How much of Obama’s new plan hinges on just 1400 people?
Warren Buffett says that rich people like him should pay higher taxes. The president came out with a new plan supposedly based in part on getting people like Mr. Buffett to have higher rate of taxation.
According to this new 10 year long goal Obama wants the tax code changed to bring in an additional $1.5 Trillion or more. That is an average of $150 Billion per year. Mind you this is only working down the deficit, we still haven't eliminated it so all this time the US debt will still grow and accrue interest at an alarming rate. The New York Post says the tax increase on this group of the wealthiest will bring in only $26 Billion. That is far less than 1% of the US budget and around 2-3% of the current deficit.
There is a deeper story in the allegation that the rich pay a lower percentage. It seems that over 50% of Americans effectively pay no taxes at the federal level. It is really hard for the rich to be paying less than the rest so long as anyone is paying. The Congressional Budget Office reports that 70% of income taxes come from the richest 10% of Americans. This leaves me wondering just how much the president thinks that top 10% is skipping out on and/or is there some great amount over looked in the rest of the quintile? It is hard to imagine that the US can bring in a hundred billions more revenue each year, to add up to $1.5 Trillion over the next decade, from such small numbers of millionaires. This means the revenue, if it really works according to his idea, must come from people who make under $1,000,000 a year and those people have no where near the value of Mr. Buffett. And as we move away from that top few percent the income decreases rapidly. So are we looking at over $100 Billion a year coming from people earning in the $150K to $300K range?
"I refuse to leave our children with a debt they cannot repay," he said in remarks opening the one-day summit at the White House. "We cannot and will not sustain deficits like these without end. … We cannot simply spend as we please."
This whole idea is a rich distraction from a guy who claimed he would cut the deficit in half by the end of his first term! It is a very poor reflection of the president's understanding of how revenue is sorted out in this country when he doesn't know, and is failed to be advised by his staff and associates, that the rich already pay a rate near 30% while middle class people in the 10-15% range.
The Chicago Tribune from Obama's hometown reports that in 2009 only 1,470 tax filers had over $1,000,000 income and paid no federal tax. Fourteen hundred folks is no match for the other 40% who also pay nothing but are more likely to be costing taxpayers. Over 200,000 high earners are paying taxes, somewhere in there is Buffett's return as well.
But if Obama's target is over $150 Billion a year, and the NY Post is correct then that means this plan is short by $124 Billion per year! That figure will have to come from the taxpayers between the bottom 40% who pay nothing and the top earners. About 20 million US families have an income above $100,000 per year. Is it a good and fair plan to take $124 Billion a year out of circulation in these families?
In all of this back and forth, angles on class warfare, Obama states that middle-class families shouldn't pay higher rates than millionairs. He says:
"It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."
But I think his plan is going to hit millions of families with a serious tax increase. It seems that President Obama should be making a strong case for simplified tax code, a flat tax. If we're going to have a federal tax on earnings wouldn't it make the most sense to just do away with all loopholes and everyone pay the same rate? Of course that would mean all citizens are equal and the poorer folks would have to shoulder some of the burden too. When they are fairly burdened with paying taxes, by being equal, then maybe they will be advocates for a more limited government.
Self interests can be a great motivator.