You are here: Home » Archives »

Obama’s meaningless tax the rich solution funds one day of spending

April 11, 2012 05:08

“It’s not a plan, it’s not serious. There’s nothing serious about it.” The Buffet tax is meaningless explains Steve Hayes – it equals one day’s worth of deficit – but the president has spent more time talking about it then any other economic policy idea. That giant sucking sound in D.C. is the leadership vacuum.

Video clip by Todd Fein.

Obama’s description of the Buffet tax from his taxpayer funded campaign speech at Florida Atlantic University:

“Right now, the share of our national income flowing to the top 1% has climbed to levels last seen in the 1920s. And yet those same people are also paying taxes at one of the lowest rates in 50 years. You might have heard this, but Warren Buffett is paying a lower tax rate than his secretary.

That’s wrong. It isn’t fair. And it’s time for us to choose which direction we want to go in as a country. Do we want to keep giving tax breaks to the wealthiest Americans like me, or Warren Buffett, or Bill Gates – people who don’t need them and never asked for them? Or do we want to keep investing in things that will grow our economy and keep us secure? That’s the choice.

I’ve told you where I stand. Now it’s time for Members of Congress to do the same. In the next few weeks, they’re going to vote on something called the Buffett Rule: If you make more than $1 million every year, you should pay at least the same percentage of your income in taxes as middle class families do. On the other hand, if you make under $250,000 a year – like 98 percent of American families do – your taxes shouldn’t go up. It’s that simple.”

A year ago we posted why this won’t work in an article by Alan Reynolds at CATO Institute:

It is not as though we have never tried high tax rates before. From 1951 to 1963, the lowest tax rate was 20% to 22% and the highest was 91% to 92%. The top capital gains tax rate approached 40% in 1976-77. Aside from cyclical swings, however, the ratio of individual income tax receipts to GDP has always remained about 8% of GDP.

The individual income tax brought in 7.8% of GDP from 1952 to 1979 when the top tax rate ranged from 70% to 92%, 8% of GDP from 1993 to 1996 when the top tax rate was 39.6%, and 8.1% from 1988 to 1990 when the highest individual income tax rate was 28%. Mr. Obama’s hope that raising only the highest tax rates could keep individual tax receipts well above 9% of GDP has been repeatedly tested for more than six decades. It has always failed.

Obama’s Marxist ideology is stuck with the belief that more should be taken from those who have produced and given to those who don’t. This is his idea of “fairness.” It does not really matter to Obama whether tax revenues actually increase or not. That’s not the point. The goal is income redistribution. In the Democrat debates with Hillary in 2008 Obama stated that he would raise capital gains rates even though it is proven to lead to less tax revenues. In Obama’s own words it’s about “fairness.”

Obama’s belief system comes from his seeking out Marxist professors and attending socialist conferences as he describes in his own book. Twenty years at the feet of Pastor Jeremiah Wright reaffirmed this philosophy with a religion based on “collective salvation.” You can’t really be saved unless you share your wealth. That is the essence of Wright’s teaching. Wright has praised Marxism and even said that he believes in socialism.

Five quick points from American Crossroads on the Buffett Rule:

1. The Associated Press completely, thoroughly debunked the premise behind the Buffett Rule in a fact-check last fall. From AP: “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.”

2. Forbes magazine estimates that for the Buffett Secretary claim to be true, she would have to make between $200,000-500,000 per year — not unheard of for the secretary to the CEO of the world’s eighth largest company, but an amount that would make her a bit, ahem, uncomfortable in Zucotti Park.

3. This proposal is not a policy prescription to fix the deficit, but rather a political wedge Obama is exploiting to change the topic away from his mishandling of the economy. A CNN analysis of the Buffett rule proposal shows it would raise revenue by barely one percent of the federal budget

4. American Crossroads has launched a Facebook petition with targeted advertising behind it to urge Obama and Buffett to put their money where their mouth is and start voluntarily giving more money to the US Treasury.

5. Dessert: While Mr. Buffett is calling for higher taxes on his colleagues, one of his companies is embroiled in a series of lawsuits with the IRS over nearly a billion dollars of allegedly unpaid taxes. (LINK)