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"It's Where the Money Is"

Unexpectedly (the LSM word used whenever the inevitable manifests) the Democrats propose to close the gaping budgetary chasm which their spending has opened via increased taxation.  They are currently formulating this as a surcharge on "the rich" which they consider to be "fair."

First off, the only "fair" tax is an absolutely flat tax, wherein EVERYONE pays the exact same percentage of their income (however derived).

Second, taxing "the rich" won't close the gaping chasm.

Where the Tax Money Is

Obama targets the middle class while pretending to tax only the rich.

A dominant theme of President Obama's budget speech last Wednesday was that our fiscal problems would vanish if only the wealthiest Americans were asked "to pay a little more." Since he's asking, imagine that instead of proposing to raise the top income tax rate well north of 40%, the President decided to go all the way to 100%.

Let's stipulate that this is a thought experiment, because Democrats don't need any more [stupid and economically suicidal] ideas. But it's still a useful experiment because it exposes the fiscal futility of raising rates on the top 2%, or even the top 5% or 10%, of taxpayers to close the deficit. The mathematical reality is that in the absence of entitlement reform on the Paul Ryan model, Washington will need to soak the middle class--because that's where the big money is.

Thus is the nose of the camel inserted under the tent flap, soon to be followed by the rest of the camel...

...in search of the green on which it feeds.

Consider the Internal Revenue Service's income tax statistics for 2008, the latest year for which data are available. The top 1% of taxpayers--those with salaries, dividends and capital gains roughly above about $380,000--paid 38% of taxes. But assume that tax policy confiscated all the taxable income of all the "millionaires and billionaires" Mr. Obama singled out. That yields merely about $938 billion, which is sand on the beach amid the $4 trillion White House budget, a $1.65 trillion deficit, and spending at 25% as a share of the economy, a post-World War II record.

1taxes
Say we take it up to the top 10%, or everyone with income over $114,000, including joint filers. That's five times Mr. Obama's 2% promise. The IRS data are broken down at $100,000, yet taxing all income above that level throws up only $3.4 trillion. And remember, the top 10% already pay 69% of all total income taxes, while the top 5% pay more than all of the other 95%.
Soaking the rich won't work, and just greases the skids for the "unexpected" confiscation of the earnings of the middle class down the road.

We recognize that 2008 was a bad year for the economy and thus for tax receipts, as payments by the rich fell along with their income. So let's perform the same exercise in 2005, a boom year and among the best ever for federal revenue. (Ahem, 2005 comes after the Bush tax cuts that Mr. Obama holds responsible for all the world's problems.)

In 2005 the top 5% earned over $145,000. If you took all the income of people over $200,000, it would yield about $1.89 trillion, enough revenue to cover the 2012 bill for Medicare, Medicaid and Social Security--but not the same bill in 2016, as the costs of those entitlements are expected to grow rapidly. The rich, in short, aren't nearly rich enough to finance Mr. Obama's entitlement state ambitions--even before his health-care plan kicks in.

So who else is there to tax? Well, in 2008, there was about $5.65 trillion in total taxable income from all individual taxpayers, and most of that came from middle income earners. The nearby chart shows the distribution, and the big hump in the center is where Democrats are inevitably headed for the same reason that Willie Sutton robbed banks.

It's where the money is.

Do as we say not as we do update:

President Obama and wife Michelle paid $453,700 in federal taxes on $1.7 million 2010 income


How about that leadership?

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Comments (38)

Here let me save the trolls... (Below threshold)
retired military:

Here let me save the trolls the trouble

"If only we could return to the tax rates under President Clinton"

Better yet.

WHy dont we double what everyone paid in 2010.

Oh wait that wont even close the deficit THIS YEAR.

In 2010 ALL taxpayers paid a total of $1.4 trillion dollars in Income tax.

If the GOVT were to double the revenue from all taxpayers that would be mean that they would collect another $1.4 trillion and our deficity this year is $1.6 trillion. This means that the 15% BRACket would move up to about the 25% bracket. The 33% bracket wouild move upwards of the 60% bracket. And that is just for Federal income taxes.

