Eat the rich!
Like all Leftists, Obama’s irrepressible impulse is to demagogue by fomenting class envy and exploiting our resentment of those who have more, especially in today’s hard economic times.
That’s the basis of Skippy’s proposal yesterday to combat the federal government’s gargantuan $15 trillion deficit — the equivalent of 101% of America’s gross domestic product — by taxing “the rich.”
He called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the “Buffett rule,” named for billionaire investor Warren Buffett — that “People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”
Buffett wrote in a recent piece for The New York Times that “super-rich” people like him should gladly pay more taxes, and that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office, including his secretary. But Buffet left out a vital bit of information from his pious op-ed:
Super-rich Buffet’s super-rich company, Berkshire Hathaway, owes the government tens of millions in taxes and has been wrangling with the IRS over this for years.
Trafficking on Americans’ sense of violated justice, Skippy declared that “the rich” should at least pay as much in taxes — be in the same tax bracket — as middle class Americans like Buffet’s secretary. “There is no justification for it,” Obama said. “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 are the rich really taxed less than secretaries? Here’s a fact check by the Associated Press.
Stephen Ohlemacher reports for the AP, Sept. 20, 2011:
The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.
There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
[...] This year, households making more than $1 million will pay an average of 29.1% of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15% of their income in federal taxes. Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5% of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7%.
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS. Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Obama’s claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15%. The top marginal tax rate for wages is 35%, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress’ official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46% of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
Note that investment income is earnings that have already been taxed. It is money accrued from wages. In other words, investment income is actually income that is twice taxed!
Meanwhile, ever the hypocrite, mere hours after delivering his speech demonizing wealthy Americans, Skippy dined with some of these very Americans in New York. His haul last night is expected to exceed $2 million for his reelection campaign.