"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Tuesday, September 20, 2011

The Obama Tax the Rich Plan

Obama has proposed a new tax plan that has no chance of passing Congress, and is solely designed to create an election-year theme that the "rich" do not pay their "fair share" of taxes.    It's pure demogoguery, of course, because the facts are so obviously the opposite.   Even the Associated Press couldn't let him get away with it today:

In his White House address on Monday, Obama 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 the billionaire investor.

The rule says, "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 the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.

"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said. "That's pretty straightforward. It's hard to argue against that."

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. But that's less than 1% of the nearly 237,000 returns with incomes above $1 million.

This year, households making more than $1 million will pay an average 29.1% of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay an average of 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%.
Not sure how they calculate this, whether it's adjusted gross income (AGI) or total income.   On an AGI basis, the Regular Guy last year paid 26.9% of income to the federal government; on a total income basis it was 21.3%.   Hard to see how I'm not paying my fair share if for every dollar I make I have to ship a quarter off to Obama.   But then maybe Warren Buffett's smarter than I am -- after all, he hires a ton of lawyers to shelter his income in trusts and foundations.   On the other hand, it's pretty hypocritical to be worth $50 billion or so, hire whole law firms to shelter your wealth, and then support a tax plan that would raise taxes on a guy like me struggling to send three kids to Catholic school. 

P.S. If I add on state income tax (high in Wisconsin), property tax (ditto), and tax paid to other states (because our law partnership has offices elsewhere), I'm up around 36% of AGI and 28% of total income.   And that's before sales tax, tolls, fees, and all the costs of items I want to buy that are themselves inflated by the cut that government takes out of the businesses that I buy from!   Is the government really worth something between 35 and 45% of every dollar I earn?   Is that really fair?   I guess I don't think so, but it's a wonder to me why anyone would think so.  Put differently, is the government really worth 3 or 4 hours of my time every day, where the government confiscates the fruits of my labor?   We used to call that slavery or servitude.   Now they call it "progressive."

No comments:

Post a Comment