. You won. Now act like a true president, not the Democrat in chief.