In short if you paid 10k last year you pay 20k this year. If you paid 1 million last year you pay 2 million this year. AND IT STILL DOESNT COVER THE DEFICIT FOR THIS YEAR.

We dont have a Tax is too low problem. We have a SPENDING IS TOO HIGH PROBLEM.

"If only we could return to... (Below threshold)
Sky Captain:

"If only we could return to the tax rates under President Clinton"

IMO, the only appropriate response is:

"Only if we can return to the spending rates under President Clinton."

"If only we could return to... (Below threshold)
apb:

"If only we could return to the tax rates under President Clinton"

If only Zippy had the integrity of Clinton ...

Yeah, the 'middle class' re... (Below threshold)
GarandFan:

Yeah, the 'middle class' really concerns progressives.

'First they came for the rich, but I wasn't rich.....so I voted for Obama."

Wait until the progressives are only left with those who currently pay no tax. For them, everything is "free". Wonder what their response will be when their told 'it's only FAIR that you pay something'.

I don´t know if Jay is argu... (Below threshold)
Steve Crickmore:

I don´t know if Jay is arguing, even theoretically, against a graduated income tax, but it seems unjust for the poor to pay income tax at the same rates, as the rich, as they have very little discretionary income after paying for necessities? It is kind of customary for people who can afford it, to pay the lion´s share, a sort of social contract, a noblesse oblige, if all are receiving services necessary for the integrity of a country, on which the nations's currency is based so that it ultimatey can be redeemed with some value.

Bush cut America´s top rated income tax for those earning 373,000 roughly I believe from 39.6% to 36%. Those on a low income income around $10,000 start in a income tax bracket of about ten percent.


However, the problem for the very rich is that it is somewhat a phyrric victory having received the benefit of extended Bush tax cuts. With government tax revenues down, deficits and the debt up, the American dollar has slumped considerably against other currencies circa 35% and other comodities such as gold. The very rich have been disadvantaged if they want to convert their savings from dollars and with a low dollar their purchasing power is also lower for imports.

And unless we get government revenue up we are all in the ´big do do· and the dollar´s value will continue to plummet. Even legendary free marketeer and Any Rand disciple Ed Greenspan recognizes that..now

"I think this crisis is so imminent and so difficult that I think we have to allow the so-called Bush tax cuts all to expire," Greenspan said. "That is a very big number," (the current federal deficit) he continued, adding that taxes should return to the higher levels instituted by the Clinton administration in the 1990s not just for the wealthiest taxpayers, but for all Americans.
If the crisis is so imminen... (Below threshold)
cirby:

If the crisis is so imminent and difficult, how about letting the Obama spending INCREASES to expire?

Oh, wait, that would be too hard, because it would cause the government to SPEND LESS MONEY...

Greenspan's name isn't Ed, ... (Below threshold)
Jim Addison:

Greenspan's name isn't Ed, but that's typical for Crickmore. Naturally, our leftist calls out Greenspan's decades of calling for spending restraint and entitlement reform, but fails to note that the former Chairman has never been exactly hostile to tax hikes, either.

I do have to wonder if Steve even bothered to read the main article. Going back to Clinton-era rates does NOTHING to solve the problem. It's NOT a revenue problem, it is a spending problem.

My bad, yes Alan Greenspan ... (Below threshold)
Steve Crickmore:

My bad, yes Alan Greenspan and Ayn Rand. It is both a spending and revenue problem, with about 49% Americans not even paying income taxes because of deductions.. If I were Obama, I would say everyone must share in the sacrificies: the Pentagon, medicare, medicaid, entitlements, rich tax cuts, welfare benefits, medicaid, executive bank bonuses to be taxed fully, no exemptions even at the White House or Congress.

How much damage will the I.... (Below threshold)
Kool aid Klan:

How much damage will the I.I.C. cause before his lying thuggish commie ass is dragged out of office?


Index: I.I.C. = Idiot In Chief


If I were Obama, I would... (Below threshold)
Sky Captain:

If I were Obama, I would say everyone must share in the sacrificies: the Pentagon, medicare, medicaid, entitlements, rich tax cuts, welfare benefits, medicaid, executive bank bonuses to be taxed fully, no exemptions even at the White House or Congress.

