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The rich guy can't pick up the tab

January 26, 2012

For all of the controversy surrounding the President's depressing and lame proposals to soak the rich, the most important aspect is getting overlooked: no matter how much money you take from "millionaires and billionaires", it will hardly reduce the budget deficit at all. The Tax Foundation explains with this helpful chart:


Click to enlarge

In so many words:

So taking half of the yearly income from every person making between one and ten million dollars would only decrease the nation's debt by 1%. Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent. There's simply not enough wealth in the community of the rich to erase this country's problems by waving some magic tax wand.

Even lowering the bar by taking 100% of the earnings of taxpayers over $1 million would only reduce the deficit by 35%, while of course bringing on an economic catastrophe that would make the Great Depression look like good times. By railing against "millionaires and billionaires" the President tries to distract us from the sad reality: failing to address the government's incontinent spending will eventually require a big tax increase on everybody. The rich guy isn't buying because he simply can't.

Other coverage of the President's tax proposals:

Shikha Dalmia, Obama's Daft Plan to Insource Jobs Back to America
Howard Gleckman, President Obama’s Tax Deform Agenda
TaxProf, President Obama Calls for 30% AMT on 'Millionaires and Billionaires'
Kay Bell, State of taxes in Obama's State of the Union address.
TaxGrrrl, Taxes and the State of the Union
Janet Novack, Obama Proposes Doubling Romney’s Taxes, With Minimum 30% Rate
Scott Hodge, Unanswered Issues on the "Buffett Rule"
Linda Beale, Obama's State of the Union vs Romney's Tax Returns

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Comments

It would be interesting to see the tax return of Buffet's secretary. According to public records in NE, she owns a rather nice home in Bellevue, NE and according to AZ public records she owns a winter home in AZ. According to Buffet, she pays at the 30% rate. Thus, she is making somewhere between $200,000 and $300,000 per year. That is, unless her tax advisors are incredibly stupid.

Not the typical victim that she was portrayed as.

The dollar amounts are "in thousands." It stands for comparison that a working class citizen can work tirelessly for 30 years at a job earning $50k, and still not approach Romney's tax refund for a single year ($1.6 million in 2010). That's just his REFUND. What we have is runaway wealth, as much as the argument is made that it would solve all our problems to tax it -- the real issue is that a small number of people are running away with this country's power through investment and lobbying, controlling businesses and political system.. because money works for them and not against them. Out democratic society is not run by the people, it is run by the powerful people. And that's sad.

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