Obama’s Master Plan to Tax the Rich would Fund Government for Eight Days
President Barack Obama has proposed raising taxes on the rich to put America’s fiscal house in order, but critics say federal spending is so massive that the wealthy don’t have enough money to cover the nation’s unprecedented debt.
In an interview with MSNBC’s Andrea Mitchell, Rep. Tom Price (R-GA) said President Barack Obama’s plan to raise taxes on the wealthy would only generate enough revenue to fund the federal government for eight days.
“The president’s plan to increase taxes on the upper two percent covers the spending by this federal government not for eight years, not for eight months, not for eight weeks but for eight days. Eight days only,” said Mr. Price. “It’s not a real solution. So, again, I’m puzzled by an administration that seems to be more interested in raising tax rates than in gaining economic vitality.”
The problem is that the rich don’t have enough money to put so much as a dent in America’s $16 trillion national debt. “If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion,” writes John Stossel. “That’s only a third of this year’s deficit. Our national debt would continue to explode.”
The inconvenient truth about the ‘fiscal cliff’ and ‘taxing the rich’
Meanwhile, the simplistic idea of raising the marginal tax rates on the rich by a couple of percentage points without limiting deductions would simply redirect the rich to their expensive tax lawyers to create non-productive tax shelters (such as digging holes and then filling them up), or to the use of such obvious loopholes as tax-free municipal bond income—which is what happened in the 1950s when the tax rates on the rich exceeded 90 percent.
Ending Bush tax cuts for rich would save about $28 billion in 2013
Democrats countered that the one-year savings from ending the cuts for the rich may not be much, but that those savings would grow over time, bringing more than $800 billion into the U.S. Treasury by the end of the decade.
“If we decouple the tax cuts for those earning above $250,000 they will be gone for good. Over ten years, that will reduce the deficit by $800 billion compared to what Republicans want to do,” said Sen. Charles Schumer (D-N.Y.).
via The Washington Post.
Obama: Tax ‘the Rich’ would raise $65 Billion but he increases spending by $202 Billion leaving a net loss of $137 Billion
Because the president wants to increase spending even faster than he wants to increase taxes. President Obama’s proposed tax hike would raise roughly $65 billion in 2013. At the same time, the president proposes to increase spending next year by $202 billion. The tax hike would pay for only 32 percent of the proposed new spending. Or put it another way: Over ten years, the new taxes would cover roughly half of the $1.6 trillion in new subsidies and Medicaid spending under Obamacare.
That means that not a penny of Obama’s proposed tax increase would, in fact, go toward reducing the budget deficit, let alone paying down the debt. Rather, every cent of the tax hike would go toward paying for increased federal spending.
So You Want to Raise Taxes on the Rich, Eh? Don’t expect a cut in Obama’s $1 Trillion Deficit
According to the Joint Committee on Taxation, the proposed tax increase would raise only $68 billion by shifting the top tax bracket from the Bush era rate of 35 percent up to 39.6 percent (plus a few from the health care law). The government expects to spend $9.9 billion per day, or a projected $3.627 trillion for this year. Based on these numbers, the addition $68 billion from a tax increase would pay for 6.8 days of government operation. Considering the deficit is projected to reach $1.2 trillion (continuing the streak of four straight years of deficits above $1 trillion), those additional 6.8 days would still leave 114.4 days of government unfunded. In fact, even if we taxed everyone who earns over $1 million 100 percent of their income – every single penny – we would still have 49.6 days where Washington has to borrow to cover its spending.
Myth – The Rich Don’t Pay Their Fair Share – Well it all depends on what you mean by fair
Perhaps one of the most common myths (or lies, depending on how you look at at it), is the idea the “rich don’t pay their fair share”. But is this true? Various groups drag out “studies” to prove their point, but are they correct? Instead of using biased “studies” (from any group), why not simply go to the source? The Federal Government published a CBO Paper in August 2004 titled Effective Federal Tax Rates Under Current Law, 2001-2014. On Table 2 (page 18 of the PDF) “Effective Federal Tax Rates” under “Share of Total Federal Tax Liabilities” heading shows some interesting results.
Taxes paid by highest incomes
- The top 1% pay 22.7% of taxes.
- The top 10% pay 50% of taxes.
- The top 20% pay 65.3% of taxes.
- The top 40% pay 84.3% of taxes.
Taxes paid by lowest incomes
- The bottom 20% pay 1.1% of taxes.
- The bottom 40% pay 6.1% of taxes.
Could it be any clearer? Sure it sounds great to “tax the rich,” but it doesn’t do a thing. Reductions in spending are necessary. So what will folks say in a year when Obama reaps another $1 trillion deficit?
The government is an addict that continues to want to get it’s fix. They will do anything to keep from going into withdraw. The rich cannot sustain this level if spending even if you tax them at a 100% rate. Next screams will be for a wealth tax. In this climate, I can see the left drumming up support for a one time 30% wealth tax. Atlas Shrugged anyone?