But that's the sticking point, Steve - that's not what Obama is saying. Homer is only going with "tax the millionaires and billionaires", even though they do not have enough money!

To quote something I heard Herman Cain state on a talk-radio program:
"We don't have a taxation problem, we have a spending problem!"

An apt quote from Mr. Potte... (Below threshold)
914:

An apt quote from Mr. Potter to the community agitator:


"Not with My money!"

crampless,Jay isn'... (Below threshold)
Rodney Graves Author Profile Page:

crampless,

Jay isn't arguing for anything in the post nor here in the comments to the post.

And why should the poor pay any less (as a percentage of income) for the benefits of citizenship than the more affluent? Is their vote worth less?

Obama paid 453,000 on 1.7 m... (Below threshold)
retired military:

Obama paid 453,000 on 1.7 million in income. An effective rate of about 25%. Gee. He doesnt fulfill his talk of the rich should pay more. If he feels that way than why did he take all those deductions.

SteveIt isnt fair ... (Below threshold)
retired military:

Steve

It isnt fair for 40%+ of people to pay NOTHING. And on top of that most are getting money back from the govt when their tax liability is ZERO.

As now noted in the article... (Below threshold)
Rodney Graves Author Profile Page:

As now noted in the article, he's not even paying at the higher rate he proposed by letting the Bush tax cuts lapse.

Yes, Obama will come round... (Below threshold)
Steve Crickmore:

Yes, Obama will come round, or if they feel a public recanting on raising middle class taxes is not worth the firestorm, the admistration will do it by stealth, since transparency and honesty have not been their strong points. Obama made most to of these pledges not to raise middle class taxes before the August 2008 recession plunge.

#13Shhhhh... (Below threshold)
914:

#13

Shhhhhhh!! Barry's doing it for the children!

Aaaaaah! Minor com... (Below threshold)
Upset Old Guy:

Aaaaaah!

Minor complaint - Taxes have to be equitable. The word "fair" does not necessarily encompass that thought.

Barack Obama wants to increase the tax rates on the rich and corporations in the name of "fairness." He doesn't care if the tax rates are equitable. He doesn't care if the higher rates result in increased tax avoidance and lower total receipts. Those higher tax rates on just those whom he targets represent social justice to him. And that, for Obama, it makes things "fairer."

I suggest we shift our discussion to the need for equitable tax rates (or rate) for all.

retired military, no it isn... (Below threshold)
Steve Crickmore:

retired military, no it isn´t fair but where are you going to get the money from? And im sure they pay a lot of retail sales taxes and othe rconsumer taxes. Hey,but I agree with you, from my personal experience, many people milk or abuse the system. You would think actually as a community organizer Obama would be aware of this?

Milking the system is what ... (Below threshold)
Walter Cronanty:

Milking the system is what a community organizer does - so yes, I agree with you, Obama should be aware of this.

Lefist taxation history<br ... (Below threshold)
Don L:

Lefist taxation history
1. yrs ago: Create and propose a program -identify the money source -raise taxes -institute program.

2. After/during Carter : create inflation -raise taxes to compensate for higher costs -Reagan stopped it with indexing.

3. Spend like hell -create large deficits -claim to be fiscally responsible -pass outrageous taxes to pay off the deficits -spend the new revenues -repeat cycle.

Steve" And im sure... (Below threshold)
retired military:

Steve

" And im sure they pay a lot of retail sales taxes and othe rconsumer taxes"

Yes and the rick pay a LOT MORE retail sales taxes and other consumer taxes.

The problem with predatory ... (Below threshold)
Clay:

The problem with predatory taxation? Those that can leave...will. I didn't want to, because I really do like it there. But, sooner or later, residing in the U.S. becomes a matter of diminishing returns. There are plenty of other countries in which I can feel confident that I'm not being led to slaughter. Yes, Clay left the building, but I barely got out without being trampled. John Galt had it right. You'll see.

"You would think actually a... (Below threshold)
GarandFan:

"You would think actually as a community organizer Obama would be aware of this?"

Hahahahaha!!!

Yeah, likes he's 'aware' of all those Black people who suddenly wanted to be "farmers" once a discrimination lawsuit was won against the Dept Agriculture.

IIRC, Barry's response has been "Yawn!"

