Obama flunks simple math
posted Wednesday, February 1st, 2012 @ 6:42 pm
In his State of the Union speech last week, President Obama clearly showed us that he intends on engaging in class warfare in his drive to secure a second term in office.
It also is obvious Obama's political advisors believe the president's odds of being re-elected in November depend on whether he can convince a majority of the American people that the nation's financial hardships can be cured by raising taxes on the super wealthy. At the very least, that is the message Obama conveyed Jan. 24 in his remarks to a joint session of the Congress when he repeated that same old line that the wealthy do not pay their fair share of taxes to Uncle Sam. It is a message the Left has peddled for years.
It is an inaccurate and misleading message, too.
Obama has suggested that the federal government levy a "Buffett Tax." The proposed tax is named after billionaire Warren Buffett of Omaha, Neb.
The "Buffett Tax" supposedly would impose a minimum 30-percent tax rate on incomes exceeding $1 million. Apparently, the 30-percent rate would apply to any income above $1 million, including monies realized from investments, which are known as capital gains. The current capital gains tax rate is 15 percent, which is more than fair considering an individual who invests money in hopes of realizing a capital gain most likely has already paid an income tax on the money in the first place.
Even Buffett has stated publicly that his tax burden is too light. He points out that he paid a tax rate of roughly 17.4 percent in 2010 while his secretary's personal income tax burden – percentage-wise – was almost double. What Buffett sometimes fails to acknowledge is that much of his income is monies he collects from investments, or capital gains. Very little of his income is what is called earned income, which, for someone of Buffett's station in life, would be taxed at a 35-percent income tax rate if he declared the income as earned income.
According to the bi-partisan Congressional Budget Office, the U.S. government is expected to rack up some $8.5 trillion in deficits over the next 10 years. The "Buffett Tax" would do very little to offset it.
The nonpartisan Tax Foundation says the proposed "Buffett Tax" might raise $40 billion annually, or $400 billion over the next 10 years. The Left-leaning Citizens for Tax Justice estimate the "Buffett Tax" would produce $50 billion annually, or $500 billion over the next decade. Factor in economic growth and the "Buffett Tax" might gin up $600 billion to $700 billion over the next 10 years.
That's a substantial sum of money but it would merely dent the deficits the federal government is expected to accrue over the same period.
While Obama clearly scores points with the Left when he demonizes the wealthy and promises to raise their taxes, the president is either purposely misleading the American people or he does not understand simple arithmetic.