May 25, 2024

Obama Obsession With “Millionaires and Billionaires” Continues

As the U.S. economy continues its slow but steady march into economic depression, the Obama obsession with taxing millionaires and billionaires continues.  Consider, Obama Tax Plan Would Ask More of Millonaires.

President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

With a special joint Congressional committee starting work to reach a bipartisan budget deal by late November, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts from Medicaid.

Mr. Obama’s proposal is certain to draw opposition from Republicans, who have staunchly opposed raising taxes on the affluent because, they say, it would discourage investment. It could also invite scrutiny from some economists who have disputed Mr. Buffett’s assertion that the megarich pay a lower tax rate over all, because many in that group actually make more from wages than from investments.

In a speech on Thursday, Speaker John A. Boehner, Republican of Ohio, agreed with Mr. Obama that the deficit-reduction committee “can tackle tax reform, and it should,” to get rid of many tax breaks and allow for lower marginal rates.  “Tax increases, however, are not a viable option for the joint committee,” Mr. Boehner said. Instead, he emphasized that meeting the deficit-reduction target should come largely from overhauling benefit programs like Medicare, Medicaid and Social Security.

The Obama proposal has little chance of becoming law unless Republican lawmakers bend. But by focusing on the wealthiest Americans, the president is sharpening the contrast between Republicans and Democrats with a theme he can carry into his bid for re-election in 2012.

Does the latest Obama tax proposal have merit or is it simply an attempt to capture votes based on a class warfare strategy?  Half of all American households already pay zero income tax and the top 5% of Americans by income already pay 60% of all income taxes.   As pointed out by the Wall Street Journal, there is No Easy Answer On Tax Issue.

“We’re approaching nearly half of the United States population that doesn’t pay any income taxes,” Mr. Perry said in Iowa, when asked about combating an “entitlement culture” in the U.S. “And I think one of the ways is to let everybody, as many people as possible…be able to be helping pay for the government that we have in this country.” In Nashua, N.H., Mr. Romney hit a similar theme: “We want to make sure people do pay their fair share.”

Of the poorest 20% of American households, those earning less than $16,812 a year, 93.4% pay no income tax. But even 30% of the middle class earning between $33,542 and $59,386 are exempt. Some Republican economists say the tax policies that cause this phenomenon have gone too far, contending that people who don’t pay income taxes have an incentive to support politicians who promise more federal programs, since they aren’t paying for them.

Moreover, they argue the tax code has become too dependent on too few people. Sixty percent of the income tax is paid by 5% of U.S. households, said Douglas Holtz-Eakin, a former Congressional Budget Office director who led domestic policy for John McCain’s 2008 campaign. “We’re going to have to have tax reform,” he said. “The system is broken.”

The U.S. tax code is a disgrace from every aspect but the odds of it being reformed by a deeply divided Congress are zero.  Taxes on all income groups have been too low to cover massive government spending programs and the result is a debt crisis that threatens the solvency of the Nation.  Our political leaders have promised unaffordable benefits to a vast array of constituents and paid for it by maxing out the Nation’s credit limits.

Ultimately, a solution to the Nation’s looming insolvency will require not only dramatic reductions of promised benefits but also large tax increases across all income levels.

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