Steve,"retired milit... (Below threshold)
Sky Captain:

Steve,
"retired military, no it isn´t fair but where are you going to get the money from?"

As I attempted to point out in #10- THERE ISN'T ENOUGH MONEY!
The US Gov't (that means Congress 2006-2010 and Homer J. Obama) are spending money worse than drunken sailors.
You can tax "millionaires and billionaires" all you want, but there STILL isn't enough $$ in them. We need to cut spending first.

THERE ISN'T ENOUGH MONEY!</... (Below threshold)
GarandFan:

THERE ISN'T ENOUGH MONEY!

Sky - they can't wrap their heads around that concept. There has ALWAYS been money. Someone is obviously hiding it someplace. I'm sure Michael Moore is on the trail, even as we speak.

Our friends from the left s... (Below threshold)
Upset Old Guy:

Our friends from the left side of the aisle seem to be ignoring an absolute fact here: even if there were enough money (there isn't, but even if there was) the historical record of Congress over at least the last 22 years demonstrates that they would just proceed to spend that as well.

Spending is the problem that brought us to this point, and still Congress and the Administration are refusing to stop spending. They've been spending so much, for so long that they now believe they can charge anything to the U.S. Government credit card without consequence.

SteveHow about col... (Below threshold)
retired military:

Steve

How about colleges like Harvard, Yale and University of Texas. UT just recently bought $1 billion in gold bars. Harvard and Yale have endowments worth billions. Explain to me why they get any federal, state or local tax money.

#12 And why should the p... (Below threshold)
ken:

#12 And why should the poor pay any less (as a percentage of income) for the benefits of citizenship than the more affluent? Is their vote worth less?


Here's a crazy idea - If you opt out of paying taxes then you can not vote. Wonder how that would play out?

"the historical record of C... (Below threshold)
GarandFan:

"the historical record of Congress over at least the last 22 years demonstrates that they would just proceed to spend that as well"

Case in point. The wonderful liberal legislature of the State of California. In 2004-5 the got a windfall $40 BILLION in added revenue (thanks to the infamous Bush Tax Cuts). Unanticipated revenue. They SPENT it.

Garand Fan,Indeed ... (Below threshold)
Rodney Graves:

Garand Fan,

Indeed they did. And for this year they have a 24 Billion Dollar ($24,000.000,000.00) deficit, not to mention a huge hole in the state retirement funds.

There wouldn't be any defic... (Below threshold)
Avgerage Democrat voter:

There wouldn't be any deficit if us liberals weren't so damn good at spending other peoples money.

ADv,Hands up or ha... (Below threshold)
Rodney Graves:

ADv,

Hands up or hands out, that's the modern democrat.

Steve and his liberals whac... (Below threshold)
WildWillie:

Steve and his liberals whacko's are still sipping the kool aid. They actually believe if the dem's raise taxes they will also reduce spending. They have pulled the trick many times. No more money from us. Time for them to do their job and live within their means. Plain and simple. I also have 2/3 of americans with me. ww

SteveCan you show ... (Below threshold)
retired military:

Steve

Can you show me one bit of evidence that if taxes go up Congress will spend the extra money responsibly (ie deficit reduction)?

When you have a hole in the... (Below threshold)
SCSIwuzzy:

When you have a hole in the bucket, you don't just pour in more water...

retired military. Your side... (Below threshold)
Steve Criickmore:

retired military. Your side now controls where the spending or Appropriations bills are introduced, the House, so if the GOP are serious, I assume they are, deficit reduction will be a priority.

Steve,What is Just?<... (Below threshold)
hcddbz:

Steve,
What is Just?

One Tax rate is just. It would apply equally to all people. If someone makes 100 and they pay 15% taxes they get to keep 85% of the money they worked for. As they make more money they keep the same %.
That is fair and just. Now in all honesty most fair takes do not kick in till 35K but i think it should just be one rate. from dollar one to dollar 1 trillion.

Now if their is unfair things about that then abolish income tax, SS and Medicare and allow people to keep 100% of the money they earn.

Collect taxes on goods and services sold. Reduce spending and the size of government.

What is the purpose of Government ?
What are taxes spent on